China’s resolve to embrace energy-efficient lighting unleashes a powerful market potential
　　
　　While a lot of attention has been focused on China’s energy shortage, there seemed to be little emphasis on making lighting, which consumes as much as 12 percent of the electricity produced in the country, more energy efficient. Until fairly recently, that is.
　　
　　The Chinese Government and companies are promoting the use of light-emitting diodes (LEDs) as a way to help ease the energy crunch. LEDs basically feature semiconductors that generate light when a current is passed through them. Unlike the traditional incandescent light bulb, which generates light by heating a filament until it glows, LEDs have proven to be highly energy efficient, experts said, noting that in theory they consume one tenth the electricity required by incandescent bulbs and half that of fluorescent lights.
　　An official survey shows that over 300 billion kw-hours of electricity are spent on lighting in China each year. According to experts’ estimates, if over the next 10 years LEDs were to take 30 percent of China’s lighting market, the saving would be 58 billion kw-hours per year, almost as much as the annual output of the Three Gorges Dam, the world’s largest hydropower plant under construction at a cost of over $24 billion.
　　Sealed tight with such materials as epoxy resin, LEDs have a firm structure that enables them to last 100,000 hours, 10 times longer than fluorescent lights and 100 times longer than incandescent bulbs. In addition, LEDs are more environmentally friendly than fluorescent lights, which may cause mercury pollution if they break.
　　LEDs are widely used in cell phones, computers, digital cameras and cars. They have also been used in indicators on the panels of some electric appliances and television remote controls. Scientists also use LED lamps for sterilization and air purification in the medical field, and for promoting the growth of farm crops. Since they do not kindle sparks, LEDs can serve as a safe lighting source for miners. They can also be made into traffic lights and equipment indicators, and used for decorating city landscapes.
　　Zhongshanlu Street in Xiamen, a prosperous tourist city along China’s southeast coast, was once known as one of China’s 10 most famous streets. It had lost its status as Xiamen’s business center to other newly emerging commercial districts. In 2004, the city government decided to revitalize the century-old commercial street. While converting it to a pedestrian street, the government resolved to raise its profile with the launch of a “night view project.”
　　Now, when night falls, Zhongshanlu is ablaze with colorful lights. With a modern new look, the street attracts legions of visitors every night. In peak time, the number of visitors can reach over 100,000 for one single night. Local government statistics show that the monthly retail sales along the street have grown 30 percent to 50 percent. Part of the secret behind this success lies in the LED lights that silhouette buildings along the street. Computer controlled, these lamps produce stunning visual effects unrivaled by conventional devices such as neon lights.
　　
　　Government promotion
　　
　　The LED industry promises great prospects. Experts generally believe that between 2010 and 2015, the optoelectronic industry may render obsolete the traditional electronic industry to become the biggest business in the 21st century and an important measure by which to judge a country’s economic development and comprehensive strength.
　　Since LEDs lay the foundation of the optoelectronic industry as its most crucial component, many governments have drawn up plans accordingly.
　　China established a national coordination team for the LED lighting project on June 17, 2003. It was decided that the period until the end of 2005 would be a preliminary stage, during which key technologies would be developed and the overall strategy for the LED industry and implementation plans would be formulated as part of the nation’s medium- and long-term scientific and technological development plan. Over the next five years, beginning this year, the government will set out to promote the industry in earnest.
　　With the approval of the Ministry of Science and Technology, Shanghai, Dalian, Nanchang, Xiamen and Shenzhen will become bases of the LED industry.
　　Shenzhen set up an industrial base for the semiconductor lighting industry in its Guangming Hitech Park last June. It aims to establish over 200 companies covering all segments of the LED industry with an annual sales volume of nearly 100 billion yuan and annual foreign exchange earnings of over $2.5 billion by 2010.
　　In the capital of Jiangxi Province, the city government plans to create the industrial fabric by relying on Nanchang National Hitech Industrial Development Zone and Nanchang University. While looking to commercial enterprises to be major investors, the local government earmarks 6 million yuan each year to support research and development, help shape a platform for technological development and subsidize loans.
