As the Sino-US trade war continues to burn, the United States has announced two wave tariff lists since 2018. The first batch of tax collections issued in the United States involves LED chips, mainly LED upstream chips and backlights. The proportion of China's LED industry's overall export value is very low (about 5% or less). The domestic large-scale LED upstream chip factories such as Sanan Optoelectronics exports to the US only between 2-3%, Huacan Optoelectronics and Co., Ltd. Domestic chip manufacturers such as Photoelectricity have a small proportion of exports to the United States.
However, in the list of US$200 billion tariffs recently announced by the United States, there are more than 30 LED lighting related products, accounting for about 70% of China's total lighting products exports to the United States, which is about US$8 billion. These products will start from September 24th. Add 10% tariff, if the dispute between the two sides has not subsided, the tariff will be raised to 25% from January 1, 2019. According to China Customs data, the total export value of LED lighting products in China in 2017 was 12.2 billion US dollars, and about a quarter of them were exported to the United States. There are about 17,800 companies involved in China's lighting export products.
Sino-US trade war has not stopped, LED supply and demand imbalances will expand
The impact of Sino-US trade wars and depreciation of exchange rates in emerging markets, LED manufacturers' exports to North America and other emerging markets have been significantly affected. In the future, many foreign brand factories may reduce OEM orders for China and seek other filings as long-term alternative manufacturing. Therefore, application manufacturers in China, including LED packaging and downstream lighting, will be affected to varying degrees, and the demand for LED chips in the upstream will be reduced.
Although the US tariff adjustment affects the global LED lighting industry, global LED lighting products will still be concentrated in China in the short term. The main reason is that the Chinese LED industry has formed a mature supply chain, and the supply relationship will not change much in the short term. However, some US lighting brands have issued price increases to dealers in the US market, reflecting the increase in tariffs and raw material prices. As for Taiwanese manufacturers, most of them have set up manufacturing plants on the mainland, so most of them will choose to ship semi-finished products back to China and assemble them in Taiwan, and then export them to North America to reduce the impact of tariffs. In the long run, LED lighting manufacturers with global layout will be more competitive because they can reduce tariff impacts through direct exports from factories outside mainland China, and the global market share is expected to increase.
Since 2018, the growth momentum of the global LED lighting market has been weak. From the perspective of regional economic performance, in addition to the strong economic recovery in the US, affected by exchange rates and uncertainties, many emerging economies are facing negative pressures from recession, including India. The regions of Turkey, Argentina and other regions all showed market volatility. The impact of Sino-US trade disputes has intensified, and the growth performance of the mainland domestic demand market has also weakened. Under the overall economic confusion, the lighting market as a demand for people's livelihood has also appeared. The terminal pulled the goods weak.
The mainland LED lighting industry revealed that due to the situation of higher tariffs in the United States, the demand for LED terminal lighting in the fourth quarter has rebounded strongly. The downstream industry is worried that the 25% tariff will continue to increase costs, and the terminal market has emerged in the near future. Orders in the upstream supply chain of LEDs have strengthened.
However, in 2018, the price of LED lighting components fell more than expected, and the annual decline was at least 20% to 30%. Under the dilution of LED component price profits, the decline of more than 20% is a severe test for the industry. At the same time, the prices of hardware and raw materials have risen. The lighting finished product manufacturing has also encountered pressure to increase the cost. Now the US tariff range is even worse. Once the tariff is raised to 25% in 2019, some of the costs will be passed on to the upstream supply chain, and the LED industry price reduction competition will be expanded again.
The industry believes that the increase in US tariffs coincides with the peak season of consumption at the end of the year. The short-term impact of standardized products such as LED bulbs and lamps should be limited. Since replacement lighting is a necessity for people's livelihood, the current retail price of LED lamps is even lower than that of energy-saving lamps. Brands and suppliers will each take profits and the basic market demand will be maintained. However, the price of in-line LED and design lighting products is relatively high. Since 2018, the lighting brands have been increasing their prices. In the future, with the increase of tariffs, LED packaging purchases may shift positions, and assembly lines will also give priority to existing certifications. His domestic line, or neighboring the Mexican region of the United States.
In recent years, the price of LED lighting has fallen, and Taiwanese manufacturers have gradually shifted their focus on lighting production. However, compared with mainland manufacturers, the cost of Chinese Taiwanese manufacturers is about 10% to 15% higher. If US tariffs increase to 25% from 2019, there will be Conducive to the return of orders to the Taiwan factory, LED factory Dongbei also revealed that since the five-factory factory was planned to be an LED lighting factory, there have been many recent US manufacturers frequently contacted. In addition to the original large customers, the original processing and export in the mainland. The US business also considers the plan to convert the production line before the end of the year.
