May 12, 2016: The demand for LED lighting in China and Taiwan is still steady and increasing. Even though, the Taiwanese LED market witnessed decline in 2015, the LED market in China continued to grow owing to the immense popularity of LED lighting.
Since 2015, the price war between different LED products has been on the rise, with Opple making the first move by cutting their prices considerably. Since then many local companies were forced to cut down prices, leading to a major price war. For example, a local brand T8 LED tube costs 10RMB, while Philips’ fluorescent T8 lamps costs about 12RMB. So the price war has also raised challenges for the bigger brands. However, due to this price war, LED tubes are now cheaper than fluorescent tubes.
Demand-supply gap will narrow down
This price war is affecting the small manufacturers the most. According to local reports, over 4,000 LED manufacturers have closed down in 2015, however, most of these are small manufacturers who were making low quality products. According to trends, it seems that the mid-sized players will not be affected by the price war for long as they will be acquired by the bigger players or they will merge with the bigger LED manufacturers. As this consolidation will happen by 2016, it seems that the demand-supply gap will narrow down and by 2017, demand for LED lighting products will increase again.
Now, China is making quality LED products at low price
As soon as ‘made in China’ is mentioned, we tend to think about poor quality and low price. But, for a change the industry seems to be in a transition phase these days. For instance, majority of the LED packages had the idea that the quality of Sanan Opto’s LED chips was poor and instead went for Epistar’s chips.
Nonetheless, such tags are changing since a number of LED manufacturers prefer to use quality chips in the LED packages, so they preferred Epistar over Sanan Opto’s chips. In short, now manufacturers have realised the importance of quality products and have adopted the quality production procedures.
Another reason for the Chinese manufacturers to opt for better quality is because they now want to export Chinese LED products to EU and US markets where standards are very high.
So, while quality of Chinese products are increasing, the prices are falling, which a good trend for the consumers.