The association in Guangdong province has already attracted 13 local companies that will establish a joint patent pool to help break down patent barriers. They will also integrate resources to use in possible overseas IP disputes.

The local government plans to support the association with a "patent navigation system" to help research, collect, track and analyze global LED patents. It will form a database and issue alerts to member companies on existing patents, local officials said.

The association's governing committee will also organize members for formulation of product quality standards.

Considered a strategic emerging industry, China's LED companies are now threatened by inadequate innovation and poor patent management, which worries authorities more than production overcapacity.

Industry data indicates that half of the world's LED-related patents and technologies are in the hands of large European companies such as Philips and the Siemens subsidiary Osram, as well as Cree in the United States and Japan's Nichia and Toyoda Gosei.

Their patents cover nearly all aspects of the industrial chain from raw materials to equipment, packaging and applications.

"The international LED giants have core patented techniques used in upstream products such as epitaxial wafers and chips, while Chinese companies mainly have utility model and design patents concentrated on downstream in the industrial chain," Zhou Aixin, a senior engineer from a member company, told the Dongguan Daily newspaper.

"One of our goals in joining the patent association is to try to break through by uniting all forces within the (domestic) industry," he said.

Scarcity of highly qualified people is another constraint on the healthy development of China's LED industry, according to industry insiders.

Only people can turn invisible assets into money, said Pan Dongmei, a senior director at the China Solid State Lighting Alliance.

Yet Chinese universities and colleges have just begun to offer related courses and majors and cannot provide enough talent in the short term.

"Technicians and marketing people are most needed in the industry," said Huang Zitian, chairman of a Dongguan LED company. "Hiring and nurturing talented people is the first imperative."

With policy support from the central government, the costs of LED products have fallen sharply and the country now has a large industrial scale in the field.

But the industry faces a range of challenges. Zhou Lian, an expert at the Chinese Academy of Engineering, said technical support for future development is inadequate and the industry is geographically scattered.

National standards, testing and certification mechanisms also need improvement, he added.

Statistics from the industry website LEDinside.cn project that the value of the country's LED lighting market this year will surpass 30 billion yuan ($4.9 billion), a 36 percent increase over 2012. Demand in international markets is also increasing.

It means more opportunities, but also higher requirements on companies, according to LEDinside.cn.

Chinese LED companies must continue to improve product quality and create indigenous brands with international influence if they want to prevail in international competition, experts said.