Tricky switch to lighting a new world

Wei attributes the glowing rise in the LED lighting industry in part to the Guangdong government's policy of promoting energy-saving lighting products in all uses across the province. By the end of the year, about 2 million traditional road lamps in the province should be replaced by LED ones.

Outdoor and commercial lighting is driving the LED industry for the time being, but Pan Wenbo, president of Guangzhou Guangya Exhibition & Trade Co, warns of gloomier scenarios.

Pan, whose company specializes in organizing lighting fairs, believes Guzhen's lighting enterprises will see a decline both in production and exports in the near future.

"China's fast urbanization requires more use of energy-saving lighting products," he says. "Under the current trend of emission reduction in commercial projects, the country will see a climax in LED lighting for public and commercial use, which then offers huge potential for domestic lighting manufacturers.

"As most chips, a core part used in LED products, are bought from overseas, the price of LED lighting is still relatively high for domestic use. I believe the price will go down over the next 10 years if more Chinese manufacturers strengthen their technology and innovation to develop their own chips."

Guzhen's LED lighting manufacturers, many of whom still rely heavily on labor-intensive manufacturing, should therefore boost investment in research and development if they are to sustain growth, or even survive, he says.

"They have made huge market profits in the past. But they will gradually lose the LED market if they don't boost investment in technology and design," Pan warns.

Like Zhongshan, other cities in the Pearl River Delta, such as Shenzhen, Dongguan, Zhuhai and Yangjiang, also host many lighting manufacturers, most of which have transferred to LED products.

"But most of the exports are far from technology-intensive or high value-added. They are still involved in labor-intensive manufacturing, especially those based in Guzhen," he says.

"And now, after years of development in the lighting industry, they are lacking land and labor resources, especially professional talent in the LED lighting industry."