In the past golden decade, the scale of China's laser industry has increased by more than 10 times, and the industrial laser application market has also grown by more than 10 times. Both production capacity and industry scale are in a high-speed growth stage. In 2020, China's laser industry will compete with the impact of the international trade war and the COVID-19, realize income increase in adversity, and become the most powerful, dynamic and safest country in the global economic development. In 2020, the market size of laser products in China reached 106.5 billion yuan, breaking through the 100 billion yuan mark for the first time, with a year-on-year growth of about 15.4%, and the growth rate accelerated compared to the previous year.

In 2020, China's laser industry became a landmark turning point, and the country's laser industry smoothly entered its second golden period. In the next 20 years, with the optimization and improvement of the international environment, timely landing of domestic support policies, rapid growth of laser enterprises, comprehensive coverage of laser technology applications, continuous breakthroughs in common key technologies, and the establishment of a sound industrial chain and complete industrial clusters, China is expected to become a leading laser intelligent manufacturing power in the world. Achieving a trillion yuan output value in the laser and optoelectronic industries is not a dream.

The international environment is conducive to our development

In the past two years, due to the COVID-19 and the adjustment of foreign economic policies of Western countries represented by the United States, the structural defects of some domestic industrial chains relying on imported finished products have been exposed, and many "choke points" have been encountered, which has brought a sense of crisis to many domestic manufacturers, and the macroeconomic environment has been greatly affected. But the contraction of foreign supply chains has led to many companies shutting down production, and the timely supply of medical supplies and daily necessities is structurally constrained in these countries. And the domestic supply chain has played a substitute role to a certain extent, which brings additional increment to the laser industry, especially in the field of laser processing.

The epidemic has not changed the development pattern of China's laser industry. As a global manufacturing center, China has a relatively complete industrial chain foundation and vast market space, and "concentrating efforts to accomplish great things" is an important manifestation of the advantages of the national system and governance system. While timely, actively and effectively controlling the epidemic, China has actively adjusted its layout, stimulated domestic demand, and steadily developed the economy, resulting in a large number of new laser technology application scenarios. On the other hand, due to trade scrutiny and increased import tariffs, China has had to accelerate the conversion of more key components and products with policy risks to domestic manufacturing, which has also brought more opportunities to the laser industry as an advanced manufacturing tool. Major domestic enterprises have turned their attention to the domestic market, stimulating domestic demand and promoting industrial development in various fields. The process of localization substitution has accelerated, and the quality of substitution has significantly improved.

National and provincial policies support development

Since the release of the "National Medium - and Long Term Science and Technology Development Plan Outline (2006-2020)" in 2006 and the first listing of laser technology as a key frontier technology for China's development, China has gradually introduced supportive policies for the development of the laser industry. For example, key policy documents such as the "12th Five Year Plan for the Development of National Strategic Emerging Industries" in 2012, the "13th Five Year Plan for Scientific and Technological Innovation in the Field of Advanced Manufacturing Technology" in 2017, and the "Action Plan for the Development of Basic Electronic Components Industry (2021-2023)" in 2021 have all provided important assistance to the technological progress and industrial development of the laser industry. In recent years, various provinces and cities have made precise deployments to promote the development of lasers, such as:

Shanghai: Action Plan for Promoting the Construction of New Infrastructure in Shanghai (2020-2022); Plan for the Integrated Development of the Yangtze River Delta Region;

Tianjin: "14th Five Year Plan and 2020 Science and Technology Plan for Tianjin's High tech Field"; Action Plan of Tianlu City on Accelerating the Development of 5G;

Chongqing: Plan for Building a National New Generation Artificial Intelligence Innovation and Development Pilot Zone in Chongqing;

Guangdong: Action Plan for Cultivating Strategic Emerging Industry Clusters of Laser and Additive Manufacturing in Guangdong Province, 2021-2025; Outline of the 14th Five Year Plan and 2035 Long Range Objectives for Economic and Social Development;

Hebei Province: "Hebei Province Manufacturing Technology Transformation Investment Guidance Catalogue (2021-2022)";

Liaoning: Outline of the 14th Five Year Plan and 2035 Long Range Objectives for Anshan's National Economic and Social Development;

Jilin: Implementation Plan for Accelerating the Construction of a New Pattern of Industrial Development in Jilin;

Heilongjiang Province: Outline of the 14th Five Year Plan and 2035 Long Range Objectives for National Economic and Social Development of Heilongjiang Province;

Jiangsu: Implementation Plan for the Integrated Development of the Sunan National Independent Innovation Demonstration Zone (2020-2022);

