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LED lighting manufacturers looking for untapped markets

LED lighting manufacturers looking for untapped markets

By BizLED Bureau

July 7, 2017: Some key trends are being observed in the global LED industry. According to the current trend, it is seen that many large LED lighting manufacturers have started penetrating and tapping the highly potential and emerging markets in Southeast Asia, Africa and Russia.

Faced with the fierce competition in the Chinese lighting market other markets that have already matured, these LED companies are looking for new potential markets in Southeast Asia, Africa and Russia.

The lighting markets in Southeast Asia are estimated to touch US$ 1.28 billion by end of 2014.

The Thai LED market penetration will increase to more than 45% by 2015. India’s LED lighting market is also expected to grow by 41% by 2015. On the other hand, about 90% of the rural population in Africa has no electricity supply, and a lot of small streets of the city have no street lights.

Driving factors

The factors that are driving these companies to new and emerging LED markets are high populations, good government policies, installation of major LED projects, high power price and acute energy crisis. For example, Philippines price of electricity is very high?it is 36.13 cents per kilowatt?and also most of its power suppliers are private firms. Philippines also has acute crisis of natural resources and heavily relies on import of energy.

Southeast Asia alone has a population of 560 million people, with India?s population alone being about 1.24 billion.

Another major factor is that, many parts of the Southeast Asian countries still lie in darkness, and a major untapped market lies in these regions. Leading lighting manufacturers like Philips, GE and Osram have already penetrated in Africa this year.

Many Asian countries are also implementing policies to phase out incandescent bulbs. The incandescent bulb phasing out policy had started in Malaysia in January 2014. Indonesia has also undertaken the policy to give away 200,000 LED bulbs to rural people. India is also installing LED street lights in many of its cities.

In many of these countries, major LED lighting projects have been undertaken which are expected to boost demand for local LED lighting products as well.

Many Southeast Asian countries have very high tariffs that make it difficult for overseas manufacturers to enter the local market. For example, Thailand has a 20% tariff and 7% VAT on imported lighting products. These Southeast Asian countries rely heavily on Chinese imports as they are quite cheap compared to products imported from other countries.

As a result, the Association of South East Asian Nations (ASEAN) agreement, which will be signed in 2015, will lift tariffs from goods traded between the member states. This will give big relief for the importers to enter new overseas markets.

Price of LED bulbs is still a barrier in these regions of Southeast Asia for large scale adoption of LED lighting. In some Southeast Asian countries, retail prices of LED bulbs are usually 20%-30% higher than in Taiwan or China.

Emerging LED market in Africa

Africa has 15% of the world?s population. It has a huge LED flood light and other public LED lighting market. Its government is now taking up major LED lighting projects as well. United Nations? Lighting Africa Charity and Development Programme will open up a potential market for LED lighting.

Russian lies untapped

Very little LED lighting manufacturing is being done in Russia. Consequently, Russia imports about 90% of LED lighting products. The Russian LED market in 2014 is estimated to be about US$ 1.01 billion. The rate of LED market penetration in Russia is about 40%, which is much higher than in Southeast Asia. Russia also has very less awareness about LED technology. All these reasons make Russia a very high potential market for LED lighting products.

LED bulb price in Russia is much higher than in Southeast Asia. A 60W equivalent LED bulb is sold at a price 40% higher than, for example, in Taiwan. This is an added drive for the LED manufacturers to enter the Russian market. Here, LED streetlights for government projects are also sold at a much higher price than in Southeast Asian countries.

The Power of Siberia, a major Russian gas line project, is also driving demand for LED lighting products. It is estimated that this project will give rise to a demand of about US $60 million worth of LED lighting products. Philips has been able to be a part of this natural gas line lighting project.

Russia’s entry into WTO will reduce import tariffs, helping it to expand its LED lighting market further, which will become more than $700 million.

However, to enter the Russian LED lighting market, importers need to form partnerships with local government agencies, lighting manufacturers, distributors or suppliers. It is also difficult to enter the Russian market if a company just wants to trade in Russia. So developing partnerships with Russian companies is a must to enter the Russian market.

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