2023 Lighting Industry Keywords | Annual Review

1. Globalization faces unprecedented challenges, with increasing uncertainties, as evidenced by the difficulty of economic recovery in the post-pandemic era;

2. Supply constraints and demand contraction, with supply chain and logistics causing uncertainty in product availability, make it difficult to stabilize foreign trade markets;

3. Intense involution and credit competition make it difficult for enterprises to achieve steady growth;

4. Tight fiscal conditions and low capital turnover efficiency make it difficult for enterprises to undertake projects.

In the post-pandemic era, slowing consumer demand, the critical period of global geopolitical maneuvering, and high-level adjustments in the real estate sector are all important factors hindering the development of the lighting industry in 2023. Lighting companies have become accustomed to gradual improvements and steady growth. Now, should enterprises increase investment to catch up against the trend? Or seek opportunities for active transformation? Should they cut costs and shrink their operations? Or form alliances among weaker players to weather the storm together? “Confusion” will likely be the prevailing mindset for most lighting companies this year.

Both domestically and internationally, the market is relatively weak, with even severe declines, so everyone is looking for a breakthrough to ensure survival and development.

After the pandemic, entrepreneurs have devoted great enthusiasm and effort to actively recovering, connecting, and seeking business opportunities and the lighting supply chain. Data shows that current endogenous economic momentum is weak and effective demand remains insufficient; in 2024, we need firm confidence, and even more so, "calm innovative thinking."

The sudden outbreak of the epidemic halted progress, and all industries faced extremely severe challenges. However, the manufacturing factories of leading lighting enterprises in Shanghai were still able to organize production and delivery in other provinces and cities. Not a single one closed, suspended operations, or went bankrupt, truly surviving amidst crisis.

Economic operation data for the Shanghai lighting industry in the first three quarters of 2023 shows steady improvement. Among 58 enterprises above designated size, year-on-year growth was 4.2%, and sales output value increased by 0.1% year-on-year. Main business income rose by 2.9% year-on-year, and export delivery value increased by 4.6% year-on-year. Colleagues in the lighting industry have always resonated with national strategies at key nodes of entering a new era and journey, committed to creating green lighting, dual-carbon energy saving, and a new ecosystem. By actively leveraging corporate initiative and strong development resilience, they are building a high-quality development system for the modern lighting industry, remaining steadfast in adversity.

In 2023, the Gaoyou street light manufacturing base experienced an industry winter, with market demand impacted by two major shocks: a reduction in government projects and cross-sector entry by central and state-owned enterprises. Production capacity release was squeezed from both ends — on the high end, brand companies extended downwards to make shared poles, while on the low end, the new rural and solar lighting markets were shrinking, even as capacity expanded and blossomed everywhere.

For most companies, the lighting market in 2023 was a rather challenging experience. Although the three-year pandemic has ended, consumption did not see the expected post-pandemic rebound and recovery. Instead, most companies felt it was even more difficult than during the pandemic. After experiencing the three-year pandemic and the market performance in 2023, most surviving companies have passively or rationally accepted the current market environment. They are able to calm down to analyze the market and think about the future. After being tempered by the market in recent years, companies have achieved self-breakthroughs in thinking and cognition, knowing what to do and what not to do, and have basically clarified their future development direction. I believe this is the greatest gain for enterprises.

一、国内国际外部信心。后疫情时代，国内国外整体环境都在复苏阶段，尽管国际形式风云变换，但是中国作为第二经济大国，从低碳、节能、智能科技等方面，国家都有非常多的好的政策和举措，今年也是共建“一带一路”倡议的第十年，随着“一带一路”建设项目的推进，“中巴经济走廊”“中俄蒙经济走廊”等国际经济走廊应运而生。畅通的经济循环带来健康、持续的发展，未来的“一带一路”及新基建市场将是持续和巨大的，中国制造也必将是引领世界的。

二、行业信心。有路就有灯，且现在的照明行业也不仅仅是点亮城市的一盏路灯，它更是搭载了更多科技元素，让路灯成为了城市的【安全卫士】，围绕照明的细分领域板块也更加具体和专业，人因照明、光伏照明、教育照明、农业照明、文旅照明等等，照明领域大有可为空间。尽管我们看到了一些企业面临的困境和压力，这也正是市场带来的新一轮洗牌和优胜劣汰，光明事业是朝阳产业，我们坚信。围绕高质量发展纲要及科技创新思路，聚焦研发投入及产业布局，拓宽及深耕照明行业的优势，勇于破局，行业才能可持续发展。

3. Corporate Confidence. As an outdoor lighting enterprise, Longteng Lighting has been committed to the "Five-Dimensional Integrated" Industry / Supply chain Solution. Longteng possesses a dual-cycle model of manufacturing plus engineering, an operational Industry / Supply chain based on the "Five-Dimensional Integrated" approach, and a virtuous development circle for upstream and downstream sectors. It continuously optimizes and absorbs professional talent. Longteng also engages in export business. As project owners increasingly demand comprehensive Solution capabilities from enterprises, companies with strong overall strength will represent the future development trend.

