China’s National Development and Reform Commission (NDRC) recently published a notification to “increase efforts to fulfill 2013 carbon emission reduction target,” according to a report by Guangming Daily. The notice revealed NDRC, Ministry of Finance (MOF) and Ministry of Housing and Urban-Rural Development (MOHURD) will be responsible for promoting the green lighting engineer project and implementing LED energy-saving industry plans. The government agencies will also be responsible for the continual implementation of energy-saving subsidiary projects to promote 130 million highly efficient lighting products sets, according to the announcement. From now on, green lighting fiscal subsidies will shift from fluorescent lights to highly efficient LED lighting products.
China’s exploding green commercial lighting market
Industry statistics showed a bursting China’s 2013 LED commercial lighting market, with 1H13 total LED street light biddings over RMB 20 billion (US$ 3.27 billion). Some Chinese provinces and cities accumulated bid value at the moment has surpassed the annual amount for 2012. In addition, international LED companies have large scale cooperation projects with Chinese LED companies and has overall raised China’s LED technology level. It is estimated as LED technology gradually matures product prices are continually lowered, and has increased promotion channels. Commercial lighting that includes LED street lights will be entering a new wave of fast growth.
From the current commercial market perspective, LED products have continued to replace conventional lighting products. In comparison, LED lighting products have the advantages of longer lifetime; higher light efficiency; conserves more energy; is more environmental friendly; flicker-free; emits no radiation; and uses low power. LED’s biggest flaw of high prices is also gradually being solved by technological advancements. Those in the industry explained pricing has been the main reason that LED products have not been applied on a large scale for commercial lighting. All these have led to NDRC’s promotional notification of gearing up on carbon emission reduction. This policy in turn can actively stimulate and promote the LED industry. Those in the industry believe the general trend will be the emergence of large scale LEDs entering the commercial lighting field. On the basis of environmental friendly and energy saving features, whether manufacturers can quickly undergo industrial upgrade and promote lighting with high P/P ratio will be a key element to their success or failure in the lighting market.
More businesses are switching to LED lighting products, due to the Chinese government’s promotional policies and lighting consumption costs. According to an industry source, China’s domestic LED tube shipment growth rate soared above 100% in 2013. In the next five years, growth rates of LED tube lights will be above 33%, and market sales growth rate will be more than 20%. LED tube light sales market is projected to reach RMB 44.5 billion in 2017.
Residential lighting has most potential in China LED market
According to industry experts, there are different LED lighting products and market penetration rate levels. These levels are classified according to user’s price sensitivity and power urgency. In general, lighting application markets can be further divided into long period factory lighting, while commercial lighting demands usually take off first. The sector with the fastest penetration rate tends to be partial lighting applications, and eventually leads to residential lighting demands.
China’s six government agencies including NDRC, Ministry of Science and Technology, Ministry of Industry and Information Technology jointly announced a “LED energy saving industry plan” in early 2013. The plan requires the LED lighting and energy-saving industry market value to reach an Year-On-Year (YOY) growth rate of about 30%, and reach RMB 450 billion by 2015. Out of these, LED lighting application products market value needs to reach RMB 180 billion. The launch of this project will no doubt become a lamp that lights up the path ahead for the LED lighting industry.
China has a huge market demand for conventional lighting. The country’s market for incandescent light and CFL in 2012 reached 1.18 billion lamps and 1.27 billion respectively. Fluorescent tube light market demands reached 830 million, while circular fluorescent lamp market demand was at 800 million. In addition, the nation’s halogen lamp market demand was at 755 million. If all these lights are replaced with LED luminaire products, it would be a massive market. Cree CEO Charles Swobodo once made a statement that the company’s goal is to replace every single incandescent light bulb.
Although the residential market has huge potential, its high initial investment and lack of consumer confidence still hinder its adoption. While those in the industry are optimistic about the future of LED residential lighting, they noted high price and product quality will be the biggest stumbling blocks for the popularization of LED lights. They also estimated LED lamps will not be widely adopted till 2020, where market shares will jump from 1% to 32%.
