The status quo, hidden troubles and reforms of domestic financial industry "fiscal subsidies"

As the LED market began to pick up, the editors ofweek talked about financial subsidies. First of all, financial compensation is a double-edged sword. It is necessary to grasp standards to prevent companies from suffering from financial dependency; Second, financial subsidies to promote LED all the way to sing, financial incentives, special support, equipment subsidies and other LED financial supplements in various forms; third The financial subsidy induced industrial chaos led to one-on-one analysis of the price system being reversed, the fraudulent incident being continued, and the original pattern being broken.

State of Financial Subsidy (1)

As a leader in lighting, LED luminaires are highly favored by people in the industry and consumers. In recent years, the LED industry has frequently received good news. One favorable policy has been gradually introduced to promote the development of the industry. As the nation's LED province, Guangdong Province, in 2012, said that Guangdong will fully popularize LED public lighting within three years. With the country’s favorable policies and investment companies’ rising revenue expectations, China’s LED industry is advancing all the way, setting off a frenzied wave of investment.

Expenditures for generous support for subsidies

The development of LED industry so far, the introduction of policy subsidies followed, from upstream equipment to downstream application procurement. Local governments have generously and generously subsidized various LED companies. Some even reached alarming levels, and the phenomenon of hundreds of millions of people frequently occurred. From 2009, Shenzhen’s annual steering grant in the LED industry is no less than 100 million yuan, and it is growing every year thereafter. The Guangdong Science and Technology Department set up special funds to support the development of the LED industry. During the “Twelfth Five-Year Plan” period, the Guangdong Provincial Government invested 450 million yuan in this part of the year.

On July 30th, the "Preferential Measures for Supporting the Development of Strategic Emerging Industries (Green Light Sources) in Jiangmen City" was reviewed and passed at the 30th executive meeting of the 14th session of the Jiangmen Municipal Government, and it was formally implemented. Since April of this year, local governments have continuously introduced LED industry support policies. On April 8th, Jiangmen City has granted 20% of the total purchase price for purchasing public lighting in the LED product catalog products of the city and lighting projects for institutions and institutions. On April 9, the Jiaxing municipal government took the lead in introducing the LED semiconductor lighting industry local support policy "Jiaxing City to speed up the development of LED semiconductor lighting industry, a number of opinions", April 10, Foshan Science and Technology Bureau, Hu Xuejun revealed that Foshan will follow the LED The lighting promotion application will complete 10% of the total project and subsidize the investor.

Liang Qianwen, deputy secretary-general of the Zhongshan Lighting Industry Association, said that Guzhen Town of Zhongshan City has also introduced many financial subsidy policies for the lighting industry. It is only that some entrepreneurs only care about doing business and do not pay attention to the government’s supporting policies.

With the support of local governments at all levels, LED industry parks are springing up. In recent years, the average annual growth rate of LED industry has exceeded 20%. At present, China's LED industry has formed the four major regions of the Pearl River Delta, the Yangtze River Delta, Jiangxi, Jiangxi, the northern region, Dalian, Shanghai, Shenzhen, Nanchang, Xiamen, Yangzhou, Shijiazhuang seven bases of the industrial structure.

There is no shortage of forms of financial subsidies that can be filled

Cheng Qian, general manager of Zhongshan City Bo Rui Import and Export Co., Ltd. said that at present, there are many types of policy support for the LED lighting industry, the most important and the most critical of which is the financial subsidies. There are many types of subsidies, mainly early R&D subsidies, industrial subsidies, demonstration subsidies for mass production, promotion subsidies, equipment procurement subsidies, and some export subsidies. Divided from the perspective of subsidized issuing units, they can be divided into central ministries and subsidy and local government subsidies, and these subsidies cover almost every aspect from research and development to application.

The forms of subsidies vary, including financial subsidies, financial incentives, special support funds, loan interest subsidies, and equipment subsidies. It is understood that in the subsidy regulations issued by several industries, the main form of subsidy is price subsidy, which means subsidizing the buyer based on the actual transaction price. The price subsidy is the “dark cover” in the financial subsidy, and the subsidy amount is generally paid by the sales company first, and then the subsidy is received based on the sales invoice and related certificates.

