23 Oct 2017
China’s Lighting Market
I. Market Overview
Lighting products are essential to the development of the national economy and people’s livelihood. As China’s economy continues to grow and living standard rises, mainland market demand for lighting products is also expanding. In the last 20 years, China’s lighting industry has been developing rapidly and the country has become a leading world lighting producer and consumer. Light emitting diodes (LEDs), compact fluorescent lamps (CFLs) and electrodeless discharge lamps (EDLs) are major products in the mainland lighting market.
There are many factors propelling mainland lighting market growth, including:
Urban functional lighting:
Infrastructure facilities such as airports, railways, ports and urban rail transport systems all need lighting. Meanwhile, flood lighting in city squares, green areas, roads and buildings has spread from large cities to small and medium-sized cities. As China continues to urbanise the potential demand for urban public lighting projects is huge.
Industrial and commercial lighting:
Today, industrial enterprises are attaching more and more importance to the role played by lighting in enhancing production efficiency, while commercial enterprises are spending more money on lighting shopping malls in order to attract customers. At the same time, lighting in offices, schools and hospitals has also seen marked improvement.
As consumption continues to upgrade people are placing more importance on the choice of domestic lighting. This, coupled with the rapid development of the property market, is bound to boost the sale of interior lighting fixtures. Following the growth of the real estate sector in the mainland, high-class residential communities and villas emerge one after another bolstering the demand for yard lamps and lawn lamps. The demand for high-end lighting fixtures is increasing.
Environmental protection and energy conservation:
China has been promoting environmental protection and energy conservation in recent years. Its successive rolling out of policies and regulations such as The Energy Conservation Law of the People’s Republic of China and Opinions on Accelerating the Development of Energy-saving and Environmental Protection Industries is providing support for the development of the environmental protection industries. At the same time, the intensive promotion of energy-saving and eco-friendly products is driving up the demand for energy-saving lighting products.
In the landscape lighting market, decorative lights for public areas such as streets and squares are the leading products. The priority given by China to the policy of developing energy-saving environmental protection industries will continue to serve as the major impetus propelling the development of LED lighting. Market data reveals that the output value of landscape lighting products reached RMB50 billion in 2016 and that of outdoor LED lighting will exceed RMB100 billion in 2017.
Today, luminaires for the home are no longer confined to simple lighting, they are now a must for tasteful interior design. Consumers now place more emphasis on the ambience created by lighting in their home. As a result, they pay great attention to lighting fixtures’ styles and materials to ensure that they match home decor. The design, style and colour of light fixtures are becoming more and more sophisticated, while more efforts are being devoted to achieving the right artistic effects. With the development of technology it will be possible to combine LED lighting with the furniture industry to form a home industry alliance. The design of individual products looks set to depend on the holistic design of homes in future.
Personalised, energy-efficient and eco-friendly lighting fixtures are the latest trends in home decoration. In the mainland market, demand for personalised luminaires is expanding and the colours and designs of lighting also come in a great diversity. Some lighting manufacturers have introduced integrated cove lighting designs that may incorporate audio systems via Bluetooth, central air conditioning, air purifier and other functions based on customer request. Integration of lighting with home decorating may be the way forward.
Meanwhile, lighting fixtures are becoming more sophisticated. Lighting products for different environments or purposes have been developed, such as iridescent lamps, writing lamps, daylight lamps, dinner lamps and floor lamps. There are even lighting products designed specifically for children. Energy efficiency, eco-friendliness and high technology content are also major development directions in the decorative lighting industry.
Driven by the National Semiconductor Lighting Project, seven national semiconductor lighting industrial bases (namely Shanghai, Dalian, Nanchang, Xiamen, Shenzhen, Yangzhou and Shijiazhuang) were formed. In February 2013, six ministries and commissions headed by the National Development and Reform Commission (NDRC) and the Ministry of Science and Technology issued the Planning for the Semiconductor Lighting Energy Saving Industry to promote energy efficiency and emissions reduction. The plan sets a target of about 30% average annual output growth for the semiconductor lighting energy-saving industry, a target of stabilising the market share of compact fluorescent lamps (CFLs) and other traditional high-efficiency lighting at about 70% and a target of over 20% market share for LED functional lighting products.
