Conclusion Of Chinese CFL Subsidies Heralds LED Lighting Era

Conclusion Of Chinese CFL Subsidies Heralds LED Lighting Era
Energy efficient CFL bulb's hay day may soon be coming to an end. Chinese government CFL subsidies started in 2008 are to conclude, according to Chinese media CCTV2 on July 4, 2014. At present, the China Development and Reform Commission and the Ministry of Finance along with other relevant departments, are researching and promoting government subsidy policies for led lighting products. The subsidy's scope and amount will be adjusted according to the base characteristics of CFL lighting relative to those of LED lighting.  

“Subsidies for CFL lighting is coming to an end,” said a CFL manufacturing employee. The employee noted that their company is therefore switching towards producing LED lighting.

China based NVC Lighting is one such company that has made the move from traditional lighting to LED lighting. The company's LED lighting product revenue in 2013 reached RMB 741 million (US $119.5 million), making up 19.6 percent of the company's total income. Yankon Lighting saw revenue of RMB 983 million in 2013 for LED related products, an astounding growth of 170 percent YoY. Revenue proportion of the company's LED lighting products increased from 14 percent in 2012 to 31 percent in 2013.  

NVC Lighting's official flagship store promoted a preferential policy for all LED bulbs on June 19, 2014, allowing consumers to purchase NVC Lighting bulbs at lower prices. Through the subsidy, consumers were able to buy NVC Lighting 3W bulbs for RMB 9.9, 5W for RMB 16.9, and 7W for RMB 29.9.

Due to intense price competition within the LED industry, along with government subsidies, LED bulb prices are now as competitive as those of CFL bulbs. Some manufacturers are even offering LED bulbs at retail prices that are more alluring than CFL bulbs'. This has removed the previous pricing boundary that has kept LED bulbs from being used for household lighting.

“Consumers are already beginning to use LED lights for household lighting, at a pace which is gradually increasing,” said Wang Qing, Secretary of the Board, San'an Optoelectronics (San'an Opto). LED industry technology in areas such as sapphire substrate, chips, packaging, drivers, and optic design has not yet reached its peak, meaning that prices still have room to drop.

LED lighting product prices are clearly on the decline. According to LEDinside's latest LED bulb retail findings, average selling price (ASP) for 40W equiv. bulbs in China were down 12.8 percent in May 2014, with existing products having also dropped in price. Chinese manufacturer Haide Lighting Technology's 5W bulb ASP declined from US $4 to US $2.60. Moreover, a portion of high-priced products were temporarily terminated, such as bulbs by manufacturers Osram and Samsung. U.S. product ASP also dipped in May, declining around 8.3 percent. Products entering the promotional period showed a dramatic price drop. The insignia 9W bulb ASP for example declined 50 percent. Philips'9W dimmable bulbs showed a similar price decline.

The LED industry is facing a huge investment opportunity on the horizon, said an investment firm. China based manufacturers San'an Opto, Yankon Lighting, Honglitronic, and other related supply chain manufacturers are anticipated to be the biggest beneficiaries.  

Source: LEDinside