China is forecast to export more than US$1.8 billion worth of ceiling and wall-mounted light fixtures in 2006. Overseas shipments have already exceeded the average 26 percent growth rate of the past two years, rising 28 percent in the first half of 2006 from the same period in 2005.
This growth is expected to continue through the rest of 2006 even as suppliers face various challenges.
The following are some of the key trends we see in China's ceiling lights industry:
• The supplier base will be consolidating further in the next several years as smaller makers unable to absorb the rising cost of materials and components stop production of the line.
• Soaring raw material and component costs will continue to drive up manufacturing expenses and, consequently, product prices. Many suppliers, however, will be keeping price adjustments to a minimum to remain competitive.
• Suppliers will be boosting capacity by at least 20 percent in anticipation of increased demand.
• More ceiling light fixtures from China will be complying with the RoHS directive in the year ahead as suppliers seek to strengthen their presence in the EU.
This report covers recessed lights, downlights and spotlights, flush-mounted fixtures, and pendant lights and chandeliers, the four biggest ceiling light fixture categories in China. The Products & Prices section describes each category mainly in terms of the materials and components used, the key factors affecting pricing and market positioning.
Product development efforts in China are addressing growing awareness of environmental sustainability. The R&D/Design section of the report explains how suppliers are complying with the RoHS directive, which was implemented July 2006 in the EU, the primary target market of most makers.
The production of each ceiling light category involves varying processes, which are described in the Manufacturing section. The production capability and equipment of small, midsize and large suppliers in China are compared in this section as well.
There are an estimated 4,000 ceiling light makers in China. Most of these companies started by offering only one ceiling light category, later expanding to include at least one more product type designed for a similar application. Flush-mounted fixture makers, for instance, also make pendant lights and chandeliers because both categories are mainly for residential use. Suppliers of commercial, industrial and structural lighting fixtures usually offer recessed lights, downlights and spotlights.
There are some, however, that can make all four categories. Most of these companies are large and can afford the various equipment necessary to make all product types.
About 90 percent of ceiling light fixture makers in China are privately owned. To reflect the structure of the industry, more than 80 percent of the suppliers in this report are China-owned. The rest are foreign-invested.
The Industry Overview elaborates on the composition of the supplier base in the country, highlighting the key characteristics and capability of different types of makers.
Industry Overview
China's exports of ceiling light fixtures are on the uptrend, averaging more than 20 percent growth in each of the past two years. In 2005, the value of shipments of these products, combined with wall-mounted fixtures, increased 22 percent from 2004 to reach US$1.4 billion.
Moreover, exports in the first half of 2006 have already grown 28 percent from shipments in the same period last year and are valued at almost US$790 million.
While ceiling light fixture exports are not tracked independently, they are estimated to account for at least half of total shipments in the line, if not more.
The growth of the export industry is attributed mainly to China's price advantage. Ceiling light fixtures from China can sell for half the price of similar models from other countries.
The improvement in the overall quality of ceiling light fixtures is likewise driving overseas demand. Many suppliers in China have boosted the quality of their products to levels that meet international standards such as CE, TÜV and GS. This is a result of increased interaction with overseas customers and competition from industry leaders such as Philips and General Electric, which have established production facilities in China.
Further Consolidation
Despite the expansion of the export market and the changing image of China-made products, increasing raw material and component costs have forced several ceiling light fixture suppliers to exit the industry in the past two years.
In the first half of 2006 alone, production costs rose by at least 10 percent in many factories. This is because the cost of metals such as copper and aluminum increased substantially while that of other materials, including steel and zinc alloy, was in a flux.
Higher technical barriers to trade and increasing consumer awareness about product safety and environmental sustainability are likewise threatening the growth and survival of several manufacturers. These factors are forcing suppliers to use better, and consequently more expensive, raw materials and components or else be locked out of their target markets.
Small suppliers are especially vulnerable to these challenges because they usually produce ceiling lights with low differentiation value and, therefore, minimal profit. These companies, as a result, are generally unable to continue absorbing the cost increases brought about by higher material and component costs and the implementation of more stringent market requirements.
The lack of technology necessary to make products with higher technological or aesthetic value, which command higher prices and offer better margin, likewise puts most small companies at the risk of closure.
Supplier Profile
Foshan Keepsun Electrical Co. Ltd
Foshan Keepsun, invested by Hong Kong-based Qipushi International Group Co. Ltd, offers mainly fluorescent light fixtures, switches and sockets.
More than 60 percent of export revenue comes from the midrange markets in Eastern Europe and the Middle East. Low-end designs account for the rest.
The company is increasing compliance with international standards, having secured CE, CB and CCC certification. It is improving manufacturing systems to be able to make components in-house. This is in line with plans to comply with the RoHS standard by the end of the year or early 2007.
Foshan Keepsun has supplied lighting fixtures to major establishments such as the Shenzhen Shangri-la Hotel and Beijing Capital Airport.
Products
Foshan Keepsun develops recessed lights mostly for two or three 14, 20, 28, 36 and 40W fluorescent tubes. Bodies are formed from 0.3 to 0.5mm thick cold-rolled steel sheets and then plastic coated.
Models with reflectors made of domestic aluminum alloy range in price from US$10 to US$29. The use of Germany-imported aluminum in the reflectors pushes per-unit price to between US$18 and US$38.
Downlights have plastic-coated cold-rolled steel bodies and aluminum alloy reflectors. Anti-moist covers can be requested. Models come in diameters of 3.5, 4, 5, 6 and 8 inches, and are priced from US$4 to US$16.50.
Flush-mounted light fixtures have acrylic housings and are used mainly with 13, 22, 32 and 40W incandescent or energy-saving bulbs. Models rated at 22W are priced at US$7.70 while 32W versions are US$9.
Prices of A2, A6, A7, A8, B2 and blackboard fluorescent lamp brackets are between US$2.80 and US$26.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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