Trade Resources Industry Views Emerging Markets Become China’s Lighting Products New Export Destinations

Emerging Markets Become China’s Lighting Products New Export Destinations

Moderate economic growth in 2015 has become the “new norm” for the stabilizing Chinese economy. With the Chinese government introducing industry restructures, explosive economic growth has become history. Gone are the good days for businesses, lighting manufacturers orders have plummeted, but costs are rising. The impact from e-commerce has misled some manufacturers, and the market has briefly become a “besieged fortress.” Some manufacturers are hanging on, while others are seeking alternative options to leave the industry, or quietly withdraw from the market, according to Guzhen Lighting Weekly.

In addition, following the global “incandescent bulb ban,” emerging markets including ASEAN, Middle East, and Africa lighting market have all seen double digit growths, according to lighting shipment statistics revealed during first half of 2015. Vietnam lighting market has even become the dark horse, with export rankings jumping from 37 to global top five. Additionally, China’s exports to Bangladesh, Pakistan, Israel and Saudi Arabia exceeded 17%.

China’s “One belt and one road” policy has entered businessmen’s vision, and many manufacturers are being drawn to the lucrative international market, or seeking alternative markets. What is the outlook of the oversea market, and what are the strategies manufacturers have implemented to leave the market.

“One belt and one road” policy

Under the global incandescent bulb ban, Europe and U.S. are still major export markets for Chinese lighting manufacturers during first half of 2015. Emerging markets include ASEAN, India, and Africa also maintained about 10% growth rates.Additionally, other countries along China’s “One belt and one road” policy region include Bangladesh, Pakistan, Israel, Saudi Arabia, and Egypt, where shipment volume has exceeded 17%. The region has become an ideal export route for manufacturers.

Basic global market outlook: lighting exports increase despite insufficient market demands

Among developed countries, the U.S. economy has the best performance. In comparison, the Eurozone and Japanese economic growth has waned. Although, emerging markets economic growth has exceeded developing countries, growth has slowed, due to structural conflicts and capital flows leaving the country. Taking this background into consideration, the outlook for China’s trade during first half of 2015 remains pessimistic.

According to Chinese custom statistics, China’s import and export total value reached RMB 11.53 trillion (US $1.86 trillion) during first half of 2015, down 6.9% compared to the same period in 2014. The country’s imports also dropped 15.5% to RMB 4.96 trillion, while trade surplus soared 1.5 times to RMB 1.61 trillion. The weak international economy rebound caused waning international market demands, and high export costs. It has been difficult for the Chinese government to maintain Renminbi’s high currency exchange rates.

During first quarter of 2015, China’s lighting industry export value was up 22.42% YoY to US $9.58 billion. Top 10 export countries include U.S., Russia, Hong Kong, Japan, Germany, UK, Spain, Netherlands, Australia, and Italy. However, there has been major changes in the export market, with exports sliding in EU and Japan. Emerging export markets for Chinese manufacturers include Southeast Asia, Middle East, and Africa. Chinese shipments to ASEAN soared 90% and has become the third largest export market.

One of the main reason is Chinese manufacturers LED products are still low to mid class products that emphasize C/P ratio. Chinese manufacturers are entering the European and U.S. market as low profit OEMs. Emerging markets also tend to have larger market demands for low to mid power products, and there is a much lower market entry level. In addition, low level market competition has attracted many Chinese manufacturers to enter these markets. Moreover, the immature LED market in emerging countries has led to fast demand growth. Hence, emerging country governments has been relatively open to product imports.

Developed countries economic outlook: U.S. economy rebounds, but EU and Japan economy still under pressure to decline

The U.S. is China’s second largest trade partner, the two country’s total trade value reached RMB 1.64 trillion during first half of 2015, which was up 4% compared to the same period. Trade between the two countries amounted 14.2% of China’s trade, in which exports increased 9.3% to RMB 1.18 trillion. U.S. market has been the best performing among China’s other major export markets. In terms of economic outlook, the U.S. economy is rebounding, and consumer confidence has stabilized. This has stimulated China’s export growth to U.S. After a quarter of negative growth, the U.S. economic growth rebounded and sped up in second quarter. Although, the current economic recovery has been lower than expected, China-U.S. trade is projected to improve during second half of 2015.

During the same period, Eurozone and Japan’s economy waned. This caused EU and Japan’s trade to drop 6.8%, and 10.6% respectively during first half of 2015. Foreign investors and Chinese manufacturers trade dropped 4.8% and 14% respectively. Processing trade exports downed 8.6%. Additionally, Chinese Export Leading Trade (ELT) index reached 34.8 in June, down about 0.2 in May. In the following two to three months, the trade market is still under immense pressure.

China has maintained high lighting export growth in the U.S. market during first quarter of 2015, while the EU market has remained relatively stable. Japan has maintained a 6% market share, but its growth has sharply declined. Moreover, Chinese manufacturers export growth has evidently dropped among BRIC countries, with the market share shrinking from 14% in 2014 to 6% this year.

One belt one road economy

Double digit growths in ASEAN and Middle East

Chinese exports to emerging markets including ASEAN, India, Latin America and Africa grew respectively 9.5%, 10.8%, 3.7% and 12%. Countries along China’s “One belt one road” region have an export value close to RMB 3 trillion, amounting to about a quarter of the country’s exports. Export performance from 1Q15 has been better than the same period last year.

Moreover, China’s exports to Bangladesh, Pakistan, Israel, and Saudi Arabia during first half of 2015 exceeded 17%. This indicates the country’s “One belt one road” and trade partnership with countries along the coast has sped up and expanded.

Malaysia is China’s biggest trade partner among ASEAN members. During first half of 2015, China’s exports to Malaysia was up 7.1% to RMB 14.01 billion, while imports from Malaysia dropped 2.8% to RMB 15.96 billion. Trade deficit between the two countries contracted 41.7% to RMB 19.44 billion. Following economic growth, the two countries relationship has become closer, and will be improving during second half of 2015. Additionally, since the Russian Rubble plummeted in 2014, the market rebounded during first half of 2014.  The Russian market is expected to become a new market attraction during second half of 2015.

The Chinese government has been expanding its decentralization policies, with “One belt one road” heading the country’s new LED lighting industry developments and providing new opportunities. For Chinese manufacturers discouraged by domestic market conditions, many are turning towards the economic zone surrounding the “One belt one road” region.

LED lighting export situation from 1Q11-1Q15

China’s LED lighting export market reached US$ 4.08 billion during the first five months of 2015, down 7.06% compared to the same period in 2014. Market decline has been most evident during the first four months of the same period last year, with exports climbing up 9.28% during May 2015.

Contribute Copyright Policy
Topics: Lighting