Anhui Province: Outline of the 14th Five Year Plan and 2035 Long Range Objectives for National Economic and Social Development in Anhui Province;

Shandong: Development Plan for High end Equipment Manufacturing Industry (2018-2025);

Henan: "2021 National Economic and Social Development Plan of Henan Province";
      Hubei: Strategic Plan for the Development of Optics Valley Science and Technology Innovation Corridor (2021-2035);
      Sichuan: Implementation Plan for Accelerating the Development of Laser Industry in Chengdu City;
      Shaanxi: Notice on Soliciting Technical Requirements for Innovation Chain of Key Industries in Shaanxi's Industrial Field;
      Ningxia: The Notice on Soliciting Projects for 2021 Autonomous Region level Service oriented Manufacturing                Demonstration and Industrial Design Centers emphasizes the promotion and development of the laser industry and intelligent equipment, providing policy guarantees for achieving a trillion yuan output value.

Industrial chain division of labor promotes laser development

The laser industry chain includes upstream components and materials, midstream laser equipment, and downstream laser processing services. At present, the Chinese laser processing equipment market occupies the largest market share in the laser market, accounting for 42% of the laser industry chain market. Since 2018, Zhejiang, Hunan, Jiangxi, Guangxi, Liaoning and other regions have successively introduced the "chain leader system" where provincial leaders concurrently serve as industry chain leaders.

At present, the chain leader system has been implemented throughout the country. The so-called "chain leader system" is led by the main leaders of each province and city, with each person responsible for an industrial chain and serving as the "chain leader". By utilizing the comprehensive coordination advantages of the local highest responsible person, it ensures the integrity, stability, and development of each industrial chain at a higher level. Through the chain leader system, with the main leaders personally leading the way, it is possible to coordinate internal and external resources, concentrate efforts on key breakthroughs in weak links of the industrial chain, accelerate the construction of a complete industrial chain, consider project construction, talent introduction, investment attraction, technological innovation, policy support and other work in a coordinated manner, increase work intensity, and promote substantial progress in "building, supplementing, strengthening and extending the chain" as soon as possible.

And community organizations serve as bridges and links, guiding members to move forward and regulating industry behavior on the one hand, and on the other hand, they should act as a mouthpiece for the government, adept at identifying, reflecting, and solving problems. Timely report the demands to the chain leader. In terms of industry development, supporting industrial chain clusters, and common development issues, the chain leader will collaborate with relevant departments to hold meetings to study and use them as policy basis to coordinate and solve problems. We have strengthened our sense of responsibility and urgency for industrial development, forming a mutually beneficial development situation where everyone is united and working together.

Market demand leads the development of the laser industry

In the current process of industrial restructuring and industrial transformation in the country, the laser industry has broad market prospects. China is the only country in the world that has all 41 major industrial categories, 191 medium categories, and 525 small industrial categories, capable of producing all industrial products from clothing, shoes, socks to aerospace, from raw materials and minerals to industrial mother machines. Our country has a strong manufacturing foundation and a complete industrial chain. In 2019, China's manufacturing industry accounted for over one-third of its GDP. The 'structural difference' provides market opportunities for the development of China's laser industry. At the same time, China has a strong manufacturing industry chain, as well as a new Internet economy represented by Shenzhen. The huge OEM industry space and the demand for laser processing have made China the world's largest market for laser applications. At present, the application proportion of lasers in manufacturing, especially equipment manufacturing, in China is relatively low, only 30%. The application proportion of lasers in the equipment manufacturing industry in the United States, Japan, and Germany has all exceeded 40%, with Germany reaching as high as 46%, which is 16 percentage points higher than China. So the application space is relatively large, which will inevitably promote the rapid development of lasers.

At present, laser processing equipment plays a key role in promoting the upgrading and transformation of traditional industries. A group of laser processing equipment companies rely on innovative processing technology and excellent equipment quality to find sufficient orders in the new and old kinetic energy conversion market for rapid growth. In addition, some manufacturing companies have tasted the sweetness of upgrading and development, and are no longer satisfied with vertical integration domestically. They are actively exploring cross-border mergers and acquisitions of high-quality foreign laser enterprise resources and planning to enter the field of precision machining. In the past 10 years, laser processing stations have been an important touchpoint for equipment companies to provide extension services. By carrying out on-site services, they can timely meet various processing needs and enhance customer loyalty. Nowadays, more and more large-scale equipment that integrates multiple functions has been developed and applied in industries such as rail transit, aerospace, and shipbuilding. It is expected that from 2020, all kinds of cloud manufacturing platforms based on industrial Internet will gradually release value, and laser processing stations will play a greater role with the support of cloud manufacturing platforms, and go to Southeast Asia, the Middle East, South America and other regions along the "the Belt and Road". At present, the world is gradually entering the 5G era. With the successive launch of 5G smartphones and new smart wearable products, the capital expenditure of customers in the consumer electronics industry has significantly increased, and the development of the industry has accelerated significantly. The application of laser processing and automation in the consumer electronics industry continues to deepen. The laser industry has achieved rapid growth in specialized fields such as brittle material processing, special material welding, and PCB industry processing. The new application scenarios and processing equipment requirements brought by 5G technology have brought huge business opportunities for laser equipment providers. In the next golden 20 years, the laser industry will experience rapid development, heading towards a trillion dollar output value.

