China's LED Lighting Industry Faces Brown-outs Despite Effort

Higher standards in EU and USA also may sideline more LED lighting makers

Despite earnest governmental support and the awareness among lighting manufacturers of the need to develop LED lighting to upgrade the industry, China's LED lighting industry, albeit having seen some progress, has a long road ahead.

Inconsistent Standards
While LED lighting is touted by especially makers to be the energy-saving, durable and remarkably performing lighting of the future, the lack of quality standards, and also effective enforcing agencies, prevents efficient development of the sector in China. In short, LED lighting calls for technologies that are likely sorely deficient in China, where most SMEs are sheepish to jump on the LED lighting bandwagon sans requisite background nor professional ethics, hence often producing subpar products.

As usual China's government stepped in to support the LED lighting sector to make up for its late entry, which has inadvertently spoilt the game by breeding reliance on official support, as well as discouraging private investment.

While competition has intensified in LED lighting with some operators managing to carve out niches, the game has weeded out the weak, incompetent and also-rans, with governmental support, though necessary, able to benefit a few qualified manufacturers.

As in many other markets, most LED lighting businesses in China are also SMEs that have been sidelined due to competition, which some industry executives feel as beneficial for the sector in China, with which some disagree for they believe large-scale phase-out should happen upon market saturation.

Industry executives say public projects outnumber LED lighting makers, who should sensibly develop business in private sectors for sustainability.

Economy-dependent
As a late entrant, China's LED lighting industry depends on the health of international and local economies. The EU debt crisis in 2011 and anemic recovery of the American economy that has sapped Chinese economic growth, have forced China to loosen monetary policy to fuel growth but control inflation. While Chinese wages have risen, LED lights remains relatively expensive to other options. So the slower economic growth in China has impacted the LED lighting sector to undermine sales, leading to capital-shortage and de-stocking pressure.

On Jan. 26, 2011, Beijing banned multiple-home owners from buying more property, with over 40 cities adopting such rule. Depressed home buying also impacts the LED lighting sector, a trend exasperated by rising costs to LED lighting makers, who can choose between filling profit-less orders or go under.

In July 2012, the EU and the United States raised qualitative standards for imported LED lighting, which some industry executives say will sharpen China's LED quality and competitiveness. However, those with dated LED technologies, especially ones with inadequate capital and expertise, may simply be left by the wayside by the higher standards. A crude example is to force a lowly-educated subcontractor of LED lights in rural Shandong to learn and turn out products that meet higher standards of CRI, per-unit-area luminosity, lumen-per-watt etc.

Despite having steady clientele worldwide, many Chinese LED lighting makers won't be able to expand customer base due to the higher entry threshold.

Besides being a late entrant in LED lighting, China also lacks patented technologies that burden cost to the sector as the nation eagerly develops such lighting to save energy.

Amid many hurdles, an increasing number of LED-lighting manufacturers in China build brands and distribution channels as well as develop customized products to enhance competitiveness.

Scape Light Co., Ltd.
Scape Light Co., Ltd., set up in 2007 in Shenzhen, develops, manufactures and sells LED lighting including LED strips, LED panels, LED modules, LED bulbs, and LED spotlights, boasting superior thermal management, circuitry, mechanical design and optical optimization.

Besides being ISO9001 certified, the company has received CE and RoHS certificates, also adopting surface mount device (SMD) machines, reflow machines and other advanced production equipment to uphold manufacturing quality.

The maker ships to over 50 countries with products branded SCAPE, generating revenue of RMB50 million (US$7.4 million) in 2010.

Quarsa Light Co., Ltd.
Founded in Hong Kong, Quarsa Light Co., Ltd. operates a factory in Shenzhen to develop, manufacture LED lighting as well as offer technological assistances and after-sale services, with its Hong Kong headquarters handling R&D backed by well trained staff and sophisticated equipment, and managers specializing in LED applications, electronics, mechanics, power supply, controller, and industrial design.

The 3,000 sq.m. Shenzhen factory has advanced quality-testing equipment and imported mechanized production lines, outputting products for upscale clubs, luxury hotels and public work projects, with the primary export destinations being the U.S. and Europe, as well as dealers and lighting-engineering companies forming the company's distribution network.

Shenzhen BCX Optoelectronic Technologies Co., Ltd.
Shenzhen BCX Optoelectronic Technologies, since establishment in 2009, has positioned itself as a supplier of innovative solid-state lighting (SSL). Working with the China National Institute of Standardization, the company develops advanced SSL technologies that are licensed, sold with technological assistance.

The maker has grown to relocate to a 30,000-square-meter site in September 2012 from the 8,000-square-meter site, with the new site equipped with China's first fully-automated production line for LED light tubes, capable of putting out over 10 million tubes a year.

The company markets under the brands “BCX” and “SHHY” to show efforts in branding.

Zhongshan Lighting Expo Show Technology Service Ltd.
Operating a venue across 10,000 square meters in Zhongshan, Guangdong Province, Zhongshan Lighting Expo Show Technology Service Ltd. provides showroom, office and warehouse to manufacturers of LEDs, electric appliances, light sources, and commercial lighting.

As most of China's LED manufacturers operate in the south, global lighting buyers flock there to source items, breeding development of a massive lighting market and exhibition sites in southern China. In Guzhen, Zhongshan, also known as “China's Lighting Capital”, there are dozens of lighting fairs a year, motivating ever more LED makers in the south to lease showroom and office at Zhongshan Lighting Expo Show's hall to do business with global buyers.