Taiwanese Outdoor Lighting Suppliers Move to High-end Product Line

Many Taiwanese manufacturers of outdoor-lighting equipment have begun supplying original design manufacturing-based (ODM-based) products as part of their efforts to differentiate themselves from low-end suppliers that generate income based on pure contract manufacturing.

According to Sam Chen, chairman of the Taiwan Lighting Fixture Export Association, the competition in the outdoor lighting market mostly comes from mainland China's local suppliers. He points out that although more than 99% of Taiwan's makers of both indoor and outdoor lighting products have transplanted manufacturing facilities to the mainland, more than 60% of the Taiwanese suppliers still dedicate themselves to indoor-lighting products.

"Rising mainland Chinese suppliers have quickly been forced into the outdoor-lighting segment because they know they would have a difficult time competing with their Taiwanese rivals in the indoor-lighting market, where Taiwanese suppliers know better than mainland Chinese suppliers how to market the products, " Chen notes.

Ningbo, a city in the mainland's coastal province of Zhejiang, is a major base accommodating both Taiwanese and mainland Chinese suppliers of outdoor-lighting equipment. Ningbo, according to Taiwanese lighting manufacturers, has many advantages for the outdoor-lighting industry, including outdoor-lighting technology programs offered at elite schools like the Zhejiang University and well-developed peripheral industries.

Chen suggests that Taiwanese outdoor-lighting suppliers should develop products that have unique designs and that are built with durable materials as well as components. "Products like these usually command higher values than do the common, "me-too" types, " he notes. Also, he points out that the mainland's economic development has caused higher labor and land costs, placing low-priced manufacturers at a growing disadvantage.

Europe and the U.S. remain the major export outlets for Taiwanese outdoor-lighting manufacturers.

Home Resource Industrial Co., Ltd. Began branching out into the outdoor-lighting sector in 1993 from the indoor-lighting business, with which the company started in 1988. Today, the outdoor lighting business represents as much as 60% of the company's revenue. "Compared with indoor lighting, outdoor products yield higher profit. However, the latter pose a much higher technical challenge, " comments Chen, who is concurrently Home Resource's president.

Chen indicates that the technical threshold has become higher since light-emitting diode (LED) lamps have been introduced to the outdoor lighting sector. "As you know, the LED lamp is noted for its long lifespan, at more than tens of thousands of hours. So, the lighting fixtures for LED lamps need to last as long as the lamps themselves, " he notes.

To make its lighting fixture as reliable as LED lamps, the company has begun producing ingress-protection 65-rating (IP 65-rating) lighting fixtures. In this rating, the "6" represents protection against dust (dust-tight, no ingress) while the "5" represents protection against water jets. For the dust-protection classification, six is the highest level. There are seven levels on the water-protection scale, with a higher number representing a better degree of protection.

"Our lighting fixtures go to market with a durability warranty of at least three years, while our LED lamps have a lifetime warranty of at least 70, 000 hours, " Chen stresses. Before they go to customers, products are examined at the company's laboratory, which is equipped with an LED lamp-testing instrument and other machines.

Beginning in 2005, the company began muscling into the market for outdoor-lighting equipment for commercial purposes as part of its plan to distance itself from rivals, particularly mainland China's local manufacturers. "The outdoor equipment mostly goes to professional markets and is equipped with die-cast bodies and 5mm-thick glass, " Chen notes, adding that the equipment now constitutes around 10% of his company's revenue. His commercial outdoor lighting products come with LED and metal halide lamps.

Home Resource's outdoor-lighting production began with products for home gardens. Chen points out that at that time, E27 incandescent lamps were the major light source. In 1995, PL-type fluorescent lamps became the dominant light source in the company's outdoor lighting equipment.

Solid brass has been the major material for Home Resource lighting fixtures for the U.S. market, while its lighting fixtures for the European market have been built from die-cast aluminum.

Chen analyzes that although most of Taiwanese lighting suppliers have dedicated themselves to making indoor products, competitive threats to Taiwanese outdoor-lighting manufacturers remains high. "The threat mostly comes from mainland Chinese suppliers. To differentiate from them, Taiwanese suppliers must put more effort into creating patented designs in order to add to their products' value, " he stresses. Unlike many of his company's rivals, Chen's company makes its outdoor-lighting equipment on an original-design manufacturing (ODM) basis instead of an original-equipment manufacturing (OEM) basis.

Each month, Home Resource's 30-engineer R&D team rolls out five to six new outdoor designs, as well as a similar amount of indoor designs. The team works at the company's factory in Ningbo. Chen reports that his company was the first Taiwanese lighting supplier to open an outdoor-lighting factory in Ningbo when it set up a die-casting facility in 1992. "My company's operation there has inspired the formation of an industrial cluster in Ningbo, " Chen claims.