Under China’s Roadmap for Phasing out Incandescent Lamps, starting from October 2012, the import and sale of incandescent lamps for general lighting is to be phased out according to their power. Incandescent lamps 100W and above for general lighting have been prohibited from import and sale since October 2012; incandescent lamps 60W and above for general lighting have been prohibited from import and sale since October 2014; and incandescent lamps 15W and above for general lighting have been banned from import and sale since October 2016.
The demand for energy-saving CFLs, an alternative to incandescent lamps, is expected to rise gradually. Meanwhile, amidst the worldwide trend of green lighting, the promulgation and implementation of China’s subsidy policy for energy conservation and consumers’ increasing awareness of energy saving are set to promote the overall market performance of CFLs. As at 2013 year-end, the policy has cumulatively promoted the use of 780 million high-efficiency lighting products, accelerated the adoption of CFLs, LED lights and other high-efficiency lighting products and the gradual elimination of high energy consuming products, such as incandescent lamps. According to an NDRC announcement, as many as 100 million CFLs have been taken by the market through government subsidy in 2014.
The development of the LED market is picking up speed as incandescent lamps are being phased out. China has been promoting the use of LED in street lamps in earnest; in 2009, it launched a 10,000 LED Street Lamps in 10 Cities project, which was subsequently expanded to Two Million LED Street Lamps in 50 Cities. Such initiatives succeeded in accelerating the development of the LED lighting market. LEDs, known as the fourth-generation light source or green light source, can be applied in various areas, such as signage, displays, decoration, back lighting, general lighting and urban nightscapes. The illumination efficiency and lifespan of LED lights outperform CFLs as well as incandescent lamps, but prices are also higher. They have found favour with consumers because they have a smaller impact on the environment and human health.
China’s LED industry is growing fast. In 2016, the output value of the LED industry as a whole reached RMB521.6 billion, up 22.8% from 2015. LED lighting products had a penetration rate of 42%, an increase of 10% from a year earlier. About 8 billion LED lighting products were produced and 3.8 billion of these were sold in the mainland, up 33% and 35% year-on-year respectively.
EDLs have entered China’s lighting market in recent years as a new generation energy-saver, competing with LEDs as the leading fourth-generation lighting source. EDLs are durable, low-energy, environmentally friendly and high efficiency. Nevertheless, they suffer in comparison because they are several times more expensive than CFLs, there is no uniform national standard and there is the possibility of external electronic interference.
Some lighting products in mainland cities were found to be sub-standard. The Foshan Consumer Council in Guangdong conducted random checks on LED globes, downlights, ceiling lights, desk lamps and other products between December 2016 and March 2017. The results revealed that less than half of the 40 product samples used in comparative tests were up to standard. In April 2017, the Chengdu Administration for Industry and Commerce announced that eight batches of CFL samples failed to meet requirements in fourth quarter 2016 random quality inspections. One reason for such low compliance rates could be the current keen price competition in the LED lighting market, forcing some manufacturers to use sub-standard materials to reduce costs. The healthy development of China’s lighting market would be hampered should this situation persist.
