China’s exports to 70 countries under its “One Belt, One Road” strategy was up 1.5% to US$ 372 billion from January to June 2015, according to China’s custom data. The country’s imports declined 18.8% to US$ 256 billion, while its trade surplus rose US$ 65 billion compared to last year’s US$ 115.5 billion. Vietnam is China's third largest trade partner, and it has a trade surplus relation with the country.
Signs of China’s trade surplus can be observed its LED lighting product export statistics to Vietnam. China's exportation reached US$ 73.7 million, reporting 1,424% year-on-year growth (YoY) in 1Q15. China’s ranking of importation into Vietnam rose from the 10th to 7th place compared to 4Q14. Meanwhile, China’s exportation to Vietnam takes more than one third of the total south Asian market by June 2015. In the first half year of 2015, though the ranking dropped from the seventh place to eighth place, it’s still higher than that of 2014.
While ChineseLED lighting industry grew mature, making major manufacturers’ expansion easier and standardizing product production, the potential and scale of Vietnam's LED lighting market attracts attention. Where lies the potential market Vietnam’s LED lighting industry?
US $2 billion invested in real estate holds great potential for lighting market.
According to the 2011-2020 National City Development Planning draft published by Ministry of Construction of the Socialist Republic of Vietnam, the urbanization rate of Vietnam is projected to rise from 27% to 45.2% by 2020. Throughout the period throughout 2011 to 2020, Vietnam's cities will need 364 million square meters of living space, implying an annually 36 million square meters of. Urbanization and rapid economic growth will boost demand of lighting products and large amount of both indoor and outdoor lighting projects. Vietnam's lighting market is witnessing its golden age.
According to reports of Vietnam's Ministry of Planning and Investment, from January to July 2015 Vietnam’s newly approved and capital increase rose to US$ 8.8 billion, reflecting 92.4% YoY growth. Total Foreign Direct Investment (FDI) rose 8.8% YoY to US$ 7.4 billion. Foreign investors invested in 17 different areas in Vietnam, real estate ranks second place with 15 newly authorized and seven capital increase projects, totaling US$ 1.7 billion and amounting to 19.3% of the nation's total registered capital.
According to data provided by Vietnam's Enterprise Management Department, the country's newly enrolled real estate business is booming. A total of 61,305 new enterprises were launched in the first eight months of 2015, reflecting 29.9% YoY growth. The registered capital rose to US $16.7 billion, reflecting 29.2% YoY growth. There were 18 newly launched real estate corporations and seven foreign enterprises increase investment amount.
These Foreign Direct Investment (FDI) will boost development of real estate industry, therefore demand of lighting products is expected to take off too. Realization of urbanization and rapid economic growth will boost demand of lighting products and large amount of both indoor and outdoor lighting projects. Vietnam’s lighting products market entered a golden age.
Owing to the high energy consumption level of lighting products, Vietnam has implemented Energy Efficient Public Lighting Project (VEEPL). The project will help reduce energy consumption by replacing and improving existing lighting system. It's projected that by 2015, Vietnam will complete the replacement of high pressure sodium- vapor street lights and all indoor T8 and T5 light tubes with energy saving lights. Since 2008, LED lighting system has been gradually installed to different places in order to reduce energy consumption and improve existing lighting system. Therefore, the demand of LED lighting and clean energy lighting system is rapidly growing.
Commercial and offices LED lighting market has great potential.
By the end of 2013, there were 724 supermarkets, 132 shops and hundreds of convenient stores in Vietnam, along with approximately 1 million vendors from 8,500 markets. Only 22% of the retailers are modern retailers, according to Vietnam Retailers Association. Compared to neighboring countries and regions, Vietnam's retailing market has greater potential.
As planned by Ministry of Industry and Trade, Vietnam will accommodate 1,200 to 1,300 supermarkets, 180 commercial centers and 157 shopping malls by 2020.
In the first seven months of 2015, foreign investors invested in 47 provinces in Vietnam. Newly approved investment and capital increase in Ho Chi Minh City rose to US $2.42 billion, taking 27.5% of total registered capital. This also makes Ho Chi Minh City top the rankings of highest foreign capital invested cities. Bình D and Nai City placed second and third with US$1.1 billion and US$ 1 billion, reflecting 12.6% and 12.5% of national investment amount.
Currently, the occupancy rate in Ho Chi Minh City exceeded 95%. It’s projected that the city will complete construction of up to 500,000 square meters of office building within five years, providing and extra 160% office space. Meanwhile, lots of commercial and industrial districts are under construction in Ho Chi Minh City and its vicinity areas, including Dong Nai, Binh Duong and Ba Ria – Vung Tau.
Tourism gains popularity, entertainment and hotel market are booming.
Vietnam will surely need more luxury hotels to accommodate the increasing tourists from around the world. According to Vietnam's tourism department, Honi will need more than 13,000 three to five stars hotel rooms to accommodate tourists, while Ho Chi Minh city requires approximately 7,000 rooms.
Aside for accommodation needs, Vietnam is also one of the most prospering cities in entertainment and media markets. It's shown that the revenue of entertainment industry exceeded US$ 2.3 billion in 2013. There were more than 4,215 bars, 1,189 discos and 73 movie theaters in 2013. Thanks to the increasing spending power, high youth population and governmental support, more entertainment and recreational facilities will be built in the future.
The construction and increase of entertaining facilities is made explicit when examining details of Vietnam's imported LED lighting products. In 2014, stage lights topped Vietnam’s China-imported luminaires at 87.7%. LED ceiling lights occupied the second place at 5.8% and LED down lights took third place at 3.5%. The high percentage of entertainment lighting imported also backed the development of entertainment in the past two years.
Government's full support creates the perfect timing for LED manufacturers to enter the market.
In 2005, the Ministry of Industry and Trade (MOIT) approved national energy efficiency and conservation 2006-2015, which known as the Vietnam Energy Efficiency and Conservation Program (VNEEP). VNEEP aims at increasing energy efficiency and reducing energy consumption by implementing varied procedures.
Vietnam promised to reduce import tax after joining WTO in 2007. At the end of 2008, Vietnam made 1%-5% tariff discount toward ASEAN counties based on Common Effective Preferential Tariff (CEPT). By 2014, the tariff was reduced to an average of 13.4% and implement zero tariff toward general products by 2015.
The Vietnamese government rolled out a US$ 90 billion urban upgrading project, aiming at 70% of urbanization by 2020. The urban upgrade project will further stimulate Vietnam's architectural lighting market, especially residential lighting, commercial lighting, hotel lighting, resort, entertainment and infrastructure lighting.
