Artificial Intelligence
From the trade deficit to the top in the world, look at China's panel industry to reverse this decade
In September 1998, Bei Cai Caijing imported the first-generation LCD panel production line from DTI, a joint venture between Toshiba and IBM. However, lacking core technology, the company struggled to keep up with industry advancements. By 2003, Chinese companies once again tried to reintroduce LCD panel production lines, but high patent fees made their products uncompetitive, leading to another failed attempt. By 2008, China's panel industry trade deficit hit a record high of 148.796 billion yuan, highlighting the country’s heavy reliance on imported panels. In fact, China’s annual import of materials for panel manufacturing ranked second only to oil, iron ore, and chips.
Ten years ago, Chinese panel companies were largely dependent on imports, operating in a state of technological lag. But by 2018, the industry had transformed dramatically. According to IHS, China was expected to become the world’s largest flat panel display production region, capturing 35% of the global market. This growth wasn’t just about scale—it also reflected a growing technological capability. Companies like BOE, Huaxing Photoelectric, Visionox, and Harmonix made significant strides in AMOLED and flexible OLED technologies, signaling a shift toward innovation.
Once dominated by Japanese and South Korean firms, the panel industry has seen a dramatic shift. China now leads in production volume, but this success didn’t come easily. While some believe it was due to Japan and South Korea shifting their focus to high-end technologies, the reality is more complex. Chinese companies worked hard to build capabilities through re-introduction, re-absorption, and continuous investment in R&D. Government support, including land acquisition and financial backing, played a critical role in enabling large-scale investments in the capital-intensive industry.
China’s labor force, with its low cost and improving skill level, also contributed to the industry’s rise. The combination of government policies, market demand, and technological progress helped China establish a strong presence in the global panel industry. However, challenges remain. While China leads in scale, its technology still lags behind top-tier competitors. Additionally, the upstream supply chain—such as liquid crystal materials and polarizers—is not yet fully developed, limiting full control over costs.
Despite these hurdles, China’s panel industry continues to grow. With rising domestic demand and a push for high-end products, the market is becoming more competitive. Yet, the industry must avoid complacency. Labor costs are no longer a major advantage, and the gap between Chinese companies and global leaders is narrowing. Future success will depend on independent innovation and stronger industry alliances.
While China currently dominates in quantity, it must work toward quality and sustainability. The path forward involves forming strategic partnerships, expanding into global markets, and continuing to invest in research and development. The future of China’s panel industry lies not just in size, but in building a truly competitive and innovative ecosystem that can stand on its own in the global market.
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