US LED lighting orders are returning to Taiwanese companies, or licensing is expected to bring about an increase in performance, but the risk of Sino-US trade competition is extremely high. It is difficult to predict when the weather will change. If it is only a short-term order, it will adjust the operation of LED companies in Taiwan. Transformation will be difficult to bring concrete benefits, and the disorder of the industrial order may lead to more sequelae of vicious competition, and will also add unpredictable haze and variables to the industrial outlook in 2019.
In the past two years, in the face of the fierce “price war” and the decreasing domestic profit margin of the domestic LED market, the overseas market has become a “sweet”, attracting major manufacturers to go out of the country and seek a broader development space. According to the statistics of China Lighting Association, the United States still remains unshakable and far ahead as the number one export market for LED lighting products in China; the traditional big North American and European markets are still in an important position.
It can be seen that the United States is the largest export market for LED products in China, and this time the United States has more than 30 LED lighting related products in the list of China’s $200 billion tariffs, accounting for about 70% of China’s total lighting products exports to the United States. , about 8 billion US dollars, will definitely affect the overseas market share of China's LED lighting.
In addition to the increase in tariffs, this trade war has also had an impact on the exchange rate of the renminbi. From the performance report of LED display companies listed in previous years, the exchange rate issue is not a small problem for LED companies engaged in foreign trade business and operating overseas markets. Exchange rate fluctuations will have a significant impact on the exchange gains and losses of enterprises, and even violent fluctuations, even It is possible that some enterprises with low risk tolerance will be in trouble, which will directly increase the difficulty for LED companies to open up overseas markets.
In 2018, the United States continued to "make a move" to the Chinese LED industry. On the grounds of patent infringement, the US International Trade Commission launched a “337 investigation” on Chinese LED display companies, LED lighting and power companies, and the respondents were all domestic LED companies. In the face of this investigation, Chinese LED companies should unite to fight. The announcement and response were issued in succession, indicating that they will actively respond to and safeguard the legitimate rights and interests of enterprises. At the same time, however, this patent maintenance in the United States has obviously strengthened the strict control of Chinese LED companies to export to the United States, which has made the development of the US market more difficult, and it has made it difficult for LED companies to pay attention to overseas markets.
Raising tariffs will reduce corporate profits and weaken Chinese companies' competitive advantage in the US market. How do Chinese companies respond?
At present, the leading enterprises in the LED industry have basically completed overseas localization, and through local subsidiaries to carry out market activities, they can control risks well in trade wars, and some for some foreign trade LED companies, they can export to the sea. Turn to other emerging markets. In recent years, Southeast Asia and other developing countries have taken over the transfer of low-end industries in China, and the economic rise has driven their own demand. Compared with the US market, emerging markets are weaker and more favorable to market development.
In the long run, the trade war also contains some positive factors. The most important point is that Chinese LED companies can more deeply understand the unpredictable market and think about the long-term development of the company. I believe that after continuous efforts, Chinese LED companies will bloom on the world stage. Radiant.
Insiders have something to say
Dr. Wang Min, CEO of Jingneng Optoelectronics believes that the Sino-US trade war has a certain impact on enterprises, but Jingneng has its own intellectual property rights, and the impact is relatively small. There is also a small portion of US exports, so the impact on crystal energy will not be too great. In terms of countermeasures, domestic enterprises should expand exports from other countries, and expand domestic demand to improve domestic high-end markets. Wang Min said that Chinese companies must be internationally competitive and must insist that core technologies are not relaxed.
Ji Hua, general manager of Nanchang Zhongwei Semiconductor Equipment Co., Ltd. said that China's lighting industry has obvious advantages and has formed a global industrial cluster. More than 85% of the world's LED lighting products are produced and assembled in China. Even with the addition of tariffs, it is difficult for the United States to find alternative products from other regions in the short term. Most of the US LED chips are (outsourced) outsourcing or purchasing, and it is not so big to manufacture itself. If you increase taxes, you actually increase these taxes to its consumers.
Wang Liangen, chairman of Anxin Electronic Technology, said: "The main material of semiconductor is high-purity single crystal silicon. Monocrystalline silicon can be produced domestically, but monocrystalline silicon is also produced by polysilicon. Semiconductor-grade high-purity polysilicon is now 100% still imported. We mainly import from Germany and Japan."