The first keyword is "Below expectations." After China relaxed its pandemic control policies at the end of 2022, there was widespread expectation that market demand would recover and grow in 2023. However, in reality, neither the microeconomic environment nor the overall demand in the lighting industry met expectations. The overall demand in the lighting industry, both in the domestic market and in overseas Export, is in a state of decline. Especially in the domestic lighting market, the recovery in demand is significantly below expectations.

The second keyword is "Change." From a macroeconomic perspective, the international environment is undergoing major changes unseen in a century, with intensified geopolitical conflicts. The global Industry / Supply chain and supply chains are impacted by various factors, leading to sluggish economic growth. The domestic macroeconomy is also undergoing structural adjustment, transitioning gradually from real estate and infrastructure towards high-end manufacturing and high-tech, high-quality development. On one hand, the lighting industry is accelerating its integration with intelligent technology to drive the industry towards intelligence; on the other hand, the outward transfer of the Industry / Supply chain is becoming increasingly evident. The polarization within the lighting industry is becoming more pronounced, with further increased industry concentration. Leading brands continue to guide the industry towards smarter, healthier, and more Energy saving directions. Whether in terms of competitive landscape or the speed of technological development, changes are accelerating.

I believe the keyword for the lighting industry in 2023 can be summarized by four aspects of "firmness": The first is resilience, meaning perseverance and the virtue of steadfast tenacity; the second is adherence, staying true to our original aspiration. I feel that MLS has done this from the very beginning, covering the entire supply chain, from epitaxy, chips, and packaging components all the way to complete luminaires. So the second point is adherence to our supply chain; the third is strength, because throughout 2023 we encountered many difficulties. Especially as MLS is an export-oriented international enterprise, strength is crucial, emphasizing willpower regardless of the situation. This year, MLS also spent about a week holding the global LEDVANCE marketing conference; the last one is robustness. Overall, MLS held firm under the previous three aspects of "firmness," standing tall without yielding, and not only on the Chinese stage but also moving to the center of the world lighting stage.

In 2023, the lighting and electrical industry was listed among the top ten industries with the "highest difficulty" in China, alongside private real estate, pig farming, and education. With the weakness in real estate, the once comfortable growth environment for the lighting industry no longer exists.

"Dullness" is my impression of the lighting industry in 2023. From the perspective of my company, combined with feedback from upstream and downstream partners, overall market demand is relatively weak, there are fewer new projects, and the decision-making cycle for new projects has generally lengthened. At the product and technology levels, there is nothing particularly innovative; it is mostly minor adjustments through different combinations.

"Hard to Summarize" is the keyword for the lighting industry in 2023. Having gone through it is wealth; perhaps 2023 will be the best year of the next three. It is good to be alive.

Having survived the pandemic, we originally expected an economic rebound and anticipated the recovery of government and private investment. Unexpectedly, after a brief moment of joy, we encountered the real estate industry's crisis and the freeze on government investment. Not only are new projects nowhere in sight, but existing projects are also facing funding difficulties. Many project designs have been completed or delayed, yet payment remains indefinitely out of reach. This feeling is truly like moving forward in a dark tunnel, relying only on the faint light held in hand, gritting our teeth to press on. We look forward to 2023 passing soon, hoping that 2024 will offer everyone a brighter future ahead.

Since the beginning of this year, the economic operation has continued to recover and improve, with demand for goods and services steadily restoring. However, the complexity, severity, and uncertainty of the external environment have increased, domestic effective demand is insufficient, and risks in some areas remain significant. In 2023, due to the impact of the broader economic downturn, many indoor and outdoor lighting engineering projects were suspended or shelved. Many domestic lighting engineering companies are currently facing a decline in business volume and sales, forcing them to confront layoffs, salary cuts, and even the struggle to maintain operations.

Looking ahead, the internal and external environments facing China's development remain complex and severe. Further promoting economic recovery and improvement requires overcoming certain difficulties and challenges. As a major energy consumer, the lighting Industry must inevitably contribute to the "dual carbon" goals. Starting with green and low-carbon considerations at the design front end is more logically sound, and addressing problems at the source makes it easier to achieve optimal results.