China’s imports of major lighting appliances and related products in 2016:
HS Code Description 2016
8539 Electric filament or discharge lamps; arc-lamps 801.0 -6.0 94051000 Chandeliers and other electric ceiling or wall lighting fittings, excluding those of a kind used for lighting public open spaces or thoroughfares 34.4 1.13 94052000 Electric table, desk, bedside or floor-standing lamps 17.3 39.9 94053000 Lighting sets of a kind used for Christmas trees 0.4 -53.6 94054010 Searchlights 7.7 -28.9 94054020 Spotlights 9.7 -16.2 94054090 Other electric lamps and lighting fittings 230.3 -7.5 94055000 Non-electrical lamps and lighting fittings 5.6 -10.9 94056000 Illuminated signs, illuminated name-plates and the like 24.9 33.8 94059100 Parts, of glass 7.4 -1.4 94059200 Parts, of plastics 22.9 -3.3 94059900 Other parts 112.8 -39.0
Source: Global Trade Atlas
II. Market Competition
Further integration of China’s lighting industry has led to the formation of five major production bases in Guangdong, Zhejiang, Jiangsu, Fujian and Shanghai. The number of lighting enterprises in these four provinces and one municipality account for over 80% of the total number of enterprises in the industry. In terms of product type, each of the five production bases has its own characteristics:
Guangdong mainly produces interior lighting fixtures, with Guzhen in Zhongshan and Dongguan being the leaders in producing decorative luminaires. There are about 8,960 lighting companies in Guzhen, most of which are mainland enterprises, with total output of the local lighting industry reaching RMB19.03 billion in 2016, making the town the largest specialised production base and wholesale market for decorative lighting on the mainland. In Dongguan, where Hong Kong and Taiwan-invested enterprises dominate, the products are mainly supplied to the international market, but in recent years greater efforts have been devoted to developing the domestic market. Other cities in Guangdong, such as Foshan and Huizhou, also account for a considerable share in the domestic market.
Zhejiang, Jiangsu and Shanghai mainly produce outdoor lighting fixtures and light sources. Yuyao in Zhejiang and Gaoyou in Jiangsu are the major producers of streetlights. In the Ningbo region, outdoor decorative lighting fixtures are the leading products. Shangyu, Lin’an and Jinyun primarily produce CFLs, round tubes and car lights. Shanghai and Changzhou in Jiangsu are leaders in producing floodlights and electrical accessories.
In Fujian, lighting fixture production mainly concentrates in Xiamen, where CFLs are the major products. The total output value of Xiamen’s opto-electronics industry reached RMB120 billion in 2016, accounting for 50% of the province’s total opto-electronics output value. Of this, the output value directly contributed by LEDs reached RMB32.3 billion, accounting for 26.9% of the total output value of the opto-electronics industry, up 20% year-on-year. By 2018, the total output value is projected to exceed RMB250 billion.
China’s lighting industry is highly dispersed. According to the China Association of Lighting Industry, currently there are over 10,000 domestic brands. First-line brands include NVC, TCL, Foshan Lighting, Yankon Energetic Lighting and Opple. In order to increase the value-added content of products they have all increased technology development and innovation. For example, TCL has established a national-level lighting laboratory and signed a memorandum of understanding with Taiwan’s LED Lighting Industry Alliance (TLLIA) to promote smart lighting. Opple has developed its phased lighting LED lamps with touch sensors on the wall and alternating warm and cool lighting to create a rich atmosphere of colour and light.
International brands in China’s lighting market include Philips, GE and Osram. The quality, aesthetics and versatility of their products are considered to be better than domestic rivals. These brands dominate the high-end market, supplying mainly to corporate clients such as upmarket communities, villas, hotels and government facilities, as well as a small number of high-end individual consumers.
The trend of overseas mergers and acquisitions is intensifying as Chinese LED enterprises gradually rise to prominence. For example, Konka Green Lighting Co Ltd of Anhui took over Toshiba’s China lighting operation in 2016.
III. Sales Channels
In China, lighting products are mainly sold through specialised lighting marts, branded stores, electrical appliance stores, home appliance chain stores, supermarket chains, hardware stores and building materials marts. Currently, most lighting products are distributed through specialised lighting marts. As technology advances, more enterprises have adopted online platforms as a new sales channel in recent years.
