Abstract: On its face, a light is a fairly simple product. And yet, there is an almost infinite number of lighting types, sizes, shapes, functions and styles. There are indoor and outdoor lights, lights for walls, poles, ceilings, under counter lights, task-specific lights, residential and industrial lights, and a host of other applications.
This creates a massive lighting industry. In 2018 Fortune Business Insights estimated that the global lighting market was worth about $115 billion. In the same report, it’s noted that the Asia Pacific lighting market was, and will continue to be the largest segment of the total industry, weighing in at $54 billion. And China contributes significantly to this total.
The China lighting industry is leading the charge in many ways, bringing new innovations to market and creating economies of scale that drive prices down. This article will discuss China’s market and its place in the global industry. By the end, you’ll have an appreciation for just how diverse the lighting industry is.
To get a sense of just how large the market is, let’s start by examining China and expand out from there.
China’s Lighting Market
When considering the China lighting market, your focus goes immediately to the town of Guzhen, located about 14 miles from the center of Zhongshan City in Guangdong Province. Dubbed the Lighting Capital of China, this town of 75,000 residents is the most important source of wholesale lamps in the country, accounting for 60% of the lighting sold.
There are currently thousands of different manufacturers and wholesalers in the city, employing more than 100,000 people. Within this single city, you’ll find a fully autonomous supply chain that sources and supplies raw materials, manufacturing a full range of lighting products for both residential and commercial use.
There are other lighting suppliers throughout the country, but the vast majority are found in Guzhen. This is a boon to global buyers, as it creates a highly-centralized market and a robust competitive environment. In many ways, Guzhen isn’t just the Lighting Capital of China. It’s arguably the lighting capital of the world.
The town is one of the four largest lighting fitting distribution centers across the globe. It supplies most of China’s lighting needs and contributes significantly to global supplies.
The Shape of the China Lighting Industry
Unlike many other countries, the Chinese lighting industry is a diverse amalgam of both large and small producers. You can find large corporate interests that build a wide range of general lighting products as well as niche companies producing tailored products for specific markets.
In Guzhen and elsewhere in the country, lighting is both a huge industrial endeavor as well as a cottage industry. It’s this diversity that makes the Chinese lighting market such an interesting place to do business. There’s virtually nothing that can’t be sourced or purchased.
LEDs Started a Renaissance
It was the advent of the LED that really kickstarted China’s burgeoning lighting industry. Developed at the turn of the millennium, LEDs, or Light Emitting Diodes, was a groundbreaking new lighting technology. Unlike bulbs, which are fragile, LEDs are a solid-state chip. When a current is passed through this special semiconductor, light is emitted.
LEDs are immensely efficient, converting the lion’s share of the energy they consume into light. Because of this, they also give off very little heat. Around the start of the 2010s LEDs were beginning to break into the mainstream, but they were still held back by cost. They were significantly more expensive than competing technologies.
China’s lighting market seized on the opportunity to create less expensive, quality LED products, and within a few years, China began to dominate the space. Industry analysts credit China as one of the primary drivers of LED lighting adoption around the world. They lowered the cost of entry and allowed this superior lighting technology to take over the lighting market.
Today LED lighting represents 56% global lighting and this extensive market penetration is due in large part to China lighting industry companies. Growth had classically been driven by the rapid urbanization of China and other markets and the large scale construction projects that this entails.
Moreover, diversities of led lightings are booming during this era. Such as led growth light, led lawn lighting, led pool lighting and so on.
China’s Place in the Global Lighting Market
The three largest sectors in global lighting are general lighting, automotive lighting and backlighting. Globally, general lighting consumes nearly 79% of all lighting fixtures manufactured. Automotive, itself a very large industry, is still a much smaller part of the global lighting market.
Within the general lighting category, the single largest portion is residential lighting applications, with commercial and architectural lighting coming in second. Lighting in this category is manufactured around the globe, with an emphasis on the Asia Pacific region, the United States, and Germany.
It’s estimated that China’s position within the global lighting market will only continue to grow. The region currently manufacturers cutting edge technologies at market-making prices. Their global leadership will only ensure that China lighting products will continue to gain market share.
Lighting Market Segmentation By Technology
There are a number of lighting technologies used around the globe. The newest of the group, LED, is already the leading driver of growth, eclipsing other participants.
LED Lighting
LEDs have taken over the lighting market globally in just under a decade. They offer a number of advantages over other lighting technologies. They’re extremely energy efficient, resilient, non-polluting, and they can last up 50,000 hours, much longer than competing technologies.
In the China lighting market and elsewhere, LEDs are driving new trends in lighting. Previously fixtures were manufactured with the assumption that the bulb would need to be changed frequently. This limited designs to bulb-accessible varieties.
However, because LEDs can last up to seven years, and sometimes longer, the assumption that a fixture needs to outlive its bulb is fading away. Modern designs are integrating LED bulbs in a non-replaceable way. The assumption now is that when the LEDs inside reach their end of life, the entire fixture will be replaced.
