Interview with Cree’s General Manager of Business Development in China: Choosing Good Lights, Making Good Lights

LEDinside has recently interviewed Tung Guoqing, Cree Inc.’s general manager of Business Development in China, also authorized representative of Shanghai photoelectricity industry association and director of Chinese semiconductor lighting committee. Either on behalf of the lighting committee, or as Cree’s representative in China, manager Tang has shared with us the most valuable insights in the illumination industry and LED market in China.

 

Outlook of Chinese LED market: choosing good lights, making good lights

Tang Guoqing said that the illumination industry development in China has featured favorable government policies which have greatly boosted the growth of semiconductor illumination and LED lighting markets, with specific policies supporting different chains in the industry including technology development and promotion. And the government is likely to support the industry with the same effort as it used to do with the semiconductor IC industry. Quoting China’s Minister of Science and Technology, government’s encouraging attitude towards green energy industry is embodied in two projects, the “One Thousand Green Automobiles in Ten Cities” project and the “Ten Thousand LED Streetlights in Ten Cities” project.

As in the case of LED streetlights, there are already thousands of lights installed throughout the country, with LED streetlight installation projects being carried out in 6 cities in Guangdong province alone, which from the general perspective has been a significant drive for the semiconductor illumination section. And the street illumination field includes not only LED streetlights but also tunnel illumination, which still has much expanding space.

However, choosing eligible LED lighting products for street lighting applications poses a great challenge, noted Tang. He approves the use of LED luminaires, but not in a blind trend, and suggests “choosing good lights and making good lights”. He said that most manufacturers are currently eyeing the most challenging LED streetlights at the very beginning of entering the LED lighting field, though some of them haven’t possessed the required technology strength yet and are producing products of lower luminous efficacy than expected, the result of which is deepened doubt about the eligibility of LED streetlights from outside the industry. In fact, there are many technological obstacles to overcome when utilizing LED technology in street illumination applications, ranging from exterior, materials, LED chips, packaging, to assembling of final LED lights. High-tech supports are required throughout the manufacturing process, not just for the former steps as in many people’s opinions. Only given discreet consideration in every manufacturing phase can the high efficacy of LED streetlights be ensured.

To extend vision beyond street illumination to indoors illumination field

At recent conferences, Tang has proposed that LED manufacturers should extend their vision beyond outdoors and street illumination field to indoors illumination applications. The implementation of LED technology in indoors illumination applications are relatively easier as the problems of specification requirements under high temperature and sun and rain exposure are not involved. Nevertheless, there are also some challenges to be solved to make quality indoors illumination products.

At present, the government-led growth in street illumination market is most noticeable in China’s LED industry, with several cities, including Dalian, Hangzhou, Shenzhen, Dongguan and Shandong, all have launched LED streetlight installation projects. Now, as the chief light source, thousands of LED streetlights have been erected in these cities, which has significantly boosted the LED streetlight market in China.

Tang also mentioned that though a large number of LED streetlights have been installed in China, not all of the lights are performing satisfactorily. The main cause accounting for this is the technology factor mentioned above. Not all the LED packaging are suitable for light sources in LED streetlights, and the standards of lighting class LEDs haven’t been reached by all LEDs. Without careful choosing in each step of manufacturing, a company wouldn’t be able to make satisfactory LED streetlights. Among others, choosing high efficiency LEDs is one of the key points in making good LED lights.

Disputed definition of “home made” products; supporting attitude towards local manufacturing
When questioned with his opinion about the argued regulation that 60 percent of the LED components used in the “Ten Thousand LED Streetlights in Ten Cities” project must be China’s home made products, Tang answered that how to define home made products is itself much disputed. He added, if the imported LED chips are packaged in China, and assembled in China, then they should be regarded as home made products too. Taking Shanghai for example, he said, no matter the LED companies or manufacturers are invested by capital from U.S., Taiwan or Hong Kong, as long as they are developing in Shanghai and paying taxes, there is no reason why Shanghai does not support them. In one word, investing in China should be seen as a good thing as long as the company produces good products.

Tang holds that it is reverse the tide of the times to separate the home made products from the non-homemade products. It’s a brand new era now, an era when energy saving and high efficiency, as well as “made in China” is the most important. Both from his individual perspective and from the industrial perspective, foreign capital and local capital should be equally encouraged as long as the company enters the fair competition in the market, and is creating values and paying taxes in China. This attitude is also in line with the government’s scientific and sustainable outlook on economic development.

The release time of China’s LED streetlight standards will influence development of LED market
Though there has been some information about the relative plans on LED standards, like the four plans in the “Ten Thousand LED Streetlights in Ten Cities” project, which leads the market to expect the developing direction of the LED industry, while the concrete LED standards, due to discretion of prepare, are not to be officially released until the latter half of 2010, estimated by regular operating processes. As far as he knows, the main standards have been sent to relevant national departments to be reviewed, and will be officially passed after some time, said Tang.

These standards will include two parts, one is the LED lighting components standards drafted by Ministry of Industry and Information Technology, and the other is the LED luminaire standards drafted by Beijing Lighting Research Institute (BLRI) and other organizations, which has been handed in to be reviewed and officially passed.

There are many different saying about the portion of the RMB4 trillion stimulus fund to be spent in driving the LED industry. Some official files concerning the currently known part for the “Ten Thousand LED Streetlights in Ten Cities” project has just been released. At present, there are already 18 cities, not just 10 cities, which are implementing such measures.

The present situation of China’s general lighting market

Development of Cree in China

Under the leadership of Cree Hong Kong’s president and general manager Shi Yucan, the company has achieved great success in China market. Cree has absorbed excellent working teams and market accesses when entering China market, said Tang, and the company has employed these sources to realize its development in both low power LED and high power LED parts, while acclimatizing itself to the mainstream local society and market at the same time. Through efforts of the local teams, Cree has taken on its social and commonweal responsibilities as a multinational company in China, and has seized a higher market share than its competitors in the country. Meanwhile, Cree has done much contribution in the introducing of white LEDs into Chinese market and the forming of the industry chain together with many local LED application manufacturers.

Cree has participated in many significant projects in China, including Beijing’s No.1 Display of China, Olympic Water Cube Stadium, Olympic Bird's Nest Stadium, and the 26 LED displays above the Bird's Nest Square.

Cree will continue to enhance its development in Chinese market, both in promotion and penetration in the market. The company plans to hold promotion conferences and new product launching events in the big cities in China every month, and will stick to the pragmatic style by standing on customers’ behalf.

Tang points out that Cree’s marketing pattern in China is different from that of the other companies. It has its own direct selling teams and two excellent deputy distributors to cover the whole market in China. Cree is to establish a new company in Shanghai and a subsidiary in Shenzhen, and will operate the companies in coordination. He further mentioned that reasonable cost performance of products and localization of the company are both of much importance for a foreign enterprise.

Viewpoint of LEDinside

From the angle of a foreign company, Tang points out that “made in China” could be the bottom line of the definition of “home made products” in China’s streetlight market. Therefore, the LED manufacturers intending to expand their business in China must seriously consider the problem of localization.

Cree’s fast growing in China is accounted not only by its advantages in product specification and technology, but also by that it has absorbed and localized the existing accesses and staff teams after purchasing the local packager COTCO Opto Technology. Cree’s success pattern in China provides a valuable example for foreign LED manufacturers planning to step into Chinese market.

Besides, the demand in China’s LED streetlight market has brought much growing momentum to the country’s LED illumination industry, and helped improve the overall output of high power LEDs. But as many factors are to be considered, not all the LED manufacturers have got stable and continuous orders.
 

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