China's emerging industries: what should be the next move?

China's LED industry has made great strides in the past two years. Under the favorable policies of the state and the rising income expectations of investment companies, a frenzy of investment has been set off.

Take Shenzhen as an example, since 2009, its annual steering subsidy in the LED industry is no less than 100 million yuan, and it has been increasing every year since then. The Guangdong Provincial Department of Science and Technology has set up special funds to support the development of the LED industry. During the "Twelfth Five-Year Plan" period, the Guangdong Provincial Government has invested 450 million yuan in this part every year.

However, policy support does not necessarily bring about the healthy development of the industry. In the fierce competition for market share, the LED market has overcapacity and lacks product specifications. In 2013, a number of LED companies closed down one after another, pouring cold water on the industry. Even large companies with a scale of more than 100 million yuan cannot escape this disaster. This is easily reminiscent of the once brilliant and now troubled photovoltaic industry.

In addition to the industrial predicament, the more troublesome thing is in the dark Things that happened. Some people in the industry said that in order to compete for special funds and obtain government LED projects, enterprises fully mobilize enterprise personal connections and government resources. Some people even stated clearly: "To apply for subsidies, the first step is to connect with the person in charge of the competent department to see who is more liked by the government."

The result is often bad. Some enterprise projects have not done well, but they have received tens of millions of government subsidies because of their good relationship with the government, but they cannot survive in the market with the ability of this enterprise.

Because of backward technology, many companies can only take the low-cost route to seize the market, and the final result of this behavior is the death of the company.

At this time, Li Xinghua, director of the Guangdong Provincial Department of Science and Technology, was censored. This person has an unusual relationship with the LED industry. Zhongshan, Guangdong is currently the area where the LED industry is relatively concentrated. According to statistics, there were more than 1,200 LED companies in Zhongshan in 2012, with an annual output value of 35.65 billion yuan.

These enterprises have sprung up under the strong support of Guangdong Province for the LED industry. In May 2012, it was proposed in the Implementation Plan for the Promotion and Use of LED Lighting Products in Guangdong Province that Guangdong would take the lead in promoting the application of LED lighting products in the field of public lighting. According to the plan, the scale of LED industry in Guangdong Province will reach 500 billion yuan at the end of the "Twelfth Five-Year Plan" period. Such "financial medicines" often appear in China. From photovoltaics to LEDs, China's emerging technology industries seem to be unable to escape the pattern.

Because of China's limited technological development and low level of marketization, it is difficult for market investment to produce a lasting driving factor for the industrial economy. The weakness of the market gave birth to the rationality of government intervention. Almost all of China's "emerging industries" flourished under the strong push of the government, and then overcapacity emerged.

Because of this, high government investment has left many hidden dangers. Just after Li Xinghua was investigated, people speculated about how big the industry shock would be. Individuals hold the power to distribute industrial funds. This reality will inevitably lead to power rent-seeking and ultimately make the technology industry a "hardest hit area" for corruption and fraudulent compensation.

In fact, the fundamental problem is that the government supports the development of emerging industries in terms of policies, but does not provide guarantees in terms of industry norms. For many high-investment technology industries, my country does not have core technologies, and often can only expand the market size with low-cost strategies.

Under this kind of thinking, few companies will really dive into technology and R&D. Many government projects have not really achieved the effect of helping the industry, and most of them have been reduced to financing means. Under the unfavorable market atmosphere such as a large amount of capital investment, immature technology and vicious competition, the risks of emerging industries such as LED continue to increase.

Nowadays, many businesses are on their guard. According to the latest statistics from the High-tech LED Industry Research Institute (GLII), in the first half of 2013, the new planned investment in China's LED industry was 37 billion yuan, a year-on-year decrease of 16%. However, the large-scale, high-intensity, large-capacity and fast-speed investment over the years has caused the economy to fall into a more serious structural imbalance and slow transformation.

It is reported that a senior person in the LED industry also said that government subsidies may not be a good thing for the industry itself, and sometimes affect the market to play its normal detoxification function. At the Guangdong Provincial People's Congress group discussion on July 31, a representative of the Guangdong Provincial People's Congress said: "Let the market choose, and the market will choose the most."

Many emerging technology projects are just Using a new concept to defraud government subsidies. Under the circumstance that the marketization process has not entered a benign track, the relationship between the government and the market has not been effectively rationalized, the market is still firmly controlled by the government, and the role of the market in resource allocation is seriously lagging behind, it is difficult for China's emerging industry development strategy to align Economic growth plays a positive and positive role.

However, the state's attention to emerging industries is undoubtedly relatively high, and the speed of corresponding policies is also relatively fast, and the intensity of some policies even exceeds market expectations. Whether the policy is a blessing or a curse for the industry is another question. If enterprises themselves can seize the opportunity and practice their internal skills, there may be dawn.