LED lighting manufacturers need more emerging market

With the saturation of LED lighting market, the price competition of LED lights has become increasingly intense. Many LED lighting manufacturers are changing their strategies to face the immense challenge. They have started penetrating and tapping the highly potential and emerging markets in Southeast Asia, Africa and Russia.

Why do LED lighting manufacturers choose these places as their new and emerging market? There are many factors to explain the change of their strategies, such as high populations, good government policies, installation of major LED projects, high power price and acute energy crisis.

This is the situation in South Asia: it has a population of 560 million people, the more people, and the more potential users. Many parts of South Asia don’t have lighting equipments to illuminate, they still lie in darkness, which become the key regions to import more LED lighting. Since incandescent bulb is not energy-efficient, more and more South Asia countries are implementing policies to phase out incandescent bulbs, for example, India has replaced them with LED street lights in many of its cities.

The level of economic development of African countries has been the lowest in the world. Some countries do not have lighting equipment for lighting, and even some places have no electricity supply. Africa has 15% of the world’s population. It has a huge LED flood light and other public LED lighting market. African governments have been trying to take up major LED lighting projects to import more LED lighting, hoping more LED lighting manufacturers to enter the African lighting market.

There are rarely local LED lighting manufacturers in Russia. Hence, they have to imports about 90% of LED lighting products. In the case, LED bulb price in Russia is much higher than in South Asia. For example, a 60W LED bulb is sold in Russia, but the price will be higher 40% than in Taiwan. This is the reason why LED lighting manufacturers want to enter the Russian market. They can earn much more profit than other markets. Russia has a large population. According to conservative estimates, there are about US$1.01 billion in Russian LED market. The key point is that Russia has very less awareness about LED technology, which is another driving factor for LED lighting manufacturers to tap the market.

However, a big obstacle will affect the enthusiasm of LED lighting manufacturers. Many countries, especially South Asian countries and Russian, they 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. In order to facilitate global trade, some agreement formulated by international organizations can solve the problem. For example, ASEAN agreement demonstrates tariffs reduction between the member states. This will give big relief for the importers to enter new overseas markets. What’s more, Russia’s entry into WTO is another settlement to reduce import tariffs.

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