Pan Wenbo's company specializes in lighting fairs. Provided to China Daily

Pan, whose company specializes in organizing lighting fairs, believes Guzhen's lighting enterprises will see a decline both in production and exports in the near future.

"China's fast urbanization requires more use of energy-saving lighting products," he says. "Under the current trend of emission reduction in commercial projects, the country will see a climax in LED lighting for public and commercial use, which then offers huge potential for domestic lighting manufacturers.

"As most chips, a core part used in LED products, are bought from overseas, the price of LED lighting is still relatively high for domestic use. I believe the price will go down over the next 10 years if more Chinese manufacturers strengthen their technology and innovation to develop their own chips."

Guzhen's LED lighting manufacturers, many of whom still rely heavily on labor-intensive manufacturing, should therefore boost investment in research and development if they are to sustain growth, or even survive, he says.

"They have made huge market profits in the past. But they will gradually lose the LED market if they don't boost investment in technology and design," Pan warns.

Like Zhongshan, other cities in the Pearl River Delta, such as Shenzhen, Dongguan, Zhuhai and Yangjiang, also host many lighting manufacturers, most of which have transferred to LED products.

"But most of the exports are far from technology-intensive or high value-added. They are still involved in labor-intensive manufacturing, especially those based in Guzhen," he says.

"And now, after years of development in the lighting industry, they are lacking land and labor resources, especially professional talent in the LED lighting industry."

LED lighting manufacturers need more land to build factories for business expansion, he says.

"But now, you see, Guzhen has a shortage of land. It cannot support business growth for local lighting industries.

"Guzhen does not enjoy advantages in land resources, professionals and preferential policies (offered in other parts of the country). That's why there are not many big LED lighting makers in the township."

Many lighting manufacturers in Guzhen were first established as family workshops, he says, and some have made little progress in industrial upgrading, he says.

"After they made money, some manufacturers in the township turned to the real estate market. They tended to invest more in property rather than in upgrading the lighting business."

Recognizing this challenge, Guzhen's local government has established a production promotion center to help train and introduce professionals in the LED sector, as well as provide intellectual property rights protection for local manufacturers.

The township also plans to build a lighting institute to develop expertise and to organize an annual international lighting design competition to help boost local manufacturers' competitiveness in the global market.

"In the past, you would consider a Guzhen brand when you bought a lamp," Pan says. "But now you think of international brands when you buy a LED lighting product."

He has called on local businesses to learn more from leading domestic and international competitors about investment in technology and design.

Cooperation with the world's new LED buyers and designers will help lighting enterprises in Guzhen diversify their sales channels and boost competitiveness, Pan says, and international lighting fairs, such as the annual Guangzhou International Lighting Exhibition, will be crucial in that process.

"More importantly, leading international LED lighting manufacturers will show off their latest designs and technology at the fair, which will be helpful for domestic small and medium-sized enterprises to study."

qiuquanlin@chinadaily.com.cn