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Globalization + vertical Integration, LED industry new trends Herald ushered in a new round of growth cycle

Jun 23, 2017

From the traditional lighting era to the LED era, the scale of industry has not been a breakthrough in the past few years. This is mainly based on the past led growth more based on the replacement market.


From the traditional lighting era to the LED era, the scale of industry has not been a breakthrough in the past few years. This is mainly based on the past led growth more based on the replacement market.

In the past few years LED lighting development phase, more still in Retrofit (replace) and Intergrated (lamp) stage, replace the light source and integrated lamp, these two are the mainstream market.

Of course, there is more innovation, combined with a variety of building materials. From 03 to now, the outdoor landscape lighting led and all the building materials, a variety of new materials combined, has brought a lot of changes to the landscape lighting market. In the future, there are more and better opportunities for indoor and commercial lighting.

But such a situation is being broken. In addition to the policy dividend from the upstream to the downstream shift, more is the global lighting industry pattern reshaping.

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And the rapid increase in market competitiveness of China LED lighting enterprises, will undoubtedly become a new round of growth cycle leader.

2016 LED lighting Industry Report, the global LED lighting industry accelerated to China transfer, domestic lighting enterprises to accelerate overseas expansion, foreign lighting enterprises shrink front.

Secondly, as the market competition is fierce, corporate profits tend to thin, the industry concentration began to improve.

More importantly, with people's quality of life more and more demanding, higher value-added lighting products are being recognized by the market, such as home atmosphere scene lighting, commercial building lighting, urban landscape lighting, intelligent lighting, etc. are gradually becoming a new trend of consumption.

And the new opportunity for LED lighting industry is, with the rapid penetration of LED market, want to improve the depth of market penetration rate also need lighting manufacturers to challenge user habits, cost budget, channel construction and the entire market environment.

LED lighting industry is in a new period of development

2016 was seen as a new watershed in the development of LED industries.

On the one hand, the enterprise scale differentiation in each subdivision area is obvious, the market share tends to be concentrated; On the other hand, the price of the core raw materials of supply chain slows down, some chip, package and so on product price callback. Industry chain competition benefits downstream demand rapid growth, enterprise survival, "price war" is no longer the new development cycle of the main means of competition.

From the traditional lighting to led, the industry has gradually shifted from the replacement market to the new market, such as more integration or intelligent products slowly out, more applications to bring more opportunities. More application scenarios and market demand, making the lighting map more and more, more competitors and even cross-industry competitors have come in.

All along, the lighting industry's essential industry characteristics are relatively decentralized, global brand concentration is not particularly high. The top ten lighting brands in China add up to a market share of less than 7%, the real competition is not particularly obvious, especially brand competition.

But into the era of LED lighting, such a decentralized pattern seems to be changing.

2016 LED lighting application output value of 369.7 billion yuan, the year-on-year growth of 11.2%, the growth rate further decline. At the same time, LED lighting larger than the size of the market accounted for a further increase.

For example, the 2016-year listed companies (including New Sanbanxi, Hong Kong stock) for the annual LED lighting application product revenue of more than 1 billion enterprises total revenue of 21.295 billion yuan, accounting for domestic LED lighting application value (excluding display, backlight, etc.) ratio of 8.57%. In view of the partial unlisted size of the LED lighting enterprise output value contribution, the market concentration is further improved.

In the next few years, domestic scale enterprises will continue to benefit from the rapid growth of domestic LED lighting, enjoy the market dividend. On the one hand, the international three major lighting leader gradually withdrew (Chinese enterprise acquisition), independent brand rise. On the other hand, as led costs and prices continue to decline, the global penetration rate is expected to continue to rise to more than 50%.

In this situation, to be a brand in fact, many new people have more and more challenges. Among these, Linsen is one of the few successful representatives who have been able to squeeze into the core channels of traditional lighting in the past few years.

2016 China LED lighting application industry listed companies list (based on lighting business revenue), Linsen lighting business to 1 billion yuan scale among the top ten ranks of China.

In addition, the trend of market competition among the 10 enterprises in the next few years and the market share of small and medium-sized enterprises is becoming more obvious. At the same time, overseas mergers and acquisitions become China's LED lighting enterprises bigger and stronger, and increase overseas market expansion of an important means.

The opportunity of "globalization" of Chinese enterprises

2016 is the year of Chinese led. From the largest potential market to the largest industrial chain cluster, the globalization of LED is laying the Chinese label. The market share of Chinese enterprises is constantly squeezing Japan, South Korea and Europe, the general lighting industry is in the market concentration of the promotion cycle.

As we all know, the U.S. lighting market is very large, although the United States has only 300 million people, but the annual number of Americans to use the lighting is very large, but also China's LED lighting products export a larger market.

However, the current lighting market in the United States, the domestic lighting products led penetration rate is very low, compared with the Chinese lighting industry there is a big gap.