In addition to direct subsidies, tax relief is another way of subsidizing consumption. Compared with “non-compliance”, for energy-saving and environment-friendly industries, “Mingbu” has even more impact on the development of the industry, that is, direct financial subsidies to the upstream industry.

In many new energy and companies with “green companies” aura, this subsidy has even become a major source of profit. In the slogan of the industrial upgrading of local governments, a large amount of financial subsidies were invested in these new energy and new technology industries.

There are high and no new equipment subsidies that will hit hundreds of millions more

"A MOCVD machine, the government subsidy three or four million." An informed source told reporters that some subsidies even exceed 50% of equipment prices. For the LED upstream chip production machinery, the government also gives high subsidies.

In 2010, BDO Runda purchased hundreds of MOCVD equipment. At the time, Yangzhou City and Wuhu City provided MOCVD equipment for local companies to provide subsidies of 800-1000 million yuan each. Even according to the minimum standard of 8 million yuan/station, the BDO Runda subsidy will exceed 1 billion yuan. The Wuhu municipal government gave Sanan Optoelectronics to purchase 200 MOCVD equipment subsidies, enabling Sanan Optoelectronics to receive equipment allowances of RMB 525 million in 2010, and the amount of subsidy can be described as high and low.

"Indeed, the government's subsidies for high-tech equipment are very high," Cheng Gan told reporters. In the same way, Jiangmen also gave the corresponding subsidy policy: the total investment in equipment for a total investment of 50 million yuan (including 50 million yuan) will be subsidized by 6% of the total amount of equipment, and if the total investment in equipment is more than 50 million yuan, it will exceed 50 million yuan. Give 8% funding subsidy.

Inadequate SMEs Without Financial Subsidy

In order to respond to the national energy-saving emission reduction call, local governments have successively introduced relevant LED industry support policies and subsidy policies, which cover various aspects such as capital, land, scientific research, taxation, talent introduction, equipment purchase, etc., and the fiscal subsidy policies that were introduced before, more. It tends to subsidize listed companies and tends to subsidize government projects.

An industry source told reporters that the government has been favored to subsidize the upper reaches of LED. Sanan Optoelectronics, BDO Runda and other listed companies have subsidized credits in varying degrees in their subsidy policies. The listed company Sanan Optoelectronics had a profit of 667 million yuan in the third quarter of last year, and the subsidy was as high as 328 million yuan, accounting for nearly half of the total. Coincidentally, BDO Runda had a net profit of 120 million yuan in the middle of last year and government subsidies amounted to as much as 150 million yuan.

However, most SMEs do not have financial subsidies. Cheng Gan said: "Not all LED companies can receive subsidies, depending on whether your company has reached the standards, such as exports, equipment and facilities, technology, etc., which must be assessed."

Double benefits for improving performance, high subsidies, and tax reductions

An LED business owner said that the recent rapid development of LED in the past two years, inevitably the preferential policy subsidies, under the policy support, many companies grow bigger and bigger, performance is getting higher and higher.

High subsidies directly pushed up the performance of domestic LED companies.

BDO Runda’s operating profit in 2011 was 146 million yuan, while total profit was 452 million yuan. Among them, about 300 million yuan in profits for its subsidiary, Wuhu BDO Runda, Yangzhou Dehao Optoelectronics won the government's “Three Science and Technology” subsidy, and Wuhu BDO Runda obtained high-tech enterprise certification, resulting in a lower income tax rate, and a smaller year-on-year payment. 27.63%. Sanan Optoelectronics (including its controlling subsidiaries) received the 13th fiscal subsidies in 2011, involving a total of 1.802 billion yuan in subsidies.

Financial subsidies hidden dangers (2)

On August 15th, a news item titled “The EU Warned China 5 Times: High Risk of Insulation of LED Lamp Cups” was wildly reprinted by major websites. Immediately, the European Union released the "Leading Energy Efficiency Regulations for LED Lighting Products". The LED lighting products exported to Europe starting September 1 must comply with the new energy efficiency standards and gradually increase the energy efficiency standards of LED lighting products in three phases in the next three years. . Why do LED products frequently suffer from quality problems? Why does the government strongly support and disregard huge subsidies? Why is the EU warned?

