Sunlight Lighting: Future Lighting Business Layout and Planning

Sunlight Lighting: The Layout History of LED Lighting Business

Since its establishment in 1997, Sunlight Lighting has established strategic partnerships with companies such as Philips and Alibaba. In 2000, Sunlight Lighting became the first private high-tech electric light source enterprise to go public on the Shanghai Stock Exchange, and subsequently established branches in Vietnam, Jiangxi, Hong Kong China, and Belgium from 2003 to 2008. In 2020, Sunlight Lighting's Stay product won the "2020 Red Dot Design Award: Red Dot Award".

Sunlight Lighting: Analysis of LED Lighting Business Layout and Current Status of Main Business Operations

1) Sunlight Lighting - LED lighting business production and sales situation: Production-sales ratio basically remains balanced

Sunlight Lighting has now established four major production bases in Shangyu, Zhejiang; Xiamen, Fujian; Yujiang, Jiangxi; and Jinzhai, Anhui. Each base serves different customer segments: the Shangyu base primarily serves customers in the Americas and supermarkets; the Xiamen base mainly serves customers in Europe, Oceania, and international large enterprises; the Jiangxi base primarily serves customers in the Asia-Pacific region; and the Jiangxi base also focuses mainly on mainland China customers.

Sunlight Lighting's LED lighting business production models are mainly divided into planned and order-driven modes. The planned production mode is mainly applied to standardized products, while the order-driven production mode can meet customers' requirements for product customization. Regarding Sunlight Lighting's LED lighting business sales model, it is mainly based on a distribution-based sales approach. The specific production and sales models are as follows:

从阳光照明近五年的产销量来看，受中美贸易战影响，2018年9月美国政府宣布实施对从中国进口的约2000亿美元商品加征关税的措施，其中包括阳光照明主营业务产品中的LED照明灯具;除此以外，阳光照明的销售布局中北美洲销售占比近几年均保持在30%左右，占比较高，因此阳光照明LED照明产品销量在2019年有所下滑。2020年，受新冠疫情影响，产销量分别为36610万只及36005万只，较上年有小幅下滑。

From the perspective of the production-sales ratio, the fluctuation is significant, yet it remains above 96%, indicating that production and sales are basically balanced. The production-sales ratio reached 98.35% in 2020.

2) Sunlight Lighting - LED lighting business regional layout: Implementing a global strategy

From Sunlight Lighting's 2020 business regional layout, the largest region is North America, accounting for 31.29%, followed by Mainland China and Asia (excluding Mainland China), with shares of 20% and 16.26%, respectively.

At the same time, under a globally balanced marketing strategy, the company has established sales companies in many countries and regions worldwide, including Belgium, Germany, the United States, France, Denmark, Canada, Australia, Hong Kong, etc., actively expanding international business. While developing local retail businesses, it has also developed engineering businesses, making the business model more balanced. Business operations within regions have also become more segmented, actively promoting rapid development in previously weak areas such as Africa, Latin America, and Oceania.

3) Sunlight Lighting - LED lighting business R&D: R&D investment amount has not changed significantly

Sunlight Lighting possesses the industry's first nationally recognized technology center in China's lighting sector, hosts the first postdoctoral research workstation in the domestic lighting industry, and operates a nationally accredited laboratory and product testing center. It boasts comprehensive R&D capabilities in material research, equipment development, and product design. Its products have obtained over 50 international standard certifications, including U.S. UL, FCC, European VDE, CE, GS, TUV, and Canadian CSA. The company has established four major R&D systems in Shangyu, Zhejiang; Xiamen, Fujian; Shanghai; and Hangzhou, driving innovation as a key growth engine.

From 2016 to 2020, Sunlight Lighting's R&D investment amount remained relatively stable, hovering around 200 million yuan. The proportion of R&D investment to revenue showed fluctuating changes. In 2020, the R&D investment amount was 190 million yuan, accounting for 3.93% of revenue.

Sunlight Lighting - LED lighting business operating performance: Gross profit margin remains at a high level

From the perspective of revenue from LED lighting business, Sunshine Lighting's LED lighting business revenue showed a trend of first increasing and then decreasing from 2016 to 2020. The main reason is that overseas business accounts for a large proportion; in 2019, performance declined due to the impact of the international situation. In addition, in 2020, due to the global COVID-19 pandemic, Sunshine Lighting's LED lighting revenue further dropped to 4.821 billion yuan.

From the gross margin of the LED lighting business, from 2016 to 2020, the gross margin of Sunlight Lighting's LED lighting business showed a trend of first declining and then increasing, indicating that the company has strong control over aspects such as raw material procurement prices. In 2020, the gross margin of Sunlight Lighting's LED lighting business reached 34.4%, which is at a high level.

Sunlight Lighting: LED Lighting Business Development Plan: Six Major Plans

After the impact of the global COVID-19 pandemic on Sunlight Lighting in 2020, Sunlight Lighting's LED lighting business formulated a lighting plan. In terms of product innovation, the company will further increase investment in innovation; in terms of market model innovation, the company will increase brand investment in the domestic market, while in foreign markets it will accelerate brand building through two models: leveraging the strength of its own-brand teams and through mergers and acquisitions; regarding cost control, the company will continue to maintain a cost leadership strategy; in risk management, the company will further implement professional specialization and establish and improve coordination mechanisms; meanwhile, the company also stated that it will further improve talent development mechanisms and continue to advance information technology development.