A few days ago, reporters learned from a forum that the total output value of China's LED lighting market in 2014 was approximately 550 billion yuan, an increase of 5% from 480 billion yuan in 2013. However, Dou Linping, secretary-general of the China Illuminating Society, said that "the golden period of China's LED industry will not exceed 5 years."
The total output value of the LED lighting market last year was about 550 billion
"Last year, the entire Chinese LED industry was in great shock. From time to time there were news reports that well-known companies were acquired, and many companies went bankrupt or ran away directly. But overall, China's LED lighting market was completely opened up in 2014, which can be felt by both manufacturers and dealers." said Dou Linping, secretary-general of the China Illuminating Society.
He mentioned that the total output value of China's LED lighting market in 2014 was approximately 550 billion yuan, an increase of 5% from 480 billion yuan in 2013. "Although the entire industry is currently on the rise, I believe that the golden period of China's LED industry will not exceed five years. I have been saying this since the end of 2013, and now it seems that there is only a golden period of three or four years."
Dou Linping explained that the current situation of the entire Chinese LED industry is that the huge stock market ensures a high growth trend, but with the recession of the real estate market, new construction has begun to decrease, and the rapid digestion of the stock market will greatly restrict the development of the LED industry.
“Last year, many companies have realized that the domestic market is becoming saturated and have begun to vigorously explore the international market.” Dou Linping said that the export of LED products grew rapidly last year, with annual lighting product exports exceeding US$40 billion, of which LED lighting products reached US$15 billion, accounting for more than 40% of the total output value of lighting products.
The sales of the top ten brands only account for 10% of the domestic market
Dou Linping said that the golden period for China's LED development will be less than five years in the future. In addition to the LED stock market slowly shrinking, the fierce competition brought about by the low industry threshold is also a major reason. "The low threshold has led to a large number of companies in the industry and disorderly competition. At first glance, there are currently tens of thousands of LED companies across the country, and some say there are 20,000 to 30,000 in Zhongshan City alone. Regardless of whether the data is accurate, it is enough to show that China's LED industry is in a melee situation."
Lin Jiliang, general manager of Mulinsen Lighting Co., Ltd., agreed with this. He mentioned that the leading companies in the global LED industry, such as the top ten lighting brands including Philips, have a combined market share of less than 10% in China. "In contrast, in India only one brand, Philips Lighting, accounts for 30%. This shows that there are many LED companies in China and the sales channels are confusing."
As the domestic LED market becomes saturated, competition in the LED industry is becoming increasingly fierce, and the living space for counterfeit lighting fixtures is getting smaller and smaller. LED lighting companies can either become the "leader" in the industry and make the market segment bigger and stronger, or they can only be integrated and acquired or forced to close down.
Du Jianjun, chairman of Shenzhen Overfrequency Three Technology Co., Ltd., pointed out that last year Philips split its lighting division, Samsung withdrew from the overseas LED lighting market, mergers and acquisitions in the LED industry accelerated, and limited resources in the lighting industry were integrated more. "At present, the global LED market is dominated by Asia, the United States, and Europe. The main manufacturers include Japan's Nichia Chemical and Toyoda Gosei, the United States Cree, and Europe's Philips and Osram. In the future, China's LED industry will also face a reshuffle under the general trend."
Enterprises spend 200 million to build e-commerce channels
"Those who win the channels win the world" is a recognized truth in the LED industry. Most companies entering the LED field hope to develop their efforts in traditional sales channels to promote sales growth. However, as e-commerce giants such as JD.com and Alibaba have gone public one after another, while the Internet is promoting consumption upgrades, it is also changing the inherent channel advantages of traditional enterprises.
Ma Zhiwei, vice president of Opple Lighting, said that the advent of e-commerce is a mixed blessing for the entire LED industry, because many companies are facing the problem of re-occupying their positions. In particular, many companies that have advantages in traditional channels are not keen on rebuilding e-commerce channels.
In this regard, Lin Jiliang said that Mulinsen Lighting is very optimistic about LED products through e-commerce channels. He believes that the inherent advantages of e-commerce channels can bring practical benefits to consumers, such as price transparency and freedom of purchase time. "Last year, Mulinsen Lighting spent 200 million to build e-commerce channels, hoping to help us break out in the melee."
Xiao Guowei, President of Jinko Electronics, expressed his appreciation for Mu Linsen’s approach. He mentioned that new e-commerce channels will have a great impact on the entire old LED channel market. He believes that the O2O platform provides a good opportunity for a large number of LED small and medium-sized enterprises, because compared with the huge cost of traditional channel construction, the low-cost advantage of e-commerce channels provides opportunities for small and medium-sized enterprises.
However, Dou Linping is not optimistic about the e-commerce development path of LED products. He believes that e-commerce sales channels are unlikely to become the mainstream channels for LEDs because lighting products require design and installation, that is, services. "Although LED e-commerce data grew rapidly in 2013 and 2014, analysis shows that the products sold through e-commerce channels are mostly standard products, such as bulbs, ceiling lights, ceiling lamps, brackets, etc. If it is a lantern or the lighting design of a new building, it is very difficult to sell it online."
He further mentioned that although there are currently many e-commerce companies in the LED industry, including NVC Lighting, which is also building an O2O platform, at present, there are not many successful companies in e-commerce sales channels, and most companies still mainly rely on traditional agents for sales.
ANNA