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As LEDs Gain Traction, China Struggles with Quality

June 20, 2014 By Karen Henry

shanghai-LED-energy-manageIf China wants to retain its 30 percent share of the global LED market, it is going to have to address quality and reliability issues of its LED products, the New York Times reports.

There has been a surge in global demand for LED lighting products over the last year, thanks in large part to American, European and Chinese energy-efficiency rules that phase out the use of incandescent bulbs. China has its lighting factories running at a breakneck pace to keep up with the booming global demand, and so far it has been able to churn out LEDs faster and cheaper than its global rivals. That churn, however, has not come without a price. Although China has the capacity to keep up with growing demand, some lighting buyers have begun to shy away from China-made LED products, citing issues with light quality and reliability.

Instead of lasting a decade like well-made LEDs, some large buyers are warning that China’s low-priced LEDs occasionally burn out after less than a year or begin to emit strangely tinted light that may leave a room looking slightly pink, green or “rainbow sherbet” colored. So even though American-brand LEDs typically cost a third more than Chinese LEDs, some buyers are considering a switch to American-made LEDs to avoid these issues, says the NY Times.

Part of the reason China has been able to keep the price of its LED products so low is because of heavy subsidies on bank loans. In the years after the global financial crisis in 2008, Beijing directed banks to provide China’s solar and LED industries with huge, low-interest-rate loans to help finance green energy projects. Today, many Chinese companies are struggling to make a profit. If state-owned banks stop financing the Chinese industry with low interest rates, consolidation may be inevitable.

China is making moves to turn its reputation, and profitability, around. Chinese companies started ordering considerable new equipment from Western suppliers early this year, which could improve the reliability of its LED products. It is also encouraging greater domestic demand for energy-efficient lighting and moving away from subsidies.

Photo credit: The Expo Boulevard in World Exposition in Shanghai, China. Photo by Tito Wong via Shutterstock.



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