Lijiang, LED and other industries attract investment, government positioning problem

Regardless of whether it is a small or medium-sized project attracted by a street office or a district government, or a large-scale project recruited by the provincial and municipal governments, the domestic investment attraction is very fierce. The local governments compete for preferential policies, industrial support, and service attitudes. The Minjiang City Belt undertakes industrial transfer and introduces emerging industries, and preferential policies are indispensable. Taking the LED industry as an example, as an emerging industry in the cultivation, Wuhu, Anhui Province, came to the forefront and became a domestic LED upstream industrial cluster. The subsidy was also followed.

The model of financial subsidies for equipment began in Yangzhou, Jiangsu Province in 2009, and later in Guangdong Jiangmen and Anhui Wuhu. Local governments generally use tax credits to subsidize, which is the normal state of attracting investment from all over the country; the Yangzhou model differs in cash payments. For example, MOCVD furnaces used in the production of LED epitaxial wafers purchased by enterprises are subsidized by financial funds. Red and yellow light MOCVD subsidies 8 million yuan/set, blue-green light 10 million yuan/set; 50% subsidy after equipment is in place, 30% trial production subsidy After the mass production acceptance, 20% of the final payment is provided. For a time, many LED upstream manufacturers such as Yanyuan Optoelectronics, Sapphire Optoelectronics, and Zhenmingli were stationed in Yangzhou. Wuhu follows the example, but the threshold for setting up the MOCVD to the enterprise must be more than 50, but the subsidy is raised by 20%. Red, yellow and blue green light respectively mention 9.6 million yuan and 12 million yuan respectively. Pull away the distance.

Soon, the effect of investment in Wuhu appeared. In January 2010, Sanan Optoelectronics (600703) signed a 12 billion LED investment project with Wuhu Municipal Government; in February, Dehao Runda (002005) signed a total investment of 6 billion LED projects with Wuhu Municipal Government; The company plans to have 200 MOCVD units. In just one month, Wuhu completed the investment promotion plan that Yangzhou completed in one year. The Yangzhou Municipal Government did not extend the subsidy policy after July 2011 (only two years is valid when it was introduced in 2009). Similarly, Wuhu has no longer implemented this equipment subsidy policy for other manufacturers. When two major projects such as Sanan Optoelectronics and Dehao Runda were successfully introduced two years ago, the investment target has been reached.

The international price of MOCVD equipment is equivalent to more than RMB 30 million. The subsidy received by LED chip manufacturers is equivalent to more than 30% of the equipment. This has important reference value for the choice of the manufacturer's choice of projects, because the subsidy is not only the amount, but also the local support. How big is it. According to public information statistics, Wuhu’s financial subsidies for the two projects reached 900 million yuan in 2011, accounting for 3% of the 28.6 billion fiscal revenue. The local government is willing to make huge subsidies, and it has a strong driving force to promote the success of the project. There will be a variety of good supporting services. Once the project fails, the pressure on the government is enormous.

This kind of investment model that is integrated with the government is very common in emerging industries. Not only LEDs, but also the photovoltaic industry. Despite the serious overcapacity in the industry and the huge financial black hole in a large number of enterprises, local governments are willing to borrow money and raise money to help them overcome difficulties. All know that there should be enterprises to eliminate to make room for the market, but everywhere feel that local enterprises can not be closed.

Similarly, the introduction of Hefei in Hefei was once controversial. The panel industry in which BOE is located is capital-intensive. The 6th generation TFT-LCD production line of Hefei was built in 2009 and mass-produced at the end of 2010. In 2009, the company relied on government subsidies of 700 million to achieve profitability, and most of the huge subsidies. From the Hefei government; in June this year, the Hefei project finally achieved a single-month profit, and BOE also achieved a single-quarter profit in the third quarter, which has a lot to do with the rebound of the panel industry and the full production of the Hefei 6th generation line. The pressure on the Hefei government may also be much smaller. The calculation of the Hefei government is: During the “Twelfth Five-Year Plan” period, the investment amount of the 6th generation line of Beijing-Hebei Hefei will drive 80 billion yuan. However, things are not over yet. The Hefei 8.5-generation line, which was opened in the second half of this year, has a total investment of 28.5 billion yuan, which is larger than the investment scale of the 6th generation line. If BOE really continues to make profits, there will be a turning point in performance, and everyone will be happy; if the industry booms, the dispute may continue.

Wu Junliang, a public finance research expert and founder of the China Budget Network, said that the local local investment model is not available abroad. The premise of this model is that local leaders can decide on fiscal expenditures; local preferential policies evolve from tax returns and land concessions to cash. Subsidies and other means show that local investment is more intense, and that local leaders are subject to very little constraints. Wu Junliang said that there is no such question in question: Why is it only subsidizing this industry? Many industries solve employment and contribute taxes, and do they need subsidies? In addition, the financial subsidies belong to the public budget. They should be proposed by the government, reviewed by the National People's Congress, and told the society to let the society express channels. The society not only knows the benefits of the project, but also knows the risks, thus reducing the degree of official understanding. It can also reduce the impulse and arbitrariness of local leaders for political achievements.

The advantage of the financial subsidy model is that it can quickly attract large projects, and even form an industrial agglomeration effect in a short period of time. The controversy is the issue of government positioning. Nowadays, the slogan "It is better to find a market than to find a mayor" has become popular again. Emerging industries will continue to emerge in the future. Researchers believe that industry cultivation should be “finding the mayor”, but the “mayor” can't help the seedlings, so as to avoid disorderly competition in the industry, and some enterprises will grow blindly before “finding the market”. Can not support, and finally become a burden.

(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)

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