2022 Analysis of Barriers in China's LED Lighting Industry

近年来，各国/地区LED照明产业一直处于快速发展阶段，在全球化的背景.下，各国/地区发布了各种政策法规大力推动LED照明行业发展。各国/地区对于准入要求各不相同，有安全方面准入要求、电磁兼容方面准入要求，也有能效方面准入要求等，对行业新进入者而言，存在较高的壁垒。

I. Current Status of the LED Lighting Market

1. LED Lighting Market Size

Data shows that the market size of China's LED lighting industry has been growing year by year. It increased from 635.8 billion yuan in 2017 to 862.7 billion yuan in 2020, with a compound annual growth rate of 10.7%. China Merchants Industry Research Institute predicts that the market size of China's LED lighting industry will reach 1008.5 billion yuan in 2022, a year-on-year increase of 7.0%.

Data source: Compiled by CSA, China Solid State Lighting Alliance and China Commercial Industry Research Institute

2. Market share of LED lighting products

After experiencing rapid growth in the early stages, China's LED lighting market has seen a swift increase in penetration rate. The market share of Chinese LED lighting products grew from 65% in 2017 to 80% in 2021. It is projected that the market share of Chinese LED lighting products will continue to rise in 2022, reaching 83%.

II. Barriers in the LED Lighting Industry

1. Product Development Barriers

Commercial and industrial lighting must meet customer needs for "guiding consumer behavior" and "promoting brand building." Therefore, the design and development of lighting products must be based on a thorough understanding of customers' product positioning and functional characteristics. Combined with factors such as the application scenarios, cultural customs, and consumer behavior patterns of the customers, companies should leverage their own technical capabilities and case experience to carry out targeted product differentiation design. Consequently, even if potential entrants in the LED lighting industry possess certain technical expertise, experience, and talent reserves in lighting product design, they still need to accumulate long-term experience regarding the operational characteristics of the downstream industries they serve, grasp customer consumption habits, and only then can they meet the comprehensive design capability requirements of customers for commercial and industrial lighting. Thus, entering the LED lighting industry involves product development barriers.

2. Certification Barriers

Overseas markets such as Europe, the United States, Japan, and Australia have long been the primary markets for Chinese LED lighting product export companies. Different countries/regions have varying standard requirements for LED lighting products entering their local markets. At the same time, the certification process requires a relatively long cycle, with significant upfront investment costs. As LED lighting technology matures, the application of LED lighting products will become increasingly widespread. To ensure the safety of LED lighting products sold in the market, relevant regulations and certification standards in different countries/regions will continue to improve, creating qualification barriers for potential industry entrants.

3. Barriers to Supporting Services

商业照明和工业照明客户注重产品尤其是差异化产品的配套服务，产品定位、方案设计、应用场景分析、销售的过程服务和售后质量保障等因素都是影响客户对产品提供商选择的重要考量指标。LED照明行业潜在进入者往往因缺乏经验造成配套服务能力不足，导致其服务质量在市场竞争中处于劣势，进而面临服务能力壁垒。

4. Technical Innovation Barriers

LED lighting technology continues to innovate, and the application fields of intelligent technology continue to develop, placing higher demands on the technological innovation capabilities and forward-looking judgment of lighting product providers. High-quality enterprises in the industry are continuously increasing their efforts in technology and product development, improving production processes and workflows for products, enhancing production efficiency and quality, and leading industry trends. Therefore, potential entrants with insufficient accumulation of experience in technological innovation and product development often find themselves at a disadvantage in market competition.

5. Scale and Capital Barriers

经过多年的高速成长，我国LED照明行业已经步入成熟期，市场竞争日趋激烈。现阶段，LED照明灯具行业具有规模效应，大型制造企业不仅可以通过集中采购、规模化生产和供货，有效降低生产成本，还可以通过产品设计案例的积累与沉淀，大大降低光学设计、工业设计等方面的成本，并提高生产效率，形成竞争优势。此外，LED照明企业生产组织能力、设备自动化能力也会直接影响产品质量及产能的提升，往往需要投入大量资金，加之LED照明产业的技术迭代速度较快，后续还需要在产品、工艺研发和设计领域持续大量投入。因此对行业内中小型企业及新进入企业而言，形成了较高的规模壁垒及资金壁垒。

6. Talent Barriers

The LED lighting industry belongs to knowledge- and technology-intensive sectors, requiring high comprehensive standards for R&D teams. In addition to mastering general knowledge in optics, electronics, automatic control, data processing, and mechanical machining, professionals must be familiar with photometry and chromaticity theory, while also understanding relevant technologies and developments in the lighting industry, light-emitting materials sector, and LED lighting field. Furthermore, market sales personnel and other technical roles within LED lighting enterprises require strong professional backgrounds and capabilities. As LED lighting companies increasingly evolve toward integrated models serving as lighting solution providers, product suppliers, and system integrators, there is a growing need for versatile, multi-disciplinary, experienced composite talents. For new entrants in the market, building a powerful team of R&D and sales professionals typically requires a prolonged period of learning, accumulation, and adaptation.

Source: China Market Research Network