Many manufacturers and distributors showcase their products to consumers at specialised lighting marts under one roof. Since selling products at these specialised marts is more direct than counter sales, the interaction between buyer and seller is stronger, prices are relatively low, and choices are extensive, such lighting marts are highly popular with consumers and have been developing in leaps and bounds in recent years. In Zhejiang, Hangzhou, Beijing, Taiyuan, Shanghai, Chengdu, Zhengzhou, Wuhan, Tianjin, Qingdao, Chongqing, Shenyang and Shijiazhuang, lighting marts of various sizes have emerged.
Hardware stores, which are in effect building materials stores selling a great variety of building materials and related products, are one of the important sales channels for lighting fixtures. As hardware stores are widely distributed, some small and medium-sized enterprises, despite the fact that they cannot compete with international and domestic branded enterprises in terms of strength, can still make a breakthrough by concentrating their resources in hardware stores in a certain regional market and building regional brands.
A number of mainland lighting enterprises with considerable strength increasingly appreciate the importance of brand awareness. They have established specialised brand stores in various regions, unifying their store image, strictly controlling prices, and forming supply and sale networks. Examples include lighting giants Huayi, Opple, NVC and Midea. Meanwhile, lighting chain stores have emerged. For instance, Yidengdashi is one store specialising in home lighting fixtures.
More lighting enterprises have adopted e-commerce models as a new sales channel in recent years. Many are relying on e-commerce platforms like Tmall and JD.com to seek new opportunities through online channels. This not only allows them to market and promote their products and facilitates consumers browsing and choosing what they like, but can also increase sales and reduce inventory pressure within a short time. Traditional enterprises, as they usually operate a number of physical stores, can readily provide consumers with offline experience and thus have an edge over pure online traders in establishing an O2O business. First-movers in the O2O market include Hugewin and Opple, while NVC’s O2O e-commerce platform and SFT’s e-lighting website have also joined the fray. This sales channel is set to be more widely adopted by lighting products vendors.
Listed below are some of the lighting exhibitions in China in 2017 and 2018:
Date Exhibition Venue 31 Aug-2 Sept 2017 China (Beijing) International LED Lighting Exhibition China International Exhibition Center 2-4 November 2017 Hangzhou International Lighting Exhibition Peace International Conference and Exhibition Centre, Hangzhou 12-15 April 2018 Chengdu International Lighting & LED Exhibition Century City New International Convention and Exhibition Center, Chengdu 9-12 June 2018 Guangzhou International Lighting Exhibition China Import and Export Fair Pazhou Complex, Guangzhou September 2018 Shanghai International Lighting Fair Shanghai New International Expo Centre
IV. Import and Trade Regulations
There are basically no changes in import tariffs on lighting products in 2017. Given below is a summary of related products:
HS code Description % 8539 Electric filament or discharge lamps; arc lamps 3-12 94051000 Chandeliers and other electric ceiling or wall lighting fittings, excluding those of a kind used for lighting public open spaces or thoroughfares 10 94052000 Electric table, desk, bedside or floor standing lamps 20 94053000 Lighting sets of a kind used for Christmas trees 16 94054010 Searchlights 17.5 94054020 Spotlights 17.5 94054090 Other lamps and lighting fittings 10 94055000 Non-electrical lamps and lighting fittings 20 94056000 Illuminated signs, illuminated name plates and the like 20 94059100 Parts, of glass 20 94059200 Parts, of plastics 20 94059900 Other parts 20
Source: Customs Import and Export Tariff of the People’s Republic of China 2017
Foreign companies entering the Chinese market should take note of the relevant standards on the mainland. Under the Standardisation Law of the People’s Republic of China, which came into force on 1 April 1989, there are four sets of standards which, in descending order of binding force, are national standards, industry standards, local standards and enterprise standards. National standards are classified into mandatory standards and recommended standards; their standard codes are GB and GB/T respectively. Industry standards are also classified into mandatory standards and recommended standards; lighting products fall under light industry and the standard codes are QB and QB/T respectively. Semiconductor lighting falls under the electronics industry; its mandatory and recommended standard codes are SJ and SJ/T respectively.
