Wang Donglei: No longer rely on government subsidies

On June 9th, during the Guangzhou International Lighting Fair, BDO Runda Chairman Wang Donglei responded to questions from the outside world for the first time. He said that BDO Runda's goal is to hit the top three global LED industry in the next five years.

This year's performance is no longer dependent on government subsidies. Since the second half of last year, many major LED listed companies, such as BDO Runda and Sanan Optoelectronics, have been questioned on many occasions. They have allegedly underemployed and rely on government subsidies to “eat”.

In this regard, Wang Donglei did not evade. He admits that last year the global LED chip industry fell into a loss, the German tycoons rely on government subsidies to tide over difficulties. The LED lighting market has recovered faster than expected this year, and government subsidies have basically ended last year. "This year's rapid growth in the market (for BDO) will bring profits, and the profitability level may not be as good as the level of government subsidies, but this is a real profit."

Government subsidies have enabled China's LED industry to quickly find a place in the world in just three years. Wang Donglei recalled: "In this industry, there is no government order can not develop, 5000 yuan a trip to the LED street lights, when the government did not buy, no one would buy. LED is a new industry, the previous government to push it, it is normal to support it ."

However, government subsidies have also brought about "side effects" of LED projects blindly launched, overcapacity and waste of resources. Wang Donglei bluntly stated that China has nearly 1,000 MOCVD devices that produce LED chips. “If these 'burners' are all opened up, they can basically meet 80% of the world's LED lighting needs. But China's furnace can be less than 40%.”

"MOCVD equipment is mainly purchased by government subsidies, and there is no economic scale." Wang Donglei said that more than 30 stoves can reach the break-even point, China has only Dehao, Sanan, Zhongke, Tsinghua Tongfang and other 4 to 5 The factory reached more than 30 stoves. "Others are all under 30, making a single loss and a single bill. Moreover, these stoves have government subsidies. The government is mostly unwilling to take these stoves out of the country."

Dehao now has 92 MOCVD equipments, which have been adjusted to full production capacity. After the arrival in June this year, there will be about 110 sets of equipment. "This is enough." Wang Donglei believes that because of the excess capacity of LED chips, China's investment in the LED industry should now focus on the downstream, including brands, channels, and lighting fixtures. "The same investment, investing in lighting, has 10 times more sales than the chip and has a higher gross profit."

Last year, the LED chip also made money. Last year it lost a lot. Wang Donglei estimated that this gave the government a wake-up call and that the subsidies for MOCVD equipment had basically reached the end. “I cannot see that the government will give subsidies.”