Key takeaways from Guangzhou International Lighting Exhibition - Pricing, pricing and pricing!

This week we attended Guangzhou Light Exhibition, the biggest lighting fair in China. There were more than 3,000 booths and full-three-day conferences.

Jun 10th, 2015
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This week we attended Guangzhou Light Exhibition, the biggest lighting fair in China. There were more than 3,000 booths and full-three-day conferences. Basically, most major LED lamp and luminaire suppliers were in this show. However, surprisingly, we found the booths of Philips, GE, Osram or Nichia were disappeared. The main reason is because they don’t want to compete with others in terms of pricing, given no brand new technology of LED lighting launch.

We saw almost every booth has the same lighting products in terms of the outlook, such as lightbulbs, tubes, downlights, streetlights, etc. It is really difficult to tell the big difference after you visited more than 100 booths except of the brand. As a result, the only thing they could compete is the pricing. These top lighting players will not attend the Lighting Exhibition in the future, instead of private conference for VIP customers in the hotels nearby.

In contrast, unsparingly, CSP LED is the key theme during this Lighting Exhibition, just like the Light Fair in New York. We have another blog which discussed the details of CSP LED by Stephanie Pruitt (http://www.strategies-u.com/articles/2015/06/csp-big-potential-in-a-tiny-package.html). Moreover, According to Samsung, the first one to launch CSP LED, tried to adopt CSP LED into LED TVs first. When the penetration rate of TV roars, the price will drop significantly. Then CSP LEDs can also be used in lighting and penetrated faster.

Last but not the least, another price war is happening in China now. We have heard that LED T8 Light tube (15W/1500lm) pricing is corrupting now. The average selling price of Philips to distributors and agents is around 18 RMB (2.9USD) and to end market is around 25RMB (4.0USD). Other China brands are around 10~15RMB to distributors and agents. Foshan Lighting (FSL) has launched the first T8 pricing under 10 RMB (9.9RMB/1.6USD). FSL has suffered from the LED lighting transition since last year. The LDE business couldn’t offset the drop of traditional lighting. Therefore, they want to gain market share of LED lighting by pricing. Then Opple has cut to 9.9RMB as well. MLS has cut to 8.8RMB (1.4USD). Kingsun is considering to follow the trend and might drop below 8.8RMB. The cost of LED T8 is around 7RMB(1.1USD). As a result, the margin of T8 lighting will be lean and we expect the consolidation and bankruptcy will continue to happen in 2015.

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