Liu Junlin, deputy director of the National Silicon-based LED Engineering Technology Research Center in Nanchang, Jiangxi, said, "At present, our short board is still in terms of basic equipment, and other raw materials are also subject to people. For example, silicon wafers, nowadays, integrated circuits must have large silicon wafers, and the diameter is large enough. A certain degree of silicon is not available in our country and needs to be imported. Basically, it is the core equipment and core raw materials. Liu Junlin believes that the trade war allows us to recognize where our disadvantages are and where to work. As long as researchers and high-tech companies have such awareness, they can certainly pass this crisis.
It can be seen that as Sino-US trade continues to heat up, all relevant companies are actively seeking corresponding countermeasures.
The trade war detonated and fled the mainland tide?
The trade war has become more and more fierce. The United States has recently issued a new wave of $200 billion in tariff sanctions on the mainland. The land-based enterprises are faced with the choice of not to withdraw. However, some scholars have said that only some enterprises will withdraw from the mainland, and some may "fire and rob" to win more preferential treatment from the government.
According to the "BBC Chinese Network" report, many foreign companies have reported that some businesses will be withdrawn from the mainland, including Korea Hynix, Japan's Mitsubishi Electric and Toshiba Machinery; among them, Mitsubishi Electric has its EDM and laser processing machines. The production line was moved back to Japan from the mainland.
The report pointed out that many experts have put forward warnings, saying that affected by the trade war, coupled with the increase in labor costs in the mainland in recent years, the global leading enterprises may accelerate the evacuation, but Professor Liu Yujia, director of the UK campus of Peking University HSBC Business School pointed out that some companies may use trade wars. "Broken fire", although shouting to leave, but the bones in the hope that the mainland government to give more preferential treatment, is a commercial bargaining strategy.
"Marketwatch" reported that JPMorgan's cross-assessment strategist John Normand's research team published a report stating that US President Trump's economic and stock market advantage would threaten to further escalate trade tensions.
Sino-US Trade War Event Review
On August 14, 2017, Trump signed an administrative memorandum authorizing the US trade representative to review the so-called "China trade behavior."
On August 15, 2017, a spokesperson for the Chinese Ministry of Commerce said that if the US side takes action in disregard of the facts, China will take all appropriate measures to resolutely defend the legitimate rights and interests of the Chinese side.
On August 18, 2017, US Trade Representative Wright Heze announced that he officially launched a "301 investigation" against China.
On August 21, 2017, a spokesperson of the Chinese Ministry of Commerce said in a speech on this investigation that the US side ignores the WTO rules and the accusation against China is not objective.
On February 16, 2018, the US Department of Commerce announced a national security investigation (232 investigation) report on US imports of steel and aluminum products, and accordingly proposed to President Trump to impose tariffs, quotas, etc. on imported steel and aluminum products. Import restrictions.
On March 1, 2018, US President Trump announced that he decided to fully tax imported steel and aluminum products from all sources, with tax rates of 25% and 10%, respectively.
On March 9, 2018, Trump signed an order to impose tariffs of 25% and 10% on imported steel and aluminum products, respectively.
On March 22, 2018, the White House officially signed a trade memorandum to China, announcing that it would be possible to impose tariffs on US$60 billion of goods imported from China and restrict Chinese companies from investing in the United States.
On March 23, 2018, the Ministry of Commerce of the People's Republic of China issued a list of suspension concessions for the US import of steel and aluminum products 232 measures and sought public opinions, and proposed to impose tariffs on some products imported from the United States.
On April 2, 2018, the Customs Tariff Commission of the State Council of China decided to suspend the tariff reduction obligation on some imported goods originating in the United States. Since April 2, 2018, the customs duties on the seven categories of 128 imported goods originating in the United States have been suspended. Concession obligation. According to 2017 statistics, it involves US exports of about US$3 billion to China.
On April 3, 2018, the Office of the US Trade Representative announced the list of Chinese goods subject to tariffs based on the results of the “301 Survey”, involving imports worth approximately US$50 billion annually from China. The US Trade Representative Office said on the same day that it proposed to impose a 25% tariff on 1,300 kinds of goods from China, mainly related to products in the fields of information and communication technology, aerospace, robotics, medicine, machinery and so on.
On April 4, 2018, the Customs Tariff Commission of the State Council of China decided to impose a 25% tariff on 14 categories of 106 items of soybeans, automobiles, and chemicals originating in the United States, involving approximately US$50 billion from China in 2017. .
On April 5, 2018, Trump issued a statement saying that the Office of the US Trade Representative had been instructed to conduct a "301 investigation" to consider whether it would be appropriate to impose tariffs on additional US$100 million worth of goods imported from China.
On April 10, 2018, Chinese President Xi Jinping said in a keynote speech at the opening ceremony of the Boao Forum for Asia 2018 Annual Meeting in Boao, Hainan, this year, the import tariffs on automobiles will be reduced considerably, and the import tariffs on some other products will be reduced.
