Taiwanese LED Makers Boost Presence in China

Forming alliances with Chinese makers to cash in on growing demand for LED lights in the mainland

In a bid to meet the targets of their 12th Five-Year Plan, the mainland Chinese authorities have introduced measures to boost the consumption of LED lights and help the domestic LED industry achieve revenues of RMB500 billion (US$79.3 billion at RMB6.3:US$1) in 2015, the plan's final year.

On May 7, the Chinese Ministry of Science and Technology announced a scheme designed to boost demand for locally made LED chips to over 80% of the country's total consumption by 2015.

On May 23, the Guangdong Provincial Government announced that all lighting projects carried out by government organizations in the province would be required to use LEDs, effective immediately. This policy aims to spread LED lighting throughout Guangdong by 2014, cutting electricity consumption for lighting by at least 50%.

At a meeting on May 15, China's State Council decided to set aside RMB26.5 billion (US$4.2 billion) to subsidize consumers' purchases of energy-saving household electrical equipment. RMB2.2 billion of that amount is to be used for LED and other energy-saving lighting procurement.

Beginning Oct. 1, 2012, the import and sale of incandescent bulbs up to 100 watts for general lighting will be banned. Four years after that, the ban will be extended to bulbs rated 15 watts or more. This measure will, of course, greatly bolster the demand for LED lighting.

The demand resulting from the stimulus measures has caught the eyes of Taiwan's LED-lighting manufacturers and encouraged them to step up their operations in China, mainly through alliances with Chinese companies.

Jumping into the Mainland Market
To take advantage of the expected surge in demand, AcBel Polytech Inc., an LED-making subsidiary of Taiwan's Kinpo Group, has forged a deal to set up a joint-venture LED-lighting venture in China in cooperation with the Samost Photoelectrical Scientific Stock co., of Henan Province.

AcBel recently expanded into LED lighting, after being in the power supply industry for more than 30 years. Samost is a leading supplier of traffic and signal lights, as well as LED streetlights, with a well-developed distribution network that covers more than 10 Chinese provinces.

The joint venture will be AcBel's first entry into the Chinese market. Its streetlights comply with Taiwanese government standards that require a maximum of 6% in light degradation after 16,000 hours of continuous operation.

Insiders report that the joint venture has been promised a number of government incentives, including land allocated by the government at flexible rental rates.

Another Taiwanese enterprise jumping into the Chinese market is the Light On Group, which plans to set up an operations center in Hubei Province to tap that country's thriving market for LED streetlights and related lighting equipment, reported the group chairman, Raymond Soong.

Hubei is at the geographic center of the Chinese market and has been vigorously developing the optoelectronics industry in recent years.

Everlight Electronics Co. has taken aim at Jiangsu Province's plan for the procurement of RMB6 billion (US$952 million) worth of LED streetlights, and has signed an agreement with the Tianmu Solid State Lighting Technology Co. (a startup founded in 2010) to set up a joint venture there.

The joint-venture plan calls for a total investment of US$200 million. US$30 million has already been poured into the construction of first-phase production lines, and volume production started in June.

Tianmu Solid State Lighting executives point out that their cooperation with Everlight provides optimal synergies between Everlight's top-notch technology and Tianmu's competitive costs.

The venture hopes to capture 50% of the market in Jiangsu and plans to install 20,000 LED streetlights there by the end of this year. Future plans include the establishment of a major LED-lighting application center.

Outside of Jiangsu, Everlight is pushing its LED streetlights in Guangdong, Sichuan, and Hebei. It is also in talks with big mainland retailers, including Tianmu, about promoting its LED light bulbs there.

Everlight's chairman, Y.F. Yeh, is confident about the prospects for his operations in China, thanks to its status as Taiwan's top brand for LED light bulbs and the joint-venture's winning of CQC approval in China.

Yeh points proudly to the outstanding price-performance ratio of his products, with LED bulbs that sell for just NT$299 (US$10.3) in Taiwan.