Market recovery: LED lighting products cost is the key

[Source: LED Engineering's "LED lighting channel" 2013, No. 5 (total of 41) reporter / Xiongyu Heng]

In the past 2012, it is the channel development year for domestic LED companies. Many LED lighting companies including Tsinghua Tongfang, Mulinsen, Zhongshan Xinteli, BYD Lighting, and Laiwei Optoelectronics are actively deploying domestic marketing channels, LED lighting. Gradually integrated into the terminal market, coupled with the introduction of the "Semiconductor Lighting Energy Conservation Industry Plan", this year's LED lighting market development trend turned better.

According to the statistics of the High-tech LED Industry Research Institute (GLII), the output value of LED indoor lighting in China in 2012 was 33.5 billion yuan, an increase of 80% year-on-year. With the trend gradually improving, the LED indoor lighting sales scale is expected to reach a new high.

Gong Weibin, chairman of Ruifeng Optoelectronics, said that the LED indoor lighting market is ushered in this year and next. Whether it is product cost performance or consumer acceptance, it has created favorable conditions for LED lighting promotion. 2013 is the year of the international lighting giant's layout in the domestic LED lighting market, and it is also the key year for determining the success or failure of domestic LED lighting companies.

Zhang Xiaofei, CEO of Gaogong LED, said that the next three years will be an important three-year channel layout for domestic LED lighting companies. This year, as the beginning of the channel development, brand, marketing, and channels have become more important. Only when multiple parties take care of each other can the company develop rapidly.

However, the entire industry is not lacking in doubt. Gong Wen, general manager of Jingtai Optoelectronics, said that the price of high-quality LED lighting products is still relatively expensive. Only when the cost really drops, the LED lighting market, especially the indoor lighting market, can really open.

The performance of listed companies has generally increased

Since March this year, LED-related listed companies have successively announced their first-quarter earnings reports for 2013. Although there are no shortages of performance or even loss, the growth figures account for the majority.

Among them, Qinshang Optoelectronics' first-quarter earnings report showed that the profit was 2,804-302 million yuan, a year-on-year increase of 30%-40%; Xuelaite also issued a performance forecast that the profit was 608.5-655.41 million yuan, and the net profit increased by 30%-40%; The performance of Chau Ming Technology has increased by 140%.

Qinshang Optoelectronics said that the company's rapid growth, thanks to the rapid increase in cost performance of LED lighting products and the continued release of terminal application demand, the company's export and domestic market achieved rapid growth year-on-year.

In the first quarter of this year, Changfang Lighting also experienced a large increase in revenue, but its net profit has fallen sharply, with a drop of 13%-28%.

According to Changfang Lighting, the company's channel construction has achieved initial results, and the sales volume of finished lamps has increased rapidly, and sales revenue has increased rapidly. As the company is currently in the expansion period, the brand and channel expenses are relatively high, so the sales expenses have increased significantly, but the net profit has decreased.

When traditional lighting transforms LED lighting, the growth rate is relatively fast due to channel and brand advantages. According to Shell Wright, this year, the company launched a new LED lighting product with relatively high cost performance in the industry. It is popular in the domestic and foreign markets, and the brand channel is developing rapidly. Therefore, the sales revenue of such products increased rapidly during the reporting period.

The lighting market has improved, making the packaging company orders very abundant. The reporter found that the income and net profit of many packaging companies including Guoxing Optoelectronics and Ruifeng Optoelectronics increased during the first quarter earnings report of related packaging companies.

Although the market scale continues to expand, but the price is always the main obstacle to the large-scale promotion of LED lighting. "The domestic LED industry has succeeded in 'price theory', and most of the company's revenue growth is mostly dependent on export. But since the beginning of this year, the domestic LED lighting market trend has turned better, and improving product cost performance has become the primary problem for enterprises."

Shang Mingjie, manager of Huayi Lighting Optoelectronics Division, said.

Gong Wen believes: "At present, customers' requirements for product performance and price are constantly improving. Enterprises need to continuously reduce innovation while trying to reduce production costs." In terms of packaged devices, packaging companies can choose to jointly develop with upstream companies for downstream applications. Enterprises provide high-performance, low-cost packaged devices that provide better lighting products to end customers and consumers.

Emerging markets warming up

Among the major export areas of domestic LED lighting, the European and American markets have experienced a sharp decline in their export share due to the financial crisis and the Japanese market due to political factors. Many companies have turned to domestic sales. In the past two years, with the emergence of many emerging seaports such as Southeast Asia, South America, and Africa, the export volume of domestic LED companies in the above regions has increased rapidly.

