29 Aug 2019
China’s Lighting Market
I. Market Overview
As China’s economy continues to grow and living standards rise, the mainland market demand for lighting products is also expanding. The country has become a world-leading lighting producer and consumer. Light emitting diodes (LEDs), compact fluorescent lamps (CFLs), electrodeless discharge lamps (EDLs) and organic light emitting diodes (OLEDs) are major products in the mainland lighting market.
Some of the major factors propelling the growth of demand for lighting products in the mainland market are:
- Urban functional lighting: Infrastructure facilities, such as airports, railways, ports and urban rail transport systems, all need lighting. Also, flood lighting in city squares, green areas, roads and buildings has spread from large to small and medium-sized cities. Given China’s rapid and continuing urbanisation, the potential for growth in the demand for public lighting is huge.
- Industrial and commercial lighting: Industrial enterprises are attaching increasing 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, there has been a marked improvement in lighting in offices, schools and hospitals.
- Consumption upgrade: Consumers are increasingly looking to upgrade their choice of domestic lighting. This, coupled with the rapid development of the property market, is likely to boost the sale of interior lighting fixtures. With the growth of the real estate sector in the mainland, rising numbers of high-class residential communities and villas are being built, which boosts 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 encouraging and supporting environmental protection and energy conservation in recent years, via policies and regulations like The Energy Conservation Law of the People’s Republic of China and Opinions on Accelerating the Development of Energy-saving and Environmental Protection Industries. The intensive promotion of eco-friendly products is driving up the demand for energy-saving lighting.
Landscape lighting is another significant part of the lighting market. The priority given to developing environmental protection industries will continue to act as a major impetus to the development of LED lighting. In 2018, the output value of outdoor lighting products reached RMB95 billion and that of landscape lighting exceeded RMB93.6 billion. Decorative lights for public areas, such as streets and squares, are the leading products in this area.
Today, luminaires for the home are no longer used just for lighting, but have become an essential part of interior design. Many consumers now place increasing emphasis on the ambience created by lighting in their homes. As a result, they pay great attention to lighting fixtures’ styles and materials to ensure that they match their home decor. The design, style and colour of lighting fixtures are becoming increasingly sophisticated, while more efforts are being devoted to achieving artistic effects.
Stylish, personalised, energy-efficient and eco-friendly lighting fixtures are the latest trends in home decoration. Mainland demand for personalised luminaires is expanding, leading to a greater diversity in the colours and designs of lighting fixtures on offer. Some lighting manufacturers have introduced integrated cove lighting designs that can incorporate Bluetooth-enabled audio systems, central air conditioning, air purifiers and other functions, depending on customers’ requests. Integration of lighting with home decor may be the way forward.
There’s also been a rise in demand for lighting fixtures with specific functions, intended for different environments, purposes or even moods. These include iridescent lamps, writing lamps, daylight lamps, dinner lamps and floor lamps. Novel lighting series designed specifically for children are also gaining popularity. Energy efficiency, eco-friendliness and high technology are the major development trends in the decorative lighting sector.
The intelligent lighting market has grown in leaps and bounds in recent years. Mainland enterprises have developed smart voice-controlled lamps and intelligent table lamps with a wireless charging function for mobile phones. Integration of lighting with entertainment is also increasingly being seen in the home use market. For instance, Signify, a brand owned by multinational conglomerate Philips, has signed a global co-operation agreement with gaming hardware manufacturer Razer to bring together indoor lighting and computer games, giving e-sports lovers an enhanced immersive game experience.
The National Semiconductor Lighting Project has helped to create seven national semiconductor lighting industrial bases (Shanghai, Dalian, Nanchang, Xiamen, Shenzhen, Yangzhou and Shijiazhuang). 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. This sets a series of targets for the semiconductor lighting energy-saving industry. These include increasing output at an average annual rate of about 30%, stabilising the market share of CFLs and other traditional high-efficiency lighting at about 70% and securing a market share of over 20% for LED functional lighting products.
Under China’s Roadmap for Phasing out Incandescent Lamps, the import and sale of general-purpose incandescent lamps are to be phased out according to their wattage. 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 since October 2014; and incandescent lamps 15W and above for general lighting since October 2016.
The demand for energy-saving CFLs, an alternative to incandescent lamps, is expected to rise gradually. The implementation of China’s subsidy policy for energy conservation and consumers’ increasing awareness of energy saving are set to boost the overall market performance of CFLs. By the end of 2013, the subsidy policy had resulted in 780 million high-efficiency lighting products being put into use, while the adoption of CFLs, LED lights and other high-efficiency lighting products was accelerating and high energy consuming products, such as incandescent lamps, were gradually being eliminated. According to an NDRC announcement, government subsidies helped sell as many as 100 million CFLs in 2014.