National standards on LEDs are being formulated and improved following the industry’s rapid growth. A number of national standards were implemented in 2010, including LED Modules for General Lighting – Safety Specifications (GB 24819-2009), which took effect on 1 November 2010 and LED Modules for General Lighting – Measurement Methods (GB/T 24824-2009), which took effect on 1 May 2010. Moreover, a number of industry standards were also introduced in 2010, such as Measurement Methods for Semiconductor LED (SJ/T 11394-2009), and Measurement Methods for Chips of Semiconductor LED (SJ/T 11399-2009). For enquiries on relevant standards, please visit the website of the Standardisation Administration of China and the standards website.
The recommended national standard Reliability Test Methods for LED Luminaries (GB/T 33721-2017) will take effect on 1 December 2017. This standard specifies the measurement methods for indoor and outdoor LED luminaries with a voltage of not more than 1,000V and gives further clarifications on the luminous flux maintenance factor, life span of luminous flux maintenance and failure of LED luminaires.
To ensure the effectiveness of certification for lighting appliances and to upgrade product quality, the Certification and Accreditation Administration of China (CNCA) promulgated the China Compulsory Certification Implementation Rules – Lighting Appliances (CNCA-C10-01: 2014) on 16 July 2014, which stipulates the basic principles and requirements for the compulsory certification of lighting appliances. The new mandatory rule has been enforced since 1 September 2015. Products which have not been certified must not leave the factory, be imported, sold or used in business activities in China. According to the implementation rules, in addition to fixed general purpose lightings of which the power supply voltage is greater than 36V but not exceeding 1,000V, portable general purpose lighting, embedded-type lighting, aquarium lighting, ballasts for discharge lamps, AC electronic ballasts for fluorescent lamps, two product types, namely “high intensity electronic ballasts for gas-discharge lamps” and “AC or DC electronic control devices for LED modules” have been added to the list of products which must obtain China Compulsory Certification (CCC) for production and sales in China.
On 31 December 2013, China promulgated the new national standard Recessed LED Luminaires: Performance Requirements (GB/T 30413-2013), which was subsequently implemented on 1 December 2014 in order to help regulate and guide the lighting industry in China.
- The recommended national standard Accelerated Test Method of Luminous Flux Depreciation for LED Lighting Products (GB/T 33720-2017) will be implemented on 1 December 2017. This new standard may be used on lighting products including LED globes, LED spotlights and straight tubular LED lamps to ensure the quality of these products.
China announced on 31 December 2013 a host of new national standards for the manufacturing of lighting products: the new Luminaires – Application of the IK Code (new); the newly developed Safety Requirements for Electrodeless Fluorescent Lamps; and the newly revised Safety for Road and Street Lighting, Glow-starters for Fluorescent Lamps, and Neon Lamp Controlgear. Luminaires – Application of the IK Code (GB/Z 30418-2013) was effective on 1 December 2014. The newly revised Safety Requirements of Electrodeless Fluorescent Lamps (GB 30422-2013), Luminaires, Part 2-3: Special Requirements – Road and Street Lighting (GB 7000.203-2013), Glow-starters for Fluorescent Lamps (GB 20550-2013) and Lamp Controlgear, Part 2-10: Particular requirements for electronic inverters and converters for high-frequency operation of cold-start tubular discharge lamps (neon bulbs) (GB 19510.210-2013) have all been effective since 1 July 2015.
The newly revised Performance Requirements for Non-directional Self-ballasted LED General Lighting (GB/T 24908-2014) was implemented on 1 August 2015 to replace GB/T 24908-2010. In addition, the newly revised Classification of Specifications for Reflective Self-ballasted LED Lamps (GB/T 31111-2014) and Classification of Specifications for Non-directional Self-ballasted LED for General Lighting (GB/T 31112-2014) were also implemented on 1 August 2015.