Xiaolan, a small town with a population of 157,000 residents located in Guangdong Province in Southern China has seen its LED industry market value balloon in a short span of 8-years, reported Zhongshan Daily.

As China kicks off its 13^th five-year plan in 2016, city authorities and town representatives are developing a fast growing economic model that is headed by the government, major companies in the industry, and market to drive innovation.

These new policies are helping the small town to transform and completely upgrade, during first half of 2016 the town’s patent applications reached 36 per month, where 10 are approved each year.

Government policies that support industry development and innovation

About eight years ago, the town’s LED market value was merely RMB 160 million, but the industry has taken off in recent years mainly due to integration of mid-sized enterprises supply chain, and the town’s encouraged innovation.

In recent years, town authorities have launched many services to support the LED industry services, including investing more than RMB 10 million to develop a public service platform. The town formed a partnership with South China Normal University to establish Xiaolan LED industry technology research center. The town also founded LED lighting studies in Jianbin Vocational Junior High School to train people with practical LED lighting technology background, and released additional innovative technology policies to spur innovation.

As of late 2015, there were more than 230 LED companies in Xiaolan, and the market value exceeded RMB 10 billion for the first time, amounting to a third of the city market size, according to the town’s Economic and Information Technology Bureau. LED package manufacturers including MLS and Everlight have leading positions in the midstream sector of the LED industry. The LED industry in Xiaolan have significant advantages in streetlights, table lights, decorative lights, and other related industries, which established the company’s leading market position in different LED lighting markets.

Incubation period of Xiaolan’s budding LED industry

Shortly after leading Chinese LED package manufacturer MLS (or also known as Forest Lighting) became listed on the Chinese bourse, it formed a biding consortium with Chinese investor IDG Capital to acquire German lighting giant Osram’s general lighting business LEDVANCE. The industry was paying close attention to these developments, and similarly in June 2016.

Following the founding of China’s Solid State Lighting Innovative Base in the town, it has created a ripple effect in the local LED industry.

“We have been revolutionizing our company for the last few decades,” said Lawrence Lin, General Manager of MLS. The rise of Xiaolan’s LED industry was not a coincidence, but the result of years of innovation that reflects the challenges LED companies in the town overcame to rise against all odds.  

Chinese LED companies partner up with foreign counterparts to acquire key patents

When LED bonding machines were widely used in China about 10 years ago, MLS sent a team to Europe to search for an important component. They purchased an advanced cutting machine that is typically used for IC semiconductors from an international manufacturer, and shipped the equipment back to its fab in Xiaolan.

“This type of cutting machine is more advanced and reliable, it raises wire-bonding precision, and extends the product lifetime,” said Lin. By switching to more advanced materials, MLS was able to improve product quality and slash costs.

MLS extensive research in basic LED materials was able to improve products C/P ratio, and help MLS acquire cost advantages. Compared to most LED companies, for the same quality and type of product, MLS usually has more than 20% cost advantages. This has accelerated the company’s product commercialization and sales. For the last few decades, MLS has been focused on innovation, while collaborating with more than 30 international companies to advance its growth.

People close to Hombo Technology Chairperson Jifang Mei have been spreading good news recently, noting the company’s LED streetlights manufactured in Malaysia had been lit up as of Nov. 12, 2016, and the company has been testing the new lights. The company also completed the Luoyang Lingpo bridge lighting project recently, where 4,800 LED lights illuminated the bridge, becoming the latest lighting project.

In early 2005, Du was not in the LED industry yet, and the company was mostly a manufacturer of electronics and plastic material. The company’s LED products were still in the R&D phase at the time.

Today nearly 200 patent certifications are hung up on the wall of a company conference room, and it has become one of the leading LED streetlight manufacturers in China. Undergoing five years of R&D, the company has taken the opportunity to release mature products on the market and continue ongoing trends.