Chen cautions that production costs in the mainland have recently gone up as the result of the mainland's one-child policy, an electricity shortage, and a new agricultural policy. "The one-child policy has begun producing a shortage of qualified workers, while the apparent outcome of the new agricultural policy is a land shortage, " he analyzes, urging Taiwanese lighting manufacturers to work on higher value-added products to make up for these higher costs.

Exporting Outdoor Lighting Products Worldwide

Founded in 1990, Silon Electronics Industrial Ltd. Is a leading outdoor-lighting manufacturer in mainland China that makes more than 100 families of products, including PIR halogen floodlights, outdoor lanterns, bulkhead outdoor lights, motion sensors, inspection lamps, garden lights/sockets, and cabinet lights.

Its products have been awarded CE, GS and CB certifications, and about 20 of its floodlight designs are protected by patents in Europe.

The company operates a factory on a 28, 000-square-meter site in Dongguan, Guangdong Province, mainland China. The factory is equipped with efficient production equipment including injection machines, stamping machines, plastic and metal tooling equipment, and testing instruments.

According to the company's sales manager in charge of overseas markets, Lee Jianpin, the company now puts out around 500, 000 sets of lighting products a month, with most of its products going to Europe, South America, Mexico, Australia, South Africa, and Japan. Europe alone absorbs over 70% of the company's exports, while South America takes 10%. Germany, the U.K., Poland, and Belgium are Silon's major European markets.

"Over the past 10 years, competition in the market has become more intense. The struggle for market share has been compounded by the renminbi's (RMB, or Chinese yuan) appreciation against the U.S. dollar, and by hikes in the prices of raw materials, " Lee notes. However, he says his company's revenue rose by 29% in 2004 to US$18 million in 2005, following a 40% year-to-year increase in 2004. He attributes the outstanding growth mostly to Silon Electronics' complete product range, which enables his company to act as a one-stop-shopping source for customers. "Besides, " Lee adds, "our quality has convinced customers, and we have also always worked hard to live up to our promises to customers."

Yuyao Howell Electronics & Casting Co., Ltd. Was founded in 2000 to make and sell accessories for outdoor lighting. Three years later, the company shifted its focus to applications for light-emitting diode (LED) lamps, including LED lights for outdoor purposes and for use in gardens. So far, about 40 of its LED lighting products have received product protection in the mainland. Currently, the company puts out around 300, 000 sets of LED lamps.

The company's sales manager, Victor Hua, pointed out that Howell has dedicated itself to developing new designs and styles to fill market needs. On average, the company rolls out about 10 new designs each month.

Yuyao Howell earned ISO 9001:2000 approval in 2004, and has so far received GS, CE, and Semko safety certifications, attesting to its stringent quality management. The company is well equipped with instruments for testing LED beams for brightness and dispersal. Hua also stresses that his company has equipped itself with instruments for examining toxic substances regulated by the Restriction on Hazardous Substance (RoHS) Directive, as well as with lead-free welding machines.

Howell exports all of its products, with 70% of them going to European countries including Germany, the U.K., and Italy. Australia is another major market. Hua points out that his company will contract with more partners-including dealers in Europe-this year to expand its sales of LED outdoor lighting there.

Hua says that Yuyao of Jiangxu Province is a major base for outdoor-lighting manufacturers in mainland China, and notes that most of these manufacturers began popping up in early 1990s. The industry has developed prosperously there, and some manufacturers began developing into prominent players in 2000. "Most of the leading manufacturers have pinpointed overseas markets and dominated market trends, " he says.

Hua is confident about the overseas market for outdoor lighting, saying that overseas demand for the products remains huge. "For LED lamps, there is no reason that we should not be optimistic about the market, since the lamps are power conserving, durable, and environmentally friendly, " he comments.

Shenzhen Royal Garden Light Manufacturing Co., Ltd. Was founded in 1991 in Shenzhen to develop, manufacture, and market outdoor solar lighting fixtures. Today, the company supplies more than 200 products made of metal, plastic, or wooden materials. All of them have received CE safety approval.

The company's general manager, Chen Yixing, points out that outdoor solar lighting equipment is easy to install, energy conserving, and environmentally friendly, making the outlook for the market niche look bright indeed. The company's products come in a full range of specifications and have special functions like killing mosquitoes and rats, making Shenzhen Royal a very competitive supplier in the sector. So far, two of the company's products have been patented, and three of them are patent pending.

Shenzhen Royal exports all of its products, with most going to Germany, the U.K., France, Sweden, and North America. According to Chen, his company participates in lighting shows in Las Vegas of the U.S. and Cologne of Germany to stay informed about the market.

Chen expects his company to export 15% more solar lighting products this year than last year because his company is in talks with some major buyers over big deals. "Besides, with our product lines becoming more complete and market for solar lamps growing bigger, we will have more business opportunities, " he says.