　　It will also concentrate on building two national LED technology research centers to integrate the city’s human resources and enhance its ability to be innovative. The city’s objective is to make its semiconductor lighting devices, display lighting and LED lamps an industry with an annual turnover of 10 billion yuan by 2010.
　　Xiamen has prioritized the optoelectronic industry and renders support to its development in terms of government policies and budget. The city’s hitech zone has decided to establish an “optoelectronic incubator.” Giving full play to its experience and advantages in nurturing businesses, the city gives special care to small and medium-sized technology enterprises engaged in this field in the spirit of stepping up their development. In addition to helping individual companies, the city is committed to promoting the development of the LED industry as a whole to shape a complete industrial chain.
　　In the last couple of years, Taiwan, the world’s second largest LED manufacturing base, has been outsourcing work to the Chinese mainland. At present, one third of Xiamen’s large optoelectronic companies are from Taiwan. Experts have projected that Xiamen’s optoelectronic industry will rise to become a 20-billion-yuan business by 2010.
　　A rough calculation based on the objectives of the five industrial bases indicates that the size of China’s LED industry will be over 150 billion yuan by 2010.
　　
　　Companies jump in
　　
　　China will be the leading edge of the solid-state lighting revolution. Robert C. Walker, CEO of eLite Optoelectronics, a California-based supplier of LEDs, made this bold assertion at an investor conference in Boston not long ago. Walker is also a senior adviser to the Chinese Government’s solid-state lighting committee.
　　“LEDs can be used anywhere light is needed,” said Ted Huang, CEO of Allray Inc. “Even if they are used to replace only the millions of general-purpose illumination lamps, there will be an immeasurable market potential.” He estimated that LEDs would represent a $50-billion market worldwide and a 60-billion-yuan market in China by 2010.
　　He pointed out that China’s LED industry is in a period of steady growth, as evidenced by the jump in annual revenues from 12.5 billion yuan in 2004 to over 25 billion yuan in 2005.
　　Huang formerly was an LED researcher at the State University of New York. Resigning his post as the chief scientist at a flight research center under the U.S. National Aeronautics and Space Administration, he returned to China with a group of U.S.-educated doctors several years ago and established Allray Inc. in Jiangsu Province.
　　Developing and producing world-class optoelectronic equipment, the company is among the leaders of China’s LED industry, boasting a considerable profit margin. A company executive estimated the firm’s annual revenues at more than 500 million yuan given normal operations of its market-ready projects.
　　Outdoor decorative lighting accounts for almost a quarter of China’s LED market, which was worth $1.4 billion in 2004. In southeast China’s Fujian Province, the consumption of white LEDs is running at 500 million units a month.
　　The 2008 Olympics to be held in Beijing and the 2010 World Expo in Shanghai have given the Chinese opportunities to show off their cities to foreign tourists. This eagerness is expected to provide an impetus to LED technology’s application in landscape lighting.
　　Given the fact that 10 percent of the lights in the Beijing subway system have to be replaced every year, maintenance costs will surely be cut if long-lasting LED lights are used instead.
　　Today, billboards in Chinese cities are mostly illuminated by spotlights that cast extremely strong light on the signs. Since they don’t depend on reflected light, LED devices will prove to be a better choice for advertisers.
　　According to a report released by China’s national coordination team for the LED lighting project, urban landscape lighting will comprise a 20-billion-yuan market by 2008, becoming the biggest area for LED application.
　　However, backward technology constitutes a stumbling block for the development of China’s LED industry, according to some insiders.
　　Huang considers China’s LED industry to be at the “fledgling stage” compared with countries and regions where the industry is relatively developed, as it lags far behind in terms of technology, size and production capacity. “The annual turnover of the LED industry on the Chinese mainland is about $1.5 billion, less than half the 2004 figure in Taiwan of $3 billion, and even less than that of a single Japanese company in 2004 of $2 billion,” he said.
　　Despite this, many Chinese optoelectronic companies like Allray have made up their minds to work their way up the value chain. Faced with the harsh reality that many LED products, high-end ones in particular, still have to be imported, an increasing number of Chinese companies vow to overcome that deficiency.

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