On April 16, 2018, the US Department of Commerce imposed a ban on sanctions against ZTE, prohibiting all US companies from doing business with them within seven years.
On April 17, 2018, the Ministry of Commerce of the People's Republic of China issued an announcement to implement temporary anti-dumping measures against imported sorghum originating in the United States.
From May 3 to 4, 2018, Liu He, member of the Political Bureau of the CPC Central Committee and vice premier of the State Council, and the US delegation headed by US Presidential Special Envoy and Minister of Finance Mnuchin were honest and efficient on the Sino-US economic and trade issues of common concern. A constructive discussion.
On May 9, 2018, ZTE announced that it was unable to proceed with the company's main business activities due to the activation of the US Department of Commerce.
On May 19, 2018, Liu He accepted a visit during his visit to the United States, saying that the biggest achievement of the Sino-US economic and trade consultation was that the two sides reached a consensus, did not fight trade wars, and stopped adding tariffs to each other.
On May 22, 2018, the State Council Tariff Commission issued a notice on reducing the import tariffs on complete vehicles and parts, which will reduce the import tariffs on complete vehicles and parts, and will be implemented from July 1, 2018.
On May 23, 2018, US President Trump asked US Secretary of Commerce Ross to investigate the impact of imported vehicles on national security.
From June 2nd to 3rd, 2018, the Chinese team led by Vice Premier Liu He and the US team led by US Secretary of Commerce Ross held consultations at the Diaoyutai State Guesthouse. The two sides have implemented the consensus of the two countries in Washington, and have conducted good communication in various fields such as agriculture and energy. They have made positive and concrete progress, and the relevant details are yet to be confirmed by both parties.
On June 7, 2018, the US Department of Commerce officially announced a new settlement agreement with China's ZTE Corporation.
On June 15, 2018, the United States announced a list of 50 billion US dollars of Chinese imports that would be subject to a 25% tariff. Among them, about 34 billion US dollars of goods have been imposed on tariffs since July 6, 2018, and at the same time, tariffs on about 16 billion US dollars of goods have been imposed to seek public opinions.
On June 16, 2018, the State Council announced a 25% tariff on 659 items of approximately US$50 billion worth of imported goods originating in the United States, including 545 items of approximately US$34 billion for agricultural products, automobiles and aquatic products since 2018. The implementation of the tariff increase will be implemented on the 6th of the month, and the implementation time for the tariffs on the remaining commodities will be announced separately. Among them, automobile products began to be implemented on July 6, and the tariffs on imported cars in the United States rose to 40%.
On July 6, 2018, the United States began to impose tariffs on 34 billion US dollars of Chinese imports.
On July 6, 2018, China will impose a 25% tariff on 545 items of approximately $34 billion worth of imported goods originating in the United States, including 28 items for automotive products.
On July 10, 2018, the Office of the US Trade Representative issued a statement. The Trump administration issued a plan to increase tariffs on China's $200 billion in goods. The target product list covers clothing, TV parts and refrigerators. It is 10%.
On July 13, 2018, the Chinese Ministry of Commerce issued a statement on the US July 10 statement, accusing the US of smearing China's unfair practices in economic and trade exchanges and disregarding China-US economic and trade differences.
On July 19, 2018, the United States held a public hearing on the "232 investigation" of imported cars and parts, and listened to the opinions of stakeholders on whether imported cars and parts damaged the national security of the United States.
On August 3, 2018, the Chinese side decided to impose a tariff of 25%-5% on 5,207 tax items originating in the United States.
On August 7, 2018, the Office of the US Trade Representative announced that it will impose a 25% tariff on the US$16 billion Chinese exports to the US from August 23.
On August 8, 2018, the State Council Tariff Commission decided to impose a 25% tariff on US$16 billion worth of US products from 12:01 on August 23, 2018.
On September 18, 2018, Trump instructed the US Trade Representative (USTR) to impose additional tariffs on approximately $200 billion of Chinese imports, which will take effect on September 24, 2018, 10% before the end of the year, 2019 It will increase to 25% from January 1. At the same time, Trump also said that if the Chinese government takes retaliatory actions against American farmers and other industries, the United States will "immediately" impose tariffs on another US$267 billion worth of Chinese goods.
On September 18, 2018, with the approval of the State Council, the State Council Customs Tariff Commission decided to impose a 10% or 5% tariff on 5,207 tax items originating in the United States and about 60 billion US dollars of goods, since September 24, 2018. It will be implemented from 01 minutes. If the US insists on further increasing the tariff rate, the Chinese side will respond accordingly and the relevant matters will be announced separately.
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