China"s Corrupt LED Industry Can"t Avoid Unwritten Rules?

unwritten-rules

After a year full of strife in 2013, the LED industry has finally seen signs of market rebound. As China gradually establishes national LED standards, leading enterprises have also increased R&D. The LED industry’s oversupply frozen state is gradually being melted away, and the industry is opening up to a new phase of explosive growth, according to a Chinese Business News report.

Energy efficient, long lifetimes are all technological advantages of the LED industry. However, LEDs, which once showed huge room for growth has no doubt became a “sunset industry” in China, due to messy addition of unwritten rules that are creating chaos in the LED industry.

Guangdong Provincial Department of Science and Technology (GDSTC) Head inspection case reveals LED industry’s government subsidiary “mess”

How close a local officer and industry can be, might beyond your imagination.

GDSTC Head Li Xinghua is under inspections due to serious violations, according to Guangzhou Disciplinary Inspection Committee (GDIC) press release published on July 26, 2013. The Chinese LED industry has been in heated discussion on this issue, with those in the industry estimating there will be further industry shakeups, with wide extent of involvements. There are even those in the industry that believe, the Guangdong Province’s LED lighting for public area plans will be affected.

China Business News interviewed many LED industry insiders recently. Those in the industry recognized the Guangdong Province government’s promotion and contributions to the development of the LED industry, but noted the lack of transparency in the industry for applying for government subsidies. This has resulted in companies to put on pretentious guises for their personal gain, and to obtain further subsidies.

Companies respond to Guangdong LED government policies

The GDIC press release has ignited social discussion in China. Many in the LED industry have used Weibo.com, Alighting.co blogs, and other public social platforms to voice their opinions. A lot of those in the industry are speculating whether the incident will result in the end of Guangdong Province’s three-year promotion of public LED lighting policy. Some in the industry have also joked, “we are uncertain as to how many people have gone sleepless during this period.”

Compared to individuals, companies have remained rather silent.

Guangdong has more than 6,000 LED companies, but only two to three percent are able to receive subsidies. Many of these are listed and domestic companies. What exactly are large companies with the “bid-awarded enterprise” halo thinking about? And what have been some of the effects?

Unveiling corrupt LED industry’s “unwritten rules”

Corruption is coined as “political tumor”, and is a serious issue in the LED industry. Some government officials, who hope to achieve personal goals, have been promoting labor intensive and costly projects. Somes have been trading under the table to increase their income, while others have fallen at the feet of women and were later reported. China’s road to corruption became more evident starting from China’s five-year plan in 1982. A review of China’s anti-corruption measures and struggles over the last 30 years reveal China’s anti-corruption evolution. Chinese rulers have never loosened their grip on fighting back corruption, or their study of anti-corruption methods.

In regards to government officials corrupt and unjust conduct, the party will impose strict rules, and tighten its grip on issuing punishments, said Chinese President Xi Jingping during the plenary session at the Communist Party of China (CPC) on Jan. 22, 2013. The party should insist on beating down both “tigers and flies”. However, for the LED industry, there has always been corruptive bidding and subsidiary practices that have not been suppressed. Are not these conditions also unwritten rules that have been difficult for industry insiders to avoid?

Correcting LED industry’s corruptive practices requires government intervention

People are familiar with the corrupt union of politicians and businesses. When angered people call this collusion, corruption and graft. Many times the public recognizes this as a social phenomenon, an unwritten economic rule. This has currently become a very sensitive topic in the lighting industry, which is based on the blurred boundaries between the lighting industry and government work division.

Li’s inspection has aroused much public interest. Whether its Shanxi’s 2 billion street light’s congregated tenure, many companies failed bids, to Shenzhen’s termination of the LED industry’s seven year development project; all these have revealed collusion between government officials and businesses. Corruption which has transcended from a century old issue to the modern era has become bad option that companies have taken as a matter of fact. Companies must be organized by governments, founded through joint government ventures, or monitored by the government and operated by businessman. To conclude, the LED industry development, specifically the lighting industry’s business model has been hovering between collusion models, and marked with uncertainty.

China"s Corrupt LED Industry Can"t Avoid Unwritten Rules?