It is understood that the global LED market has gradually recovered from last October. Demand in the first quarter of this year has risen sharply, and the outstanding performance of emerging markets is even more remarkable.

The person in charge of Qinshang Optoelectronics said that the rapid growth of this year's performance is not unrelated to emerging markets, especially in South America and East Asia.

Shang Mingjie also said that emerging markets such as Southeast Asia and South America have large demand for LED lighting and are not very sensitive to price. As long as the domestic LED product technology and quality are excellent, the opportunities in these emerging markets are still quite large.

According to data from an overseas research institute, 10.6% of the nearly 1,000 LED lighting companies surveyed in China are mainly exported to Southeast Asia, second only to the EU's 17.0% and North America's 15.9%.

Among them, more than 35% of enterprises are optimistic about the Southeast Asian market in neighboring continents, and believe that the demand for LED lighting in the region will show a steady upward trend in 2013.

In Vietnam, for example, Vietnam will achieve a 38% urbanization level by 2015, which will be a great opportunity for China's LED lighting exports.

In addition, as the largest and most populous country in South Asia, India has spared no effort in promoting the conversion of traditional lighting systems to LED lighting. This is a country with nearly 80% of national lighting products coming from China.

Zhang Lei, director of marketing for Global Markets Group, believes that LED prices are relatively high compared to traditional lighting products. It is very similar to the LED lighting market in mainland China. Some countries such as ASEAN and South Asia have not been promoted on a large scale, but these regions have great market potential.

Cost-effectiveness

"From the perspective of domestic and international market performance, this year's LED lighting market is expected to achieve substantial growth, but the price is still the main obstacle to the promotion of LED lighting market this year." Gao Zong, LED Industry Research Institute, deputy director said.

Therefore, LED lighting needs to be promoted quickly, but also need to work hard to reduce product prices and improve cost performance.

"LED Lighting Channel" reporter learned in Zhongshan and other places to visit the research, the terminal market has appeared 3W power, the price of only 5 yuan LED bulb products, and LED lights have been as low as 3 yuan / meter, the price even more than Similar traditional lighting products are cheaper.

In order to meet the needs of the market, many well-known LED lighting manufacturers have also begun to introduce low-cost, cost-effective LED lighting products. The price of less than 3 yuan per watt is everywhere in these manufacturers' catalogs.

"Using high-end brands and prices to participate in the domestic market competition, it is not grounded, the consequences of not being grounded can only be failure." Tan Wei, general manager of Laiwei Optoelectronics said.

Yu Jing, assistant to the president of Xinli Light Source, also said that the LED lighting products on the market are mixed, and the inferior products have a huge impact on the lighting market. Good products because the price can not be scaled up, but he believes that this situation will not last long.

There are also people in the industry who attribute the confusion of the industry to the lack of standards. Zhou Xuejun, director of marketing for Philips Asia, said frankly that although there are many standards and norms in the market, no standard can rise to the stage of national standards. Many so-called local standards are not lacking in the show, or local protection, or the means of marketing LED lighting companies.

Cost-effectiveness is the key to the promotion of LED lighting. However, the reality is that many low-cost products are often based on the premise of sacrificing quality.

"Low-priced lighting products can bring short-term profits and sales to enterprises, but it is very unfavorable for the long-term development of the company." Liu Haidong, deputy general manager of Dehao Runda, said that it is now the LED lighting company to sprint and accumulate brands. In the era of accumulating customers, brand companies should not hit the market with low-priced products and pursue short-term profits. This will only smash their own brands, and it will be difficult to mix them in the industry in the future.

"Currently, the purpose of brand enterprises to lay out domestic channels is more to create conditions for establishing independent brands. Even the old-fashioned traditional lighting enterprises are faced with the problem of channel upgrading. It is difficult to achieve profitability in the short term." Shang Mingjie said .

Therefore, companies that once seized the market at low prices have also begun to take the high-end route. Including the Linsen and Changfang Lighting, which provoked the price war banner last year, they all launched their own high-end commercial products, trying to establish their own high-end brands with the existing brand effect.

Wanting to not only sacrifice product quality, but also break the price deadlock of LED lighting, companies must work hard on the scale of production.

Zhang Xiaofei said that the situation of price chaos this year will not be much improved. The industry will have a large number of lighting companies whose scale and technology can not meet the requirements are eliminated. After the home lighting market is truly opened, the future price war will be even more bloody.

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