Overall situation
In 2021, faced with the continued impact of the COVID-19 pandemic on the global market and the increasingly complicated external environment, China continuously implemented its policies and measures to stabilize foreign trade and promote innovation. Besides, Chinese exporters in the lighting industry forged ahead. Under their concerted efforts, China’s lighting industry practiced the strategic concepts of dual circulation, high quality and new development, showing strong resilience and growth potential.
In 2021, the entire industry completed the exports of USD 65.470 billion totally, up 24.50% year on year, up 44.09% over 2019, and the two-year average growth rate reached 12.95%. Wherein, the export value of LED lighting products was USD 47.445 billion, up 33.33% year on year, up 57.33% over 2019, and the two-year average growth reached 16.31%. The proportion of total exports also increased to over 70% from 25% 10 years ago. The total exports of lighting products and those of LED lighting products once again hit a record high after 2020, reflecting the important role of foreign trade in connecting domestic and international dual circulation.
From a monthly perspective, the exports of China’s lighting products continued to head forward in 2021 under the influence of multiple factors after experiencing a “V”-shaped reversal in 2020.
From a quarterly perspective, compared with the super high growth in 2021Q1, Q2’s growth rate reflected a downgrade month by month; in Q3, the momentum picked up while Q4 showed weakness again. The trend was both related to the change in the comparison base in the same period last year and affected by the repeated impact of overseas pandemic on the supply chain and demand side.
Cause analysis
Causes for the relatively high growth rate of lighting exports in 2021:
1. Low comparison base in the same period in 2020 (especially in Q1).
The domestic outbreak in 2020Q1 greatly impeded the manufacturing capacity and supply chain. Difficult delivery caused exports to go through the floor. However, this year, China’s manufacturing had benefited from the progress made in the fight against the pandemic, and the supply side had gone into overdrive to provide strong support for exports;
2. Continuous improvement of external demand margin.
Although the pandemic was not effectively controlled in major economies, with the continuous promotion of COVID-19 vaccines, they still restarted the economy under pressure, which had improved the external demand margin for China’s lighting exports. Meanwhile, stimulated by the easing monetary policies of various countries, the demand side recovered better than the supply side, and consumer demand continued to release;
3. Continued easing monetary policy.
The global pandemic still continued. Major economies continued their substantial easing monetary measures since 2020, and interest rates also remained at a relatively low level. People in various countries also received varying degrees of financial assistance and relief from their respective countries. Excess liquidity boosted the consumption of lighting and other daily necessities of rigid demand;
4. Relatively high level of the export of COVID-19 response and stay-at-home economy related products.
However, compared with that in the same period in 2020, it is worth noting that the exports of COVID-19 response related products such as lamps used in scientific research, medical lamps and UV lamps, as well as products such as horticulture lamps and filament lamps related to the stay-at-home economy, declined. At present, the growth of related products has shown signs of narrowing, and the boost to overall export growth has weakened;
5. Advance and over-order on the demand side.
In 2021, especially in 2021H1 when the entire industry was extremely short of cores and materials, many international customers generally placed orders in advance and in excess to occupy the production capacity and materials of Chinese suppliers based on their prediction of a phased supply and demand imbalance in the upstream of the industrial chain;
6. Increased consumption price caused by rising costs.
Although there is a certain time lag for the price transmission from upstream to downstream and the price decreases gradually, the surge in commodity prices since 2020Q4 has led to a sharp rise in various cost prices, and has ultimately pushed up the prices of terminal products. Prices were a significant driver of exports especially in 2021H2;
7. Changes in product structure.
The growth of light source products had faced a ceiling, and its proportion in total exports has been declining year by year. On the contrary, the proportion of integrated lighting products with higher unit prices and interconnected lighting products has further increased, thereby promoting the overall increase in exports.
8. Continuing “substitution and transfer effect” of China on the global market
which is still the main cause of the continued growth of exports in 2021. Since 2020Q2, China, as a major economy that has fully contained the pandemic, took the lead in resuming work and production. The rapid recovery of China’s manufacturing has further highlighted the advantages of lighting manufacturing centers and supply chain hubs, which has effectively made up for the global supply gap caused by the pandemic, and replaced the exports of other countries for a specific time period.
In 2021, despite the ongoing pandemic in the world, the resumption of work and production in other industrial countries was still on-again, off-again, and the full recovery of supply was still far away. So, the substitution and transfer effect still continued.
Products
1. Light source products
From the changing trend of the proportion of light sources over the years, the development trend of the total amount of light source products reflects a growth ceiling.
