LEDs have become mainstream lighting applications. In recent years, market penetration rate of LED lighting has increased rapidly, and in 2016 the downtrend in prices became less noticeable. However, market growth has slowed, suggesting that global demand has become uneven.
Opportunities: Next Emerging LED Markets18 Feb
Many fear that with US president Trump’s trade policy, China’s export to the US may be adversely impacted, bringing about uncertainties in the US market in 2017. Therefore, emerging markets such as the Southeast Asia and the Middle East are expected to have more business opportunities that global companies would compete hard for.
After years of rapid growth, exports of Chinese lighting products have seen a slowdown in 2016. Government statistics show that by the end of the third quarter, exports of lighting products dropped 13.9% YoY to USD 28.56 billion, marking the first decline in 7 years.
Other statistics suggest that from January to November 2016, Chinese companies exported their LED lighting products mainly to the EU, the US, Japan, ASEAN countries, the BRICS and the Middle East, but export growth varied. Export to the US declined to 17%, and market share was up 4% compared to the same period in 2015. Export to the EU grew 23%. Export to the Middle East grew the most to 27%, and market share was 7%, a 2% increase compared to the same period in 2015. On the contrary, export to Russia declined drastically, and market share in the BRICS decreased from 7% in 2015 to 6%. In addition, export to Japan declined a whopping 17% YoY.
Emerging LED Markets with Economic Potential
With competition-led price drops, Thailand consumers have gradually switch to LED tubes. In addition, Thai government has actively promoted energy saving programs and encouraged the use of LED tubes instead of fluorescent ones, prompting SMEs and some consumers to turn to LED tubes.
As a result, Thailand’s Kasikorn Research Center (a research division under Kasikorn bank) estimates that demand for LED tube in Thailand may increase significantly, further powering future growth. In 2016, total market value of Thailand’s LED tube market is expected to increase 33.5% to 38.1% from THB 3.73 billion (RMB 696 million) to 4.98 billion to THB 5.15 billion (RMB 930 to 962 million) YoY.
In Vietnam, due to higher average income, LED lighting market has grown as well. As a result, it has become an important task for LED makers to expand businesses through branding and building sales channels.
LEDinside reports that in 2015, the scale of Vietnam’s LED lighting market reached USD 271 million, and is estimated to increase 28% to USD 348 million in 2016. The importance of this market has thus increased for global LED players.
On average, Vietnam consumes around 200 million traditional light bulbs annually, mainly inefficient incandescent ones. As the penetration rate of LED light bulbs increased over the past few years, demands for traditional bulbs have continued to decrease, while that for LED products has been on the rise. It is estimated that in 2016 the penetration rate of LED products would reach 35%.
Roger Chu, analyst of LEDinside, said that due to a shorter base period, Vietnam’s LED market appears to grow faster than other Southeast Asian countries. In recent years, as average income increases, transition to LED will gradually expand from industrial applications to residential ones. With the advantage of low labor costs, many foreign companies chose Vietnam as their production base and used LED products in new construction sites. In addition, governments of China, Japan, and South Korea provided development aids to Vietnam, boosting the demand for outdoor LED lighting products required in infrastructure projects. However, since government contracts are largely taken by local suppliers, foreign companies need to work with local players to secure business deals.
According to The Hindu, the International Energy Agency (IEA) is trying to replicate India’s LED bulb policy in Indonesia to lower costs of the efficient lighting technology. “EESL’s LED program has been successful, and IEA is partnering with it to take the program global,” said Paul Simons, Deputy Executive Director at the IEA while speaking at the World Sustainable Development Summit. “In particular, we would like to implement it in Indonesia. We believe this is a best practice that must be shared.”
The EESL in India has been purchasing LED light bulbs in bulk to reduce prices, and disturbing the bulbs under the government’s Unnat Jyoti by Affordable LEDs for All (UJALA) scheme. This has led to a steady drop in prices over the past few years. In 2014, the company purchased LEDs at INR 310 (USD 4.65) per bulb, and in March 2016, the price plunged to INR 55. Compared to two years ago, production capacity of LED bulbs has increased from 1 million to 40 million bulbs. LED bulbs consume 80% less electricity than incandescent bulbs.
“Reaching 175 GW of renewable energy capacity by 2022 will be achievable for India,” Upendra Tripathy, Secretary in the Ministry of New and Renewable Energy, said.
In its comprehensive report on Turkey’s LED market from 2015 to 2020, ResearchandMarkets estimates that from 2016 to 2022, LED market in Turkey will increase at a 15.6% compound annual growth rate. By 2022, market size is projected to reach USD 344 million.
LED market analysis is based on the main applications of LED products, including lighting, displays and backlights, handheld devices, signs and billboards. In Turkey, LED signs and billboards have the greatest growth potential.
Turkey’s LED market has seen rapid development after the country implemented intellectual property licensing on LED products, and adopted LED lights as alternative sources to reduce energy consumption. In addition, with government promotion, the adoption of other LED products has grown significantly. The Turkish government has also invested in outdoor lighting retrofits. This is expected to lead to an exponential growth in LED adoption, replacing traditional halogen and incandescent bulbs in rural areas.
Furthermore, EU’s ban on halogen bulbs provides opportunities for Turkish LED makers. Company like AtilAydinlatma has already exported products to EU countries.
In recent years, infrastructure projects in the Middle East have attracted global investors, and the demand for LED products has significantly increased. Iran, in particular, is the main exporter of LED lighting products in this region. In January 2017, Chinese president Xi Jinping visited Iran along with a large group of government leaders and trade representatives, which not only marks an important milestone for the two countries but also strengthens future cooperation.