The North American market has been the world's largest lighting market, but up to now, the market penetration rate of LED lighting products in North America is less than 10%, almost the lowest in the world.

In the process, Lin Guiliang says, we also find that it is not so easy to make a brand abroad. In particular, to build a century brand, not only need a lot of input, but also some window of opportunity, and sometimes some good precipitation.

Speeding up the acquisition of overseas quality assets has also become a magic weapon for Chinese companies to truly squeeze into the global market.

General lighting Business (Landevince, Ledvance) accounts for about 30% of Osram's full-year revenue. Ledvance's access to more than 40 countries (all developed countries) and close customer relationships will drive companies into markets in Europe, America and other Asian countries quickly, further diversifying and globalizing the company's business.

According to the plan, Ledvance will continue to expand the scope of LED lighting business, and actively develop OTC lamps, smart home electronics business and other measures to enhance performance and profitability.

According to Ledvance Management, Ledvance led business level in Germany first, the world's second, in the European market share of 10%, Americas market share accounted for 9%.

At present, there are eight major warehouses around the world, including 3 in the United States, 1 in Germany, 1 in France, 1 in Mexico, 1 in Spain and 1 in Russia, with nearly 60 external warehousing centers. Sales channels covering 120 countries or regions around the world.

The future market competition mainly concentrates in the brand and the channel, Landevince will bring the huge sea mouth to Linsen in the European and American market. In turn, the Linsen of the Chinese mainland channel layout, but also to Landevince brought a huge localization advantage.

In addition, the Landevince layout of high-end lamps, can help Linsen expand more consumer channels in the professional lighting market, engineering lighting market layout, relatively standardized light source will have a better profit margins. Linsen can help Landevince solve the upstream supply problem and push its products to meet the needs of emerging markets.

Earlier, Linsen's overseas expansion business has begun, Forest Lighting was founded in 2014, for the Linsen lighting brand, with marketing and public relations promotion, in North America retail and wholesale channel market has gradually become well-known, and gradually towards Southeast Asia, the Middle East and Russia and other emerging markets.

At present, forest Lighting Top 10 major electrical distributor cloth has access, a total of more than 600 distribution points, but also estimated lighting revenue will grow more than 1 time times in 2017, for the future lighting development in the heart has been quite sure, in the next five years, the market will continue to develop intelligent control, lamp color temperature can be regulated, systematic lighting products, through the software, will currently only control a lamp to upgrade to the entire building lighting.

In addition to laying down their own offline terminal channels, Linsen has been actively looking for new cooperative relations since 2016, first in March to acquire Hong Kong super Age Light Source (Supertrend), the company to OEM led filament lamps and lighting products, its subsidiary and New (Shaoxing) green lighting is currently China's largest led filament bulb manufacturer.

In March 2017, Linsen also announced the establishment of a joint venture with Lighting Science Group, a veteran American lighting company, to enter the American market. Lighting Science Group has established a factory in North America and Mexico, long-term help Home Depot, such as the United States large-scale retail channel LED lighting bulbs, accumulated profound experience and cooperation.

Vertical integration of supply chain "benefit" highlights

Compared to traditional lighting, LED lighting competition will undoubtedly benefit from the deep integration of the supply chain.

If the past decade is the LED industry to rely on price and impulse mode to drive industrial shuffle, then with the increase of market concentration, how to rapidly expand the vertical integration of "ecological chain" will become an important direction, but also will be the enterprise to open up the gap with the competitors an important means.

2016, with the continuous improvement of LED technology and the downstream application field gradually expanded, especially LED lighting market rapid development, pulling the entire led industry to appear accelerated growth momentum. Technology upgrading, cost reduction, power consumption reduction and industrial policy to promote the lower speed led popularization, led industry chain overall development.

Prior to the acquisition of Osram, Linsen had a rhythmic, focused layout: to upstream integration to ensure the core supply chain and patented technology protection; horizontal expansion in the middle reaches, to ensure a strong leading position in the packaging chain, the downstream application of the matching, assembly, brand and channel extension, the adoption of eco-circle management mode, the establishment of a global lighting industry chain layout.

Lin Guiliang thinks, "led market growth opportunity is very big, the likelihood that the price continues to fall is relatively small." The bargaining power of future brand and channel providers will be improved. And manufacturers face the pressure will be relatively large, especially in purely manufacturing, to do the standard product manufacturers, with the brand, buyers will be in a disadvantageous position. ”

At present, Linsen as a veritable global operation of the brand, the production of strategic layout, and strive to become an excellent brand business + manufacturers. Of course, Linsen is very open on the external platform, and the next step is to work with the supply chain to look across the industry and serve the entire industry.

Such vertical integration will undoubtedly bring powerful control over the end products and components to Linsen.

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