This revelation creates all-new design possibilities. It’s also lowering the price of lighting generally, as the fixtures are being viewed from a more disposable perspective. In many ways, standard light bulbs, including LED replacement bulbs, remain only because of legacy lighting systems that require them. In the future, it’s likely that replaceable bulbs will fade from use as the older lighting systems that needed them are replaced.
Within the next decade or two, it’s likely that bulbs, as we know them today, will be largely phased out, and LEDs, or whatever eventually replaces them, will dominate. The China lighting market is certain to lead the way.
High-Intensity Discharge Lighting
HID lighting is the next largest market segment. Prior to the advent and rise of LEDs, HID technologies like high-pressure sodium (HPS) and metal halide (MH) bulbs were found in a number of industrial and commercial applications.
The automotive lighting segment used HID lighting extensively for headlights. They were also found anywhere that extremely bright lighting was required, particularly when energy efficiency was needed such as warehouses, parking lots, big box stores, stadiums, streetlights, public parks, and other large venues.
HID lighting produces a highly-focused light that’s useful for large-scale lighting installations, including indoor gardening, an application that popularized HID lights outside of more commercial applications. HID lights never really found acceptance among residential and commercial general lighting, and now that LEDs have taken over these markets, its unlikely that they will.
LEDs are now ousting HID from many of the places the technology once dominated. The China lighting industry is playing a large part in this process. It’s simply difficult for these bulky gas-filled bulbs, with their exacting ballast requirements to compete with the ease of application that LEDs represent.
Fluorescent Lighting
Once the darling of office buildings and homes alike, fluorescent bulbs are losing market share to both HID and LED bulbs. At one time, fluorescents were the choice for low-heat, high-output lighting applications.
The bulbs were also extremely inexpensive to manufacture, and so they became the technology of choice for large office buildings around the world. With the creation of the CFL (compact fluorescent) bulb, residential lamps began adding the technology as well.
However, the bulbs were never fully satisfactory for consumers. They flickered as they aged, there could be a delay between flipping the switch and powering the bulb, and they were an environmental hazard, containing mercury vapor, a known toxin and carcinogen.
Fluorescents can still be found in offices around the world, due to legacy lighting systems, but we can expect, within the China lighting market and globally, to see fluorescent bulbs phased out over the next decade or so.
Incandescent Lighting
The first bulbs created by Edison were incandescent bulbs, and this technology dominated the market for decades after. Incandescent bulbs are cheap, easy to manufacture and produce a warm, welcoming glow.
Standard light bulbs as well as halogen bulbs qualify as incandescent. This technology creates light by heating a metal filament with an electric current until it glows in the visual spectrum. The problem with incandescents is that this method of creating light is immensely wasteful.
90% of the electricity an incandescent bulb uses leaves the bulb as heat. Only 10% is converted to light. The technology is being phased out actively due to this terrible inefficiency. Many world governments have banned standard incandescent bulbs in an effort to speed their demise. LEDs are far more efficient, and in an era where climate change is a concern and green technologies are preferred, incandescents have no place at the table.
The China lighting industry recognized this trend before the rest of the world and invested heavily in alternative lighting technologies, which is part of the reason they lead the globe in LED fixture production.
Smart Lighting: The Next Step
Smart lighting bridges the gap between illumination and the internet of things. Smart lights are bulbs and fixtures fitted with onboard IoT communications hardware that lets them communicate with mesh networks and smart hubs. This lets computers and voice-activated hubs control lighting systems. Smart illumination is another area where China lighting industries are leading the charge.
The smart lighting market is growing at a feverish pace. In 2019 the global smart lighting market was estimated to be worth $14 billion. By 2025 it’s expected to mushroom to $59 billion, a compound annual growth rate of over 27%.
In many ways, the rise of LED fixtures and bulbs allowed for smart lighting technologies. The reduced “bulb” footprint means there’s more room for communications chips inside of LED fixtures. Also, LED technology gives the user a great deal of control over the color temperature of the light emitted, which means you can build lighting fixtures with user-selectable colors. Finally, the reduced heat output of LEDs, relative to other technologies, mean that temperature-sensitive electronics can be added without the chance of overheating.
The China lighting industry has embraced smart lighting. Smart cities are being planned by the Chinese government that will take advantage of AI and numerous other smart technologies to create connected, efficient cities at the bleeding edge of technology. Smart lighting, on roadways, in public buildings, and in other public spaces are a big part of this push.
We can expect these green initiatives to further push what’s possible with smart lighting. In the coming decades, the China lighting industry will advance past the rest of the world, feeding its own demand for innovative lighting technologies as well as the planet’s.
The Global Lighting Industry Continues to Grow
Year on year, the global market grows, currently enjoying a CAGR of 4.2%. Slow but steady growth. However, smart lighting and new LED applications, driven largely by the China lighting industry, will accelerate this growth.
In the coming decades, an ever-increasing percentage of the world’s lighting demands will be satisfied by Chinese firms. These companies are leading the charge to find new and better ways to illuminate our world, and consumers around the planet will benefit.
