Is LED Lighting the Next Solar War With China?

China could be getting into another low-cost price war, but this time it’s not in solar, but LED bulb manufacturing.  

As with solar, the government is propping up LED manufacturers with lavish subsidies and they are taking market share from innovators in the US, Europe and Japan, which developed them in the first place, reports the NY Times. 

Until this last year, the hundreds of factories in China operated way below capacity, but now demand is surging and the race is on to provide bulbs at the lowest prices.

Yes, LED lighting is taking hold thanks to the US phase-out of inefficient incandescents and efficiency provisions in other countries. Since lighting accounts for about 6% of the world’s greenhouse gas emissions, switching to LEDs can make a big difference quickly. 

LED Street Lights

"LED lighting could become the next solar, wind or other future opportunity that the U.S. will have given away by failing to address Chinese industrial policies and unfairly traded products," Michael Wessel, a member of the US-China Economic and Security Review Commission, told the NY Times.

China has already grabbed about 30% of the global market, Alice Tao, a lighting analyst at IHS Technology, told the NY Times, and Japan, South  Korea, Germany, Taiwan and the US are splitting the rest fairly evenly.

Retail prices for LEDs are 50% less for Chinese-made bulbs just in the past year. They are churning them out fast and furious to beat out other countries – and intense competition within China. While LEDs made elsewhere cost 15-20% less, people are noticing the difference in quality.

Poorly made LEDs can emit strange looking colors and burn out in less than a year, turning big lighting purchasers away. Xicato, for example, which provides lighting systems to retailers and hotels, is paying a third more from LED specialists such as Cree (Durham, NC), Philips Lumileds (San Jose, CA) and Osram Opto Semiconductors (Regensburg, Germany).

To take care of the problem, Chinese firms are investing in upgraded equipment, but selling lights at such low prices puts them at the same risks the solar industry ended up grappling with there. After flooding the world market with cheap solar panels, even Chinese companies couldn’t make a profit. They are still recovering from that debacle.

Read our article, The Future for LED Lighting: Improving Health & Mood.

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