Government subsidies are a double-edged sword LED enterprise how to grasp the scale?

For the lighting industry, LED subsidies are obviously not a new term. The government has subsidized the LED lighting industry since 2009, and the central government has subsidized the semiconductor lighting industry for six consecutive years. With the support of subsidies, the LED industry, especially the LED chip industry, has indeed ushered in a spurt development. Since 2013, China's LED industry has ushered in a policy spring, from the State Council to local governments have issued policies to promote LED, the local government's call and the national promotion of green lighting projects have put LED lighting products on the promotion plan.

Government subsidies for companies to show performance

The development of LED enterprises is indispensable for government subsidies. Some studies have shown that domestic semiconductor and LED companies receive considerable government subsidies, and even some enterprises receive government subsidies accounting for nearly 50% of their regular profits.

According to incomplete statistics, the LED lighting industry "subsidized a brother" Sanan Optoelectronics from 2010 to 2015, the amount of subsidies exceeded 3 billion yuan. According to public data, in 2010, Sanan Optoelectronics received government subsidies of more than 700 million yuan, accounting for 60% of 2010 net profit; in 2011, government subsidies were 1.829 billion yuan, net profit accounted for 86%; in 2012, more than 3 The subsidy of 100 million yuan accounted for 60% of net profit; the subsidy accounted for 45.7% in 2013; the total amount of government subsidies in 2014 reached 1.28 billion yuan, the net profit ratio of subsidies was still around 50%; in 2015, the government subsidy was 89 million US dollars. , accounting for 28% of its current profit.

On January 6, Sanan Optoelectronics announced that the company's controlling subsidiary, Xiamen Sanan Integrated Circuit Co., Ltd., received a special investment support fund of RMB 150 million from the Xiamen Torch High-tech Industrial Development Zone Management Committee.

On June 30, Xiamen Sanan Optoelectronics Co., Ltd., a wholly-owned subsidiary of Sanan Optoelectronics Co., Ltd., received a net subsidy of 208.5 million yuan from the Xiamen Torch High-tech Industrial Development Zone Management Committee. Up to now, Xiamen Sanan Optoelectronics Co., Ltd. has received a total of 60.85 million yuan of subsidies for 53 chambers (4-inch single-chamber 31-piece models).

Dehao Runda is also one of the beneficiaries of government subsidies. From 2009 to the first half of this year, Dehao Runda's government subsidies for the current profit and loss were 8,100,300 yuan, 265,560,400 yuan, 310,264,400 yuan, 22,422,900 yuan, 23,023,900 yuan and 64,430,800 yuan, accumulatively included in the end of the period. The government subsidies for reporting profit and loss amounted to 110.084 million yuan. The net profit realized during the same period was only 85,562,226 yuan. The government subsidy was 250 million yuan higher than the net profit.

On June 23, Dehao Runda subsidiary 蚌埠三颐 Semiconductor Co., Ltd. received 90 million yuan of industrial support funds. According to the accounting standards, the subsidy is a government subsidy related to income and will be directly included in the current profit and loss, so it will have a positive impact on the company's 2016 profit.

On June 30, Huacan Optoelectronics issued an announcement stating that the company had received the “Reply from the Administration Committee of Zhejiang Yiwu Industrial Park on the grant of industrial development subsidies to Huacan Optoelectronics Co., Ltd.” and agreed to allocate Huacan Optoelectronics Co., Ltd. in 2016. In the second quarter, the industrial development subsidy fund was 50 million yuan.

On July 1, Ganzhao Optoelectronics announced that it received the seventh grant of the Xiamen Torch High-tech Industrial Development Zone Management Committee for a total of 37.548 million yuan.

In addition to Sanan, Dehao, Huacan, Ganzhao, Qinshang Optoelectronics, Hongli Optoelectronics, Guoxing Optoelectronics and other enterprises are the beneficiaries of subsidies. It can be said that the government's support and subsidies have helped the rapid development of China's LED industry. It is also the subsidy's “assistance” that enables enterprises to purchase high-value MOCVD equipment and have the funds to develop their own technology. ".

Government subsidies are a double-edged sword

The so-called subsidy refers to the financial or financial incentives provided by a government or any public institution to domestic producers or exporters, including cash subsidies or other preferential policies, so that their products are more enjoyable in the international market. Subsidized similar products are in a favorable competitive position.

For government agencies to give subsidies to LED companies, some people think that subsidies are conducive to the growth of local enterprises, while others believe that the government should not interfere too much in the development of the market economy. In fact, government subsidies are a double-edged sword for the entire LED lighting industry or enterprises, which can support the development of industry and enterprises to a certain extent. In fact, in recent years, China's LED lighting market has continued to grow, with rapid growth of more than 30% per year. In 2014, the traditional electric light source products retreated completely, and the penetration rate of LED lighting terminal applications continued to increase. In 2015, due to the impact of the global economic environment, the growth rate of the LED lighting industry began to slow down, and the industry entered a stage of comprehensive transformation and integration.

One of the main reasons for the rapid development of the LED industry is that it is inseparable from the support of the local government and the development of the industry. Among the LED companies in the fierce and fierce market competition, many local governments have given a large amount of subsidies and subsidies to corporate procurement. Effectively accelerate industry integration.

However, in the long run, the government's strong subsidies to support LED companies still have certain drawbacks. The United States has filed a lawsuit against the WTO on China's export subsidies. It believes that China's high subsidies have caused Chinese enterprises to gain unfair competitive advantages and interfere with the market. Foreign trade frictions have also become increasingly fierce. On the other hand, some enterprises have Government subsidies have a great dependence, using government subsidies to whitewash the actual situation of business operations.

All in all, government subsidies have advantages and disadvantages, depending on how the firm grasps the scale. If you use it well, you can improve your innovation and production capacity, and continuously improve the intrinsic value of the product. If you use it improperly, it may be overwhelmed in the tide of LED industry integration.

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