The development of the LED market is picking up speed as incandescent lamps are phased out. China has been heavily promoting the use of LED street lamps. In 2009, it launched a 10,000 LED Street Lamps in 10 Cities project, which was later expanded to Two Million LED Street Lamps in 50 Cities. Such initiatives succeeded in accelerating the development of the LED lighting market. LEDs, a fourth-generation light source, or green light source, can be used in many ways, including signage, displays, decoration, back lighting, general lighting and urban nightscapes. While LED lights cost more than CFLs and incandescent lamps, they outperform both in terms of efficiency and lifespan. They have found favour with consumers because they are less harmful to both the environment and human health. In 2018, the output value of the LED industry as a whole was RMB728.7 billion, up 13.5% from the year before. About 30% to 40% of mainlanders now use LED lights.
In recent years, EDLs have begun to make their mark on China’s lighting market, competing with LEDs to become the leading fourth-generation lighting source. EDLs are durable, environmentally friendly products which combine high efficiency and low energy consumption. However, they are relatively costly (several times more expensive than CFLs), there is no uniform national standard and there is the possibility of external electronic interference.
The application of OLEDs is expanding. Led by technology giants such as Apple and Sony, many companies are working on the use of OLED in AR/VR, smartphone, TV and computer products. OLEDs have the advantages of being light, thin and flexible and have a wide colour range and visual angle. Domestic colour TV manufacturers such as Skyworth, Changhong and Konka have produced different models of OLED TVs. Thanks to the advance of OLED technology and the growing penetration rate of these products, the value of China’s OLED market grew from US$530 million in 2011 to US$10.35 billion in 2017, a compound annual growth rate of 64.2%.
China’s imports of major lighting appliances and related products in 2018:
|8539||Electric filament or discharge lamps; arc-lamps||822.7||-18.7|
|94051000||Chandeliers and other electric ceiling or wall lighting fittings, excluding those of a kind used for lighting public open spaces or thoroughfares||49.2||3.3|
|94052000||Electric table, desk, bedside or floor-standing lamps||18.7||-2.3|
|94053000||Lighting sets of a kind used for Christmas trees||0.6||0.3|
|94054090||Other electric lamps and lighting fittings||264.4||15.2|
|94055000||Non-electrical lamps and lighting fittings||4.7||5.1|
|94056000||Illuminated signs, illuminated name-plates and the like||9.6||-45.8|
|94059100||Parts, of glass||5.6||-13.7|
|94059200||Parts, of plastics||44.4||-27.3|
Source: Global Trade Atlas
II. Market Competition
The integration of China’s lighting industry has led to the formation of five major production bases in Guangdong, Zhejiang, Jiangsu, Fujian and Shanghai. Together, the number of lighting enterprises in these four provinces and one municipality accounts for over 80% of the industry total. In terms of product type, each of the five production bases has its own characteristics:
Guangdong mainly produces interior lighting fixtures, with the cities of Guzhen in Zhongshan and Dongguan being the leaders in decorative luminaires. There are about 7,739 lighting companies in Guzhen, most of which are mainland enterprises. Their total output amounted to RMB24 billion in 2018, 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, 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 of 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 is mainly concentrated in Xiamen, where CFLs are the major products. The total output value of Xiamen’s opto-electronics industry reached RMB167.6 billion in 2018, accounting for half of the province’s total opto-electronics output value. Of this, the output value directly contributed by LEDs was RMB39.73 billion, comprising 23.7% of the industry’s total output value.
China’s LED enterprises are actively expanding into overseas markets. For example, Mulinsen has merged with Germany’s Ledvance, while Opple is continually establishing subsidiary companies overseas. Meanwhile, mainland lighting enterprises are also strengthening their presence in China by setting up display centres and more specialty stores. Mainland enterprises are expected to devote more resources in future into technological development and innovation so as to add more value to their products and boost their competitiveness.
The development of medical, aviation and electronic lighting is a growing trend for traditional lighting companies looking to upgrade and transform their business. In recent years, international brands such as General Electric, Siemens and Osram have been downsizing their traditional lighting business and focusing on the more lucrative business of health applications. They have been increasing their R&D investment in medical devices, automotive lighting, industrial applications and plant lighting.
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, however, a growing number of businesses are adopting online platforms as a new sales channel.
Many manufacturers and distributors showcase their products to consumers at specialised lighting marts all under one roof. Since selling products at these specialised marts is more direct than through counter sales, the interaction between buyer and seller is stronger, prices are relatively low, and choices are extensive. Lighting marts are highly popular with consumers and have been developing rapidly in recent years. Lighting marts of various sizes have emerged in Zhejiang, Hangzhou, Beijing, Taiyuan, Shanghai, Chengdu, Zhengzhou, Wuhan, Tianjin, Qingdao, Chongqing, Shenyang and Shijiazhuang.
Hardware stores, which are in effect building materials stores selling a great variety of building materials and related products, are one of the most important sales channels for lighting fixtures. Hardware stores are widely distributed across the country, which means that some small and medium-sized companies that struggle to compete against international and mainland branded enterprises can still succeed by concentrating their resources on hardware stores in regional markets and building regional brands.
