Driven by a virtuous cycle of falling prices, policy support and energy goals, the light-emitted diode’s share of the lighting market in China will nearly double from 9.6% to 18% in four years, forecasts Lux Research in its report ‘Running to the Light: Sizing China’s LED Lighting Market’.
Both residential and commercial segments will drive LED lighting to a compound annual growth rate (CAGR) of 24%, far outpacing the 5.6% CAGR for the broader lighting market.China’s LED lighting market revenue will hence more than double from $3.1bn to $7.4bn in 2017, as ongoing urbanization, local energy savings targets, and price cuts make the technology more appealing, according to Lux.
“LED lighting has changed from expensive products outside the cost-conscious sweet-spot of Chinese buyers to value-adding solutions, gaining market share and realizing sustainable growth,” says Jerrold Wang, Lux Research associate and the lead author of the report.
Lux Research studied the Chinese LED market and industry value chain to assess opportunities for global players and investors. Their findings include the following:
In Lux’s Market Adoption Grid, Guangdong, Shanghai, Zhejiang and Jiangsu provinces emerged as the upper tier of ‘premium’ markets for LED adoption. Guangdong offers the best overall combination, driven by the largest new and existing building floor space in 2015. The Chinese residential LED market will grow from $23m in 2013 to $310m in 2017, a CAGR of 92% (the highest among five market segments) as average prices fall the fastest, from $6.02 per fixture in 2013 to $3.13 in 2017. China’s end-product market is highly disaggregated, with more than 5000 players. The top 50 suppliers account for only 33% of the market and the top 10 take merely 18%. Industry consolidation is imminent over the next five years, with suppliers of poor-quality products facing elimination, reckons Lux.