The proportion of LED products in the total export of light sources has been increasing year by year, and was close to 70% in 2021, reflecting that the replacement of traditional products by LED products still steadily showed a gradual trend of alternate increases and decreases. In terms of traditional light sources, the total amount of incandescent lamps had been stable at about 2 billion for 3 to 4 years. The total amount of high-intensity discharge lamps (HID lamps) including high-pressure mercury vapor lamps (HPMVL), high-pressure sodium lamps (HPSL) and metal halide lamps was decreasing gradually, but the proportion remained relatively stable.
In 2019, affected by the EU ErP Directive in September 2018 requiring the phase-out of some non-reflective HTL, the export volume of HTL was halved, and had slowly recovered in the past two years. The compact and straight tube/ring fluorescent lamps have been directly impacted by LED products with continuously optimized cost performance, continuing the obvious downward trend in recent years.
In terms of the average export price of light source products, it has shown a downward trend as a whole over the years. However, affected by the sharp rise in upstream raw materials, logistics, energy and other costs in 2021, the average export prices of various light source products had mostly rebounded in 2021 to some extent. Wherein, the price of LED bulbs further declined.
With the increase in the price of CFL in the same period, the ups and downs in the prices of these two have made the price ratio change from 1:0.7 five years ago to 1:1.8 nowadays. In the context of the rigid rise in costs, the profit margins of relevant exporters have been further compressed, which is also the core reason of leading exporters’ gradual reduction or withdrawal from the LED light source export market in recent years.
In the next step, light source products will continue to be impacted by the replacement of integrated lamps, and the total volume will experience downward fluctuations. The total amount of thermal radiation light sources and HID light sources is relatively stable over a certain period of time. In the context of international restrictions on mercury-containing and mercury-added products, the proportion of FL will continue to decline, while that of LED products still has development space but has reached a bottleneck.
2. Lighting products
The exports in 2021 had continued to head forward, the main driving force of which came from the significant growth of various lighting products and accessories. The exports of main tax items of lamps, including fixed lamps, portable lamps and other NESI lamps, increased by nearly 20%, and the export value increased by over 30%, which not only included the price increase brought by cost inflation, but also reflected the increase in the value of goods brought by the integration, modularization, systematization and intelligence of lamps.
From the changes in the structure of China’s lighting export products, it can be seen that the proportion of lighting products was increasing year by year, and accounted for 77% of the overall exports in 2021.
The changes in the product structure of the export markets also fully reflected the significant increase in the proportion of lamps. The export of lighting products reflected the basic needs of the national economy and social life of various countries. In a considerable period of time in the future, the export of lighting products will still be the core driving force for the overall export of lighting products.
Among the lamps exported, the scale competition of standard products such as indoor downlights, spotlights, panel lights, ceiling lights, and light bars/light strips became increasingly fierce, while high-power products with relatively high requirements and value, such as street lamps/tunnel lights, high bay lights, flood lights, horticulture lights, and stage lights became options for some enterprises to optimize product structure and enhance the added value of products.
3. COVID-19 response related products (including UV products)
Since the beginning of 2020, COVID-19 response related lighting products such as scientific research lamps, medical lamps, and UV lamps, had seen an explosion in the context of the massive demand caused by the raging of global COVID-19 crisis. In 2020, exports of relevant products originally aimed at niche markets soared by over 540% to USD 585 million. Entering 2021, although the export of lighting products related to COVID-19 response remained at a relatively high level, the data declined. The exports of related products in 2021 were USD 460 million, down 21.3% year on year, among which, the exports of UV lamps were USD 330 million, down 31.5% year on year.
Generally speaking, the traditional low-pressure discharge lamps still played the major role in the front line of COVID-19 response, whose contribution can be said to be immeasurable during the pandemic. Driven by the pandemic response demand, UV LED products were sweeping the country. The UV LED devices/modules that were originally in low production capacity were once hard to get, which attracted manufacturers in the upstream, midstream, and downstream of the industrial chain to increase investment successively. As a physical means of environment-friendly sterilization and disinfection, deep UV LED was also confirmed to be effective in killing COVID-19 by research institutions. Even if not driven by the COVID-19, it also has a wide application prospect in many occasions with sterilization needs, with great market potential. However, in this stage, due to the restrictions of relatively low photoelectric conversion efficiency and high costs, it is still in the development period, and it needs to be improved in terms of luminous efficiency, lifetime, cost, standards, testing, patents, reliability, and application safety if it is to be fully promoted.
4. Horticulture lighting products
In 2020, especially since 2020H2, driven by multiple factors such as the legalization of the commercial use of cannabis in North America, the shortage in the supply of foods and medicines, and the increased stay-at-home isolation, the export of horticulture lighting products had increased significantly. In 2021H1, the export of horticulture lighting continued the growth trend since 2020, but it is worth noting that after entering 2021H2, the momentum of the export of horticulture lighting slowed down considerably due to factors such as the decline in logistics efficiency, the increase in terminal inventory, the weakening of consumer demand, and the high comparison base in the same period last year. The total exports of horticulture lighting products in 2021 were USD 450 million, down over 10% year on year, declining after reaching a raid rising. At the same time, restricted by exchange rate fluctuations, intensified competition, and rising logistics and raw material costs, and other factors, the gross profit margin of products showed a relatively obvious decline.
