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

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.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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