Central and South China will lead the development of lasers

In recent years, China's laser processing industry has developed rapidly and its international competitiveness has increased rapidly. Numerous laser companies have spread across East China, South China, North China, Northeast China, Central China, and other regions. It is reported that China has established 40 laser industry bases (parks) in 28 cities. From 2011 to 2019, the sales revenue of laser equipment has increased by more than 6 times, and a number of laser enterprises with global competitiveness have emerged. In the past 10 years, laser manufacturing in China has become one of the fastest growing fields in advanced manufacturing, forming certain characteristics, and some technologies have reached the international leading level.

2020 Scale of Laser Industry in Various Regions of China

At present, China's laser industry is mainly divided into five industrial zones: South China, East China, Central China, North China, and other regions. These five industrial zones each have their own characteristics, with their own research and development bases and industrial cluster parks. Although they are geographically different, their goals are the same, which is to promote the development of lasers and contribute to achieving a trillion yuan output value.

Distribution Map of Trillion Output Value

South China region: Guangdong has been the largest laser market in China for several consecutive years. In 2010, Guangdong's laser output value was only 5 billion yuan, but by 2020, it had increased to about 40 billion yuan. The output value accounts for 37% of the national total, achieving good growth. In 2020, Guangdong Province officially listed "laser and additive manufacturing" as one of the top ten strategic emerging industries, and issued a "five-year action plan" for this industry, which pointed out the direction for the layout and development goals of the laser and additive manufacturing industry in various cities in Guangdong. It is expected that the laser application market in South China will further increase in the next 10 years, becoming a leader in achieving trillion dollar output value.

Central China region: There are over 200 laser companies in Wuhan, with more than 50000 people engaged in laser technology and industrialization, laser processing applications, laser related supporting industries, etc. The "high concentration" of laser companies has attracted attention. Wuhan's "China Optics Valley" has a complete national level base for industry university research in the fields of laser processing technology and industrialization. Including industrialization base, technology source innovation base, Wuhan National Optoelectronics Laboratory, and engineering innovation base, laser processing National Engineering Research Center are important bases leading the innovation and development of laser industry. In 2020, the output value of lasers reached 30 billion yuan, accounting for 30% of the national total.

According to Sun Wen, a member of the Hubei Provincial Political Consultative Conference, Vice President of the Hubei Provincial Chamber of Commerce, Honorary President of the Hubei Laser Industry Association, and Chairman of the Chutian Laser Group, by around 2020, there will be more than 20 laser listed companies in Hubei, with a total industry scale of billions of RMB. Hubei will be a powerful assistant in achieving a trillion yuan output value.

East China, North China, and other regions are brothers in achieving trillion dollar output value. On November 8, 2021, the Zhejiang Provincial Government issued the "Action Plan for the Development of the Optoelectronic Industry in Zhejiang Province (2021-2025)", which clearly stated that the goal is for the province's large-scale optoelectronic industry to exceed 500 billion yuan in operating revenue by 2025.

look into the future

The development opportunities of the laser industry are mainly driven by factors such as policy promotion and market demand expansion. The way out in the future is to further develop and master more core technologies by combining Internet, CNC and processing technology development. If possible, we should cooperate with automation enterprises and terminal application enterprises to jointly develop processes, and customize equipment and production lines according to needs. Only by further expanding higher end customized applications and gradually mass producing can we bring new growth momentum to the laser manufacturing market. Laser can no longer be treated simply as a laser processing equipment, but rather as a tool integrated into intelligent manufacturing production lines. Laser equipment with low consumption, high efficiency, and high precision is favored by the market, and ultra fast lasers, laser welding, laser cleaning, and laser processing automation equipment may become the next growth point of China's laser industry.

The next 20 years will be the peak period for the development of China's laser processing industry, and achieving a trillion yuan output value is not a dream. We will wait and see.

                                                                                                                                  ---- Reprinted on Laser Manufacturing Network.