Some big mainland lighting enterprises are increasingly appreciating 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 sales networks. Examples include Huayi, Opple, NVC and Midea. At the same time, some lighting chain stores have emerged, such as Yidengdashi.
A growing number of lighting businesses have adopted e-commerce models as a new sales channel in recent years. Many rely on e-commerce platforms like Tmall and JD.com. This allows them to market and promote products and makes it easier for their customers to browse and choose what they want. It can also help these businesses increase sales and reduce inventory pressure rapidly. Traditional enterprises usually operate a number of physical stores as well, which means they can provide their customers with an offline experience, giving them an edge over pure online traders when establishing an O2O business.
Some of the lighting exhibitions being held in China in 2019 and 2020 are listed below:
|3-5 September 2019||Shanghai International Lighting Fair||Shanghai New International Expo Centre|
|18-20 September 2019||LED CHINA 2019 • Shanghai||Shanghai New International Expo Centre|
|24-26 February 2020||LED CHINA 2019 • Shenzhen||Shenzhen Convention and Exhibition Centre|
|10-12 April 2020||Chengdu International Lighting & LED Exhibition||Western China International Expo City|
|9-12 June 2020||Guangzhou International Lighting Exhibition||China Import and Export Fair Complex (Guangzhou)|
IV. Import and Trade Regulations
The State Council reduced the most-favoured-nation (MFN) tariff rates on 1,449 imported daily consumer goods from 1 July 2018. The tariff cuts cover products such as lighting fixtures, garment, headgear, footwear and cosmetics.
The import tariffs of selected lighting products in 2019:
|8539||Electric filament or discharge lamps; arc lamps||0-8|
|94051000||Chandeliers and other electric ceiling or wall lighting fittings, excluding those of a kind used for lighting public open spaces or thoroughfares||5|
|94052000||Electric table, desk, bedside or floor standing lamps||10|
|94053000||Lighting sets of a kind used for Christmas trees||8|
|94054090||Other lamps and lighting fittings||6|
|94055000||Non-electrical lamps and lighting fittings||10|
|94056000||Illuminated signs, illuminated name plates and the like||10|
|94059100||Parts, of glass||8|
|94059200||Parts, of plastics||8|
Source: Customs Import and Export Tariff of the People’s Republic of China 2019
Foreign companies looking to enter the Chinese market should be aware of the mainland’s relevant standards. Under the Standardisation Law of the People’s Republic of China (Revised Draft 2017), there are five sets of standards - national standards, industry standards, local standards, organisation 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 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 came into force on 1 May 2010. 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 information on relevant standards, visit the website of the Standardisation Administration of China and the standards website.
The Performance Requirements for Recessed LED Luminaires (GB/T 30413-2013), which took effect on 1 December 2014, provides the norm and guide for the lighting industry.
On 31 December 2013, China unveiled a host of national standards for the manufacture of lighting products: the new Luminaires - Application of the IK Code; the newly developed Safety Requirements for Electrodeless Fluorescent Lamps; and the revised Safety Requirements for Road and Street Lighting, Glow-starters for Fluorescent Lamps, and Neon Lamp Controlgear. Luminaires – Application of the IK Code (GB/Z 30418-2013) came into force on 1 December 2014. The revised Safety Requirements for 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/T 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 in force since 1 July 2015.
The revised Performance Requirements for Non-directional Self-ballasted LED General Lighting (GB/T 24908-2014) replaced GB/T 24908-2010 on 1 August 2015. The 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 the same date.
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. It sets out the basic principles and requirements for the compulsory certification of lighting appliances. The new mandatory rule has been in force 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. The implementation rules state that - in addition to fixed general purpose lighting in 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, and AC electronic ballasts for fluorescent lamps - two more product types, “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.
The recommended national standard Accelerated Test Method of Luminous Flux Depreciation for LED Lighting Products (GB/T 33720-2017) was 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.
The national standard Limits and Methods of Measurement of Radio Disturbance Characteristics of Electrical Lighting and Similar Equipment (GB/T 17743-2017) came into effect on 1 July 2018, replacing Limits and Methods of Measurement of Radio Disturbance Characteristics of Electrical Lighting and Similar Equipment (GB/T 17743-2007) as the basis for compulsory certification. The amendment specifies the scope of products covered by GB/T 17743 and includes new limits and methods of measurement for products like lamp cords and extra-low voltage (ELV) lighting.
The recommended national standard, Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades of LED Products for Indoor Lighting (GB 30255-2019), will be implemented on 1 May 2020. It will replace the Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades of Non-Directional Self-Ballasted LED Lamps for General Lighting Services (GB 30255-2013). Under the new standard, revisions will be made to the luminous efficiency indicators and technical requirements on lumen maintenance factor of various grades of non-directional self-ballasted LED lamps.