As early as in 2009, the Yangzhou municipal government took the lead in introducing the MOCVD subsidy policy. A MOCVD equipment can receive up to one million yuan in subsidies. At the beginning of the development of the LED market, it greatly stimulated the enthusiasm of entrepreneurs. Baoguang, Zhenmingli, Longyao Optoelectronics and many other LED epitaxial wafer manufacturers have stationed in Yangzhou, hoping to obtain a government subsidy. This move has attracted governments across the country to follow suit. In a flash, not only in Yangzhou, LED companies have “emerged everywhere” across the country, a thriving scene.

At the same time, people in the industry said that the extreme must be countered. Behind the prosperity, there are often hidden huge crises. Excessive investment in equipment has deepened the doubts oversupply of the LED industry. LED excess production capacity is an undeniable fact, and these are all obvious and deeper. The level of market trends, price systems and corporate development are unavoidably affected.

Over-financial distortions in the price system have fallen far beyond expectations

Yang Shiyu, general manager of Brand and Marketing Department of BDO Runda, said that the government’s financial subsidies are still positive for upgrading the LED industry and guiding consumer spending. This is because the government's financial subsidy, in addition to the help of funds on the equipment, will also carry out relevant tax deductions. As we all know, the price of LED lights is much more expensive than ordinary incandescent lamps and energy-saving lamps, but through price subsidies, combined with the promotion of energy-saving, low-carbon and other environmental factors, can effectively help companies open the civilian market.

However, how much can the price subsidy guide the consumption of the market? According to the reporter's understanding, the actual situation is not very optimistic. For example, a 3W LED bulb can reach a maximum price of 100 yuan at the beginning of the launch; by the end of last year, Mulinsen launched a 3W bulb with only 1 US dollar; today, the price of some small brand products is even Lower to freezing point, as long as 3 yuan. The big drop is unheard of.

According to estimates in the LED industry, the price reflection of 2.2 billion yuan in fiscal subsidies may drive a 15%-20% price drop in the product, and this decline is far more than the industry expected decline. Obviously, such price reductions do not require fiscal subsidies and market competition can be achieved. Financial subsidies may instead distort the market price system. The LED price wars have intensified and are more or less affected by subsidies.

The wealth of financial incentives to make up for the temptation to take advantage of risks to cover up scandals

LED financial subsidies are frequently tens of millions or even hundreds of millions of yuan, which is undoubtedly a fat piece for major companies. There are more folk tales: “Government subsidies, and income from income for three years.” It can be seen that the government subsidies are a big temptation for companies. This has led some companies to take risks and make skepticism. There are no projects that also make up projects, make false declarations, and defraud financial subsidies.

In June and July 2013, the National Audit Office successively issued a circular stating that Anhui China Energy Conservation Investment Co., Ltd. declamated 9.9 million yuan in subsidies for central government energy-saving key projects, and Guangdong Snowlight Optoelectronic Technology Co., Ltd. plunked 3.455 million yuan. Guangdong Dongguan 100% Technology Co., Ltd. made up 232,000 yuan.

Frequent fraudulent incidents have caused the government to be vigilant as well - raise the standard for reporting subsidies. However, industry insiders said that this is only a "temporary solution", or even just to narrow down the scope of the declaration of the company, can not ignore its fundamental.

"Empty Gloves and White Wolves" Disturb Structured Indirect Directorial Resource Mismatches

“The government’s great support for the LED industry is very likely to cause misunderstandings from the outside world.” Zhong Zhongdong, deputy general manager of Zhongshan Qiteng Lighting Electric Co., Ltd., told reporters, “With the government’s support, what the outside world sees is only this industry. The bright spot, and then blindly entered the field, only to gain a slice of the industry in the early stages of development. Their joining, but also for those of us who originally do LED feel great pressure."