From the product perspective, the export of horticulture lighting is currently dominated by high-power HID and LED lamps, while in many high-power applications, due to issues such as technology, efficiency, cost, and reliability, traditional HID lamps are still the main products, with higher gross profit margins.
From the market perspective, the horticulture lighting products were mainly exported to developed economies in Europe and the United States, of which the North American market was still the main force, with an exclusive market share of 76% in 2021, followed by the European market. The North American markets were relatively concentrated as there are demands from large brand owners, while the European markets were relatively scattered, dominated by some small traders.
Among the exporters, UNIT FARM, Enlite Energy, Horti RIGHT, WESTLAND, GDRTECH, HongRui Photoelectric, etc., were leading in the export of LED finished products, while Inventronics and Sosen Electronics were the leaders of LED power supply for horticulture lighting. Besides, it is also worth mentioning that representative enterprises of horticulture lighting, such as Lumlux, Megaphoton, and Plusrite, have more complete coverage of horticulture lighting product lines, including HID lamps and supporting ballasts besides LED lamps.
Generally speaking, the domestic horticulture lighting field, especially the LED horticulture lighting, is still in the early stage of development. This round of export growth was mainly driven by the process of the legalization of the commercial use of cannabis in North America. There is still a long way to go before the development in an all-round way that we expect. At the same time, along with the needs of food security and agricultural industrialization, the rapid growth in the export market of horticulture lighting, the emerging domestic market, the continuous completion of standards and specifications, the continued increase in enterprises’ investments, and the expanded application scenarios, we should be optimistic about the huge development potential of the horticulture lighting market.
The Market
1. Overall situation
Both the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) mentioned the correlation between pandemic prevention and control and economic recovery in their economic reports in 2020, pointing out that the pandemic is currently the biggest destabilizing factor hindering the stabilization of the global economy. We can also see the correlation between the pandemic spreading and the market performance from the changes in the proportions of LED lighting exports in various regions worldwide.
In 2020, the Asia-Pacific markets dominated by emerging economies performed better than the European and American markets dominated by developed economies. Among the Asia-Pacific markets, the markets of East Asia, West Asia, Southeast Asia, and Oceania performed well despite the pandemic, while the South Asian market became a drag due to the sharp decline of the Indian market. Among the European and American markets, since 2020H2, with the assistance of the accommodative monetary policies, the North American market recovered better than the European market and Latin American market, while the proportions of both European and Latin American markets declined obviously.
In 2021, the situation changed suddenly. In particular, the 2021H1 saw a rapid increase in COVID-19 vaccines in developed economies in Europe and the United States. In contrast, the pandemic center shifted to Asia, affecting the economic restart in Asia-Pacific markets. Under such circumstances, the demand in the European and American markets rebounded strongly, while that in the East Asia, Southeast Asia and West Asia markets, which performed well in the same period last year, increased slightly, both with declined proportions to varying degrees.
2. Specific market
From the perspective of the main markets where LED lighting products were exported in 2021, the top 20 countries almost succeeded, among which the situation of major economies such as the United States, Germany, the UK, the Netherlands and France had improved compared with that in 2020, thus driving the overall performance of the North American and European markets; Saudi Arabia and Vietnam, which performed well in 2020 and were the representatives of the two major dynamic markets in West Asia and Southeast Asia, had become one of the few markets that had experienced a decline year on year in 2021, seeming to fall down after reaching a height. In 2021, China’s total exports of LED lighting products to the top 20 countries and regions accounted for about 74% of the overall LED lighting exports, with a relatively high concentration of main markets, but down 2% from a year ago.
In 2021, the exports of LED lighting products in the European market reached USD 13.79 billion, up 33.9% year on year, and the proportion of total LED lighting exports also rose to 29.1%. The leading economies surged generally, driving an overall rebound.
In 2021, the exports of LED lighting products in the North American market reached USD 15.01 billion, further up 30.8% year on year on the basis of last year and the assistance of accommodative monetary policies, hitting a record high of 31.6% of the total exports of LED lighting products, practicing the saying that those who win the North American market win the world”.
In 2021, the exports of LED lighting products in the Southeast Asian market reached USD 4.68 billion, down 0.4% year on year, and the proportion of total LED lighting exports also decreased by 2.6%. Singapore suffered a sharp decline of nearly 60% and became a drag of the whole, reflecting the respective difficulties.
