Looming concerns

A recent research report from the Guoyuan Securities Co. Ltd. said China's LED industry is getting into full swing, and LEDs are widely used in cell phones and liquid crystal television. But they are yet to be widely accepted as a general lighting source, it said.

"The biggest problem is high costs—its manufacturing cost is 50-60 times that of incandescent lamps," said the report.

"Without government subsidies, it would be difficult to promote LEDs as general lighting, but elimination of incandescent lamps has provided a powerful catalyst for the promotion of LEDs," it added.

In 2008, the NDRC and MOF launched a lighting program and distributed more than 400 million energy-efficient lamps to consumers. But the program encountered many problems, hindering further promotion of those lamps.

Energy-efficient lamps contain mercury, a neurotoxin that can pose a serious threat to environmental health. The amount is tiny—China, as well as the European Union, allows each fluorescent lamp to contain no more than 5 milligrams of mercury—but that is enough to cause acute environmental damage and has sparked worries over the disposal of those lamps.

Hua Shuming, Director of the National Lighting Test Center, said the service life of a qualified energy-efficient lamp is more than 6,000 hours, six times that of an incandescent bulb. A 13-watt energy-efficient lamp can produce illumination comparable to that of a 60-watt incandescent lamp, and it is able to reduce electricity consumption by 60-80 percent.

Energy-efficient lighting products are being recognized by global consumers. Data from the NDRC showed that Chinese energy-efficient lamps controlled 85 percent of global markets, up from only 20 percent in 1996.

Fluorescent lamps use electricity to stimulate mercury vapor. The mercury atoms produce short-wave ultraviolet light that then causes a phosphor to fluoresce, producing visible light.

Some people suggested manufacturers recycle the lamps, but that was less feasible given the high costs.

"Indeed, it is difficult to establish a nationwide recycling system in such a big country," said Xie. "What we are doing is further improving technologies to decrease the mercury content of such lamps."

Moreover, the high prices of energy-efficient lamps are also impeding the consumer acceptance.

In China, an LED lamp costs nearly 100 yuan ($15.75), compared with less than 10 yuan ($1.57) for an incandescent bulb. That is also why most Chinese LED manufacturers have focused on exports, instead of the home market.

Chinese LED firms still have a long way to go to sharpen their competitive edge. Chinese companies are good at assembly production, but one cause for concern is a lack of core chip technologies. U.S. and Japanese companies have dominated chip technologies, leaving Chinese firms in a weak position to compete.

Worse still, domestically made LED lamps suffer from the problem of a short battery life. As a result, it would be critical for domestic enterprises to strengthen efficiency and extend the service life of batteries so as to make their LED products more market competitive.