As Dan Zhongdong said, high subsidies have indeed attracted a large number of other industries involved in LED. When people mention the United States, people think of home appliances first. It is true that Midea Group is a leader in the field of home appliances. But now it has set foot in LED; BYD Group's main business is automotive, but it can not help but banned the financial incentives of "induction", officially entered the LED in 2010; there is a lamp of the emperor wolves, its predecessor is the production of mobile phones, and now also in the field of LED lamps The development has taken off.

So many other industries plugged into LED, not only broke the original LED market structure, but more importantly it will create illusions - LED demand is extremely strong. Due to the influence of unreal "domestic demand", the company made mistakes in decision-making, blindly entered the LED field or increased productivity, and even some small workshops staged the drama of "empty gloves and white wolf", which led to serious overcapacity of current LED products. Quality is mixed. In policy incentives and fiscal subsidies, resources are misallocated, and local governments and enterprises are desperately competing for projects, competing for subsidies, conducting enclosures, and repeating construction. Fiscal subsidies, a double-edged sword, disrupted the market's original orderly competition and led many leading companies to lose market acumen.

Financial compensation induces companies to rely on "addiction" or forcible agents

When it comes to government subsidies, it has to say that Sanan Optoelectronics and BDO Runda are two companies. It is understood that Sanan Optoelectronics and BDO Runda are probably the two companies that currently receive the most financial subsidies. Sanan Optoelectronics obtained a government financial subsidy of RMB 172 million for its "Sapphire Project". In 2011, BDO Runda Subsidiary received a financial subsidy of RMB 249 million from the Wuhu government. The net profit growth rate of the two companies in 2011 was more than 100%. Among them, government subsidies contributed to 90% of Sanan Optoelectronic's net profit, and BDO Runda was 79%.

With low profits, corporate profits have increased, which has benefited the government's financial subsidies. This should be the development of the market that dominates the industry. The fact is exactly the opposite. The government's financial subsidies have become the chief helmsman of the leading industry. As far as the development of LED is concerned, companies have already formed a dependence on the government's financial subsidies, and rely on subsidy profits can also be high, making some companies begin to suffer from the development of technology, the development of the project. The quality of LED lighting products can not be qualitatively improved, and "heart-breaking agents" become "caused to death agents." The European Union issued five warnings on China's LED lamp cups, undoubtedly a big hurdle for the quality of LED products.

Financial subsidy model needs to be changed

Driven by the country's favorable policies, the LED industry has been advancing rapidly. With the influx of large amounts of capital and the various problems that emerged, the reporter would no longer be rumored. "Good steel is not used on the blade", it can summarize the current status of development of the LED industry. The reporter interviewed a number of small and medium-sized enterprises. They also complained about financial subsidies, but most of them complained that they could not get subsidies for themselves. The reporter reconsidered why the SMEs could not receive subsidies. Since the state must support the development of the LED industry, it should be regulated from the whole. It is better to send charcoal in the snow than icing on the cake, and the overall development of the industry can create a healthy competitive market. . Some people also say that financial subsidies can also be directly subsidized by consumers, so that the benefit to the end-user is better than direct subsidies to the company. There is a lot of disagreement and no one is convinced. But one thing is certain: The current subsidy model does need to be changed.

Financial subsidies advice (3)

Financial subsidies are a blessing or a curse for enterprises. Some people think that the government is too fond of LED companies to let them suffer from “financial dependency,” and some believe that the government has created a myth of LED generation. If there is no government, With the strong support of LED, it is impossible for LED to develop so rapidly. There are many opinions from inside and outside the industry. How to grasp the usage standards of financial compensation is becoming more and more important in the current work of the company. Now let us listen to the opinions of people in the industry.

It is necessary to pull down the car and look up at the road

For the LED industry to subsidize this piece, in fact, the government has made great efforts. In addition to direct subsidies on capital, land will be given cheap land on plant land; policies will be used to support the development of the industry through tax deductions; these are available through the Internet government website. However, as far as I know about the ancient township enterprises, most of them are hard-working types and don’t know about it, nor will they look at the relevant government policies. The government has very good resources to provide, but most of them do not know. Therefore, I think that the current enterprises, especially LED companies, should not only bow their heads but also look up the road. Because the development of an industry, especially the initial stage, can not be separated from policy support.