In 2021, the exports of LED lighting products in the West Asian market reached USD 3.52 billion, up 8.6% year on year, and the proportion of total LED lighting exports decreased to 7.4%. It is worth mentioning that Iran was once a super market comparable Saudi Arabia in terms of size, but over the years, its market share has shrunk by over 70% due to increased difficulties caused by Western sanctions and the pandemic, falling out of the top 10 even in the West Asian market. The rebuilt Iraq, in contrast, has grown considerably year after year.
In 2021, the exports of LED lighting products in the Latin American market reached USD 3.04 billion, up 49.9% year on year, and the proportion of total LED lighting exports increased by 1% to 6.4%. Mexico, with a high growth of nearly 60%, had replaced Brazil which had been a leader of Latin America for many years.
In 2021, the exports of LED lighting products in the East Asian market reached USD 2.71 billion, up 13.8 year on year and the proportion of total LED lighting exports slightly decreased to 5.7%. Hong Kong, as a major re-export hub, suffered a drop of over 25% for the year due to the continuous pandemic.
In 2021, the exports of LED lighting products in the South/Central Asian market reached USD 1.77 billion, up 53.4% year on year, and the proportion of total LED lighting exports rose to 3.7%. The main driving force came from India, whose proportion accounted for more than a half of the market, up over 70% year on year in 2021.
In 2021, the exports of LED lighting products in the African market reached USD 1.74 billion, up 28.7% from a year ago, and the proportion of total LED lighting exports increased slightly to 3.7%. The “disunited” African market maintained a certain upward trend, but it was still in the initial stage of development due to its overall social and economic development status. Except for the economic powerhouse, South Africa, countries in North Africa, and the populous Nigeria, there is nothing good to report about the rest.
In 2021, the exports of LED lighting products in the Oceanian market reached USD 1.18 billion, up 13.8% year on year, and the proportion of total LED lighting exports decreased slightly to 2.5%. The market was highly concentrated, with Australia and New Zealand accounting for over 97% throughout the year, with a stable pattern and stable growth.
In 2021, China’s exports of LED lighting products in the 65 countries along the “Belt and Road” (B&R) reached USD 13.3 billion, up 13.8% year on year, accounting for 28% of the total exports of LED lighting products.
In 2021, China’s exports of LED lighting products in the 14 countries of the Regional Comprehensive Economic Partnership (RCEP) reached USD 8 billion, up 9.4% year on year, accounting for 17% of the total exports of LED lighting products.
3. Specific products
1. LED light source
From the perspective of the export markets of LED light source products, in 2021, the total export volume to the top 20 markets were 4.52 billion, an increase of 370 million compared with that in the same period in 2020, and the proportion of total exports also increased to 66%; in 2021,the total exports to the top 20 markets were USD 4.51 billion, an increase of USD 200 million compared with that in the same period in 2020, and the proportion of total exports also increased by 2% to 75%.
When looking at LED bulbs and tubes separately, it can be seen that the total export volume of LED bulbs to the top 20 markets was 4.23 billion, accounting for 2/3 of the total export volume, and the total exports to the top 20 markets were USD 3.47 billion, accounting for 74% of the total exports; the total export volume of LED tubes to the top 20 markets were 430 million, accounting for 72% of the total export volume, and the total exports to the top 20 markets were USD 1.1 billion, accounting for 83% of the total exports. Regardless of LED bulbs or LED tubes, the average price of products exported to Japan was out of reach.
2. Traditional light source
The export markets of incandescent lamps showed that African countries occupied 7 of the top 20 markets, from which it can be seen that there is a prominent market in less developed countries for incandescent lamps with an average price of less than USD 0.2. THL, which is also a thermal radiation light source, experienced differently.
Its leading markets were mostly developed economies in Europe and the United States. THL, with its excellent color of light, high efficiency compared to incandescent lamps, and low prices compared to LEDs, has been favored by the European and American markets that like low color temperature and high CRI. Although its development will be limited by the energy efficiency requirements of the main market, it will still have differentiated market competitiveness for a period of time in the future.
The unit price of products of the FL category, similar to LED light sources, which are exported to developed economies such as the United States, Canada, Germany, the UK and the Netherlands, was obviously higher than the average level. In particular, for CFL, its export to Europe and the United States is now dominated by high-power products with higher values because the current small and medium power CFL in the European and American markets have been generally replaced by LED products.
3. LED lamps
From the perspective of the export markets of LED lamps, in 2021, the total exports to the top 20 markets were USD 31.19 billion, up 28% year on year, accounting for 75% of the total exports of LED lighting products. With the improvement of the integration, modularization, systematization and intelligence of LED lighting products, the proportion in the overall export will also increase gradually.
Source: China Association of Lighting Industry
