Without explanation, the Shenzhen government has ended a seven-year incentive plan for the city’s much-hyped LED lighting sector

May 2, 2013 Leave a comment

Shenzhen’s LED incentive plan comes to sudden end

Staff Reporter, 2013-05-02

Without explanation, the Shenzhen government has ended a seven-year incentive plan for the city’s much-hyped LED lighting sector, reports Guangzhou’s Southern Metropolis Daily. The original plan by the city government called for building a 130 billion yuan (US$21 billion) LED industry in Shenzhen from 2009 to 2015, according to Sui Shirong, head of Shenzhen Light Emitting Diode Industry. An official who wished to remain anonymous due to the sensitivity of the issue told the daily that the industry is facing falling prices amid oversupply.Shenzhen, the epicenter of China’s LED production, began investing in the lighting business in the early 1990s as part of the central government’s incentive to promote greener energy in the country.

But as with many industries in China, Shenzhen’s success was soon copied in other parts of the country, with speculators descending upon the LED industry and quickly turning it upside down, the official said.

Mired in intense competition to cut prices amid overproduction and declining demand in European and US markets, many LED companies in China began to fail, said Feng Jiun, a 43 year-old owner of an LED company in Shenzhen.

Feng said the LED sector in the city was difficult last year. Many companies failed or relocated to other cities — a stark contrast compared to the strong showing of the sector a few years ago.

Despite the sudden end of the government’s plan to promote the lighting sector in the city, both Sui and Feng said they are confident that fierce competition will force companies with weak fundamentals out of the market, while those that remain will have a better chance to thrive.

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