China Lighting Industry Export Flash Report for Q1 2022: Exports Remained Stable at the Start of the Year; HS Code Changes Warrant Attention

The following article is sourced from the China Association of Lighting Industry (CALI), authored by CALI.

01 Overall Situation

In the first quarter of 2022, China's total export value of lighting products was US$13.452 billion, a slight year-on-year (YoY) decline of 2.37%. Among them, the export value of LED lighting products was US$9.996 billion, a slight year-on-year (YoY) decrease of 1.76%. Overall, the performance was better than expected. Traditional light source products generally experienced a larger decline, while LED-related products, luminaires, and accessories remained relatively stable.

It should be noted that the decline in volume for many products, including LED light bulbs and LED tubes, was more significant. Excluding the price inflation caused by sharp increases in upstream costs such as raw materials, energy, and logistics, which raised terminal product prices, the actual decline in export volume exceeded the decline reflected in export value. This article provides a brief overview of the lighting industry's export situation in the first quarter of 2022. For detailed analysis, please refer to the journal of China Association of Lighting Industry（中国照明电器协会）, "China Lighting".

02 Cause Analysis

On a monthly basis, the growth bottleneck has been evident since the fourth quarter of last year. In January-February 2022, lighting product exports totaled USD 9.733 billion, a Year-on-year (YoY) decrease of 5.27%, dragging down the Export figures for the first quarter.

By quarter, this marks the first single-quarter negative growth in China's lighting product exports since the outbreak of the COVID-19 pandemic in Q1 2020. However, the decline remains within expectations, and export values for both all lighting products and LED lighting products remain at historically high levels.

The slight decline in Q1 data is due to

1. Demand-side contraction:

(1) The ongoing pandemic and the Russia-Ukraine situation have hindered the recovery of global market demand;

(2) Demand for products related to epidemic prevention and the stay-at-home economy declined (export value of epidemic prevention-related lighting products in Q1 2022 was USD 54 million, a year-on-year decrease of 33.92%);

(3) The backlog inventory resulting from overseas customers placing advance and excessive orders last year, combined with inefficient logistics turnover, has constrained procurement for new orders;

(4) In particular, pressure on other manufacturing countries to accelerate the resumption of production and work has weakened the "transfer substitution" effect of Made in China and reduced the spillover impact on the lighting industry supply chain.

2. Supply-side pressure:

While rigidly rising costs for materials, logistics, labor, land, and energy persist, the recent surge in domestic epidemics has significantly adversely affected the production capacity and supply chain coordination of related enterprises.

3. High contrast ratio:

实际上，2021年同期，在“转移替代效应”持续和需求端基于缺芯少料进而“超前超量”下单双重作用下处于高位的海外需求，以及在国家倡导“就地过年”的情况下又保证了相关企业的充足产能，使得2021年一季度出口数据不仅远好于往年同期，而且作为传统淡季的一季度数据甚至显著高于正常年份下传统旺季的三四季度数据，是非常态的且难以复制的。因此，2022开年一季度数据略低于去年同期是可预料的，可接受的。而真正的挑战还在二季度。

03 Changes in Customs Codes Related to Lighting

At the end of 2021, to adapt to the development of international trade, the World Customs Organization (WCO) released the 2022 edition of the Harmonized System Nomenclature and Coding amendments, which came into effect on January 1, 2022. The revised Harmonized System deleted and replaced relevant provisions for heading 8539 concerning light source products, as well as subheadings 9405.10 to 9405.60 under heading 9405 concerning luminaire products. It also introduced separate tariff classifications for LED light sources, LED modules, parts, and luminaires and lighting devices designed to use only LED light sources.

Following this adjustment, the number of HS codes related to lighting has expanded from 51 to 59. This change aligns with the development trends of the lighting industry, enables more detailed classification of exported lighting products, and facilitates precise implementation of industry research and analysis.