It is necessary to regulate the industry, but also to guide the market

The government’s high investment has left many hidden dangers. The fundamental problem lies in the fact that although the government strongly supports the development of emerging industries in terms of policies, it does not provide guarantees in the industry norm, and the industry norm can not achieve the effect of implementation in small and medium-sized enterprises. It caused some confusion to the market. Enterprises use subsidies to blindly engage in high-input technology industries. However, China lacks core technologies and can only expand its market size at low prices. Under this kind of thinking, very few companies will really engage in technology and research and development. Many companies do not make good use of government subsidies. Instead, they bring many hidden dangers to the industry. Under the unfavorable market conditions such as the large amount of capital investment, immature technology, and vicious competition, the risk of emerging industries such as LED continues to increase. Therefore, the government should give the promotion of the enterprise to the market, let the market choose, and the market will choose the most. Moreover, the company itself must be clear about the direction, grasp the opportunities, hard work, will usher in the dawn.

It is necessary to be self-reliant and to take control

To be honest, LED's rapid development over the past five years cannot be separated from the government's strong support. Enterprises have natural expectations for subsidies, and they hope to enjoy various preferential policies such as tax deductions and cheap industrial land. Coupled with generous government funding, large capital subsidies have also tempted many companies to enter the LED market.

My personal suggestion is not to participate in subsidies. Government subsidies are limited in time and will not be subsidized for a long time, just like the original energy-saving lamps. It is extremely unwise to see subsidies only and infiltrate into the LED sector. Furthermore, blindly entering the LED field will result in a mismatch of resources. Enterprises that originally focused on other areas will be able to separate out the original resources of the company to open up new areas. Once they have not properly controlled it, they will be disrespectful. People inside and outside are not people.

It is necessary to skillfully use and improve technology

Good use of financial subsidies is a good medicine for companies to remedy. Enterprises should take good care of money from their pockets and use their preferential policies to develop industries soundly. In addition, they cannot fully rely on financial subsidies. Companies should See clearly the industrial development situation, increase the technical content, and develop core technologies. Nowadays, China's LED core technology mainly relies on foreign countries. Once the core technology is blocked, domestic enterprises are bound to suffer. If this happens, the original government’s excessively generous financial subsidies to the LED industry will result in a large excess of production capacity. Vicious competition will occur between the industries and eventually ruin the entire LED industry.

It is necessary to focus on R&D but also take into account the market

The government's strong support for LED's emerging industry has indeed led to a large influx of capital, but everything is double-sided. The influx of capital can also leverage the market's leverage to regulate the LED industry structure, eliminate some companies that do not inflow, and only powerful companies can withstand market inspections. Those companies that are zealously trying to subsidize and focus on immediate interests will sooner or later be abandoned by the market. The real capital comes from society. The government subsidy is only a drop in the bucket. Therefore, I believe that the focus of enterprise development should still be on product R&D and quality control, and that it is better for consumers to pay more attention than government subsidies.

It is necessary to provide reasonable subsidies, but also to find a new way out

The country’s emphasis on LED companies, coupled with the fact that I have been in the lighting industry for so many years, have a certain understanding of the lighting, so I also started my own boss, and now I have my own factory and outlets, but the scale is not very large. But also because of the country's strong subsidies, many small companies like me appeared in ancient towns. The LED cake is so big. There are many people who eat more food, and it is very difficult to survive. Especially this year, it is smaller than in previous years. In order for our small businesses to survive, they can only play a "price war" and attract consumers at a low price. This thought that small profits and quick turnover are the only advantages we have compared with big companies, but the intensified price war makes us somewhat unbearable. Unless new outlets are found, small companies like us will be eliminated. What I hope is that the state subsidies will not only be used to supply large companies. Their strength is already very strong. They should be fully supported by LED, tax relief, etc., so that every enterprise can benefit.