Southeast Asian LED lighting market penetration accelerated

According to statistics, in Southeast Asia's six major countries (Thailand, Singapore, Malaysia, Vietnam, Indonesia, and the Philippines), the overall Southeast Asian lighting market will be close to US$4.8 billion in 2015, of which LED lighting will be about US$1.5 billion. The LED lighting market in Southeast Asia grew fastest in 2013, with a year-on-year growth rate of 63%. It slightly slowed down from 2014 to 2015, but it still has a growth rate of more than 30%. In addition, the penetration rate of LED lighting in the Southeast Asian market has been increasing year by year, and the speed of promotion has gradually accelerated. From 2012 to 2015, Southeast Asian LED lighting penetration is expected to increase from 12% to 32%. The Southeast Asian market is growing into a fertile ground for the development of LED lighting with the most vitality and potential.

In addition to the rapid development of LED lighting in Southeast Asia, besides benefiting from the infrastructure development, the development and influence of the Association of Southeast Asian Nations has also given great impetus. The Association of Southeast Asian Nations is a governmental international organization that gathers countries in the Southeast Asia region. The ASEAN, which was established in 1967, is one of the fastest growing regions in the world economy.

ASEAN not only actively negotiates free trade agreements with foreign countries, but also sets targets for the establishment of the “ASEAN Economic Community” in 2015. The establishment of the ASEAN Community will make ASEAN a single market and manufacturing base. The ASEAN Economic Community is scheduled to be implemented by the end of 2015 in order to facilitate the free flow of goods, services and professional labor, and the flow of capital among Member States.

In the policy and standards section, after the establishment of the ASEAN Economic Community, the AHEEERR standard for electronic equipment will be implemented. Since 2016, electronic equipment products can be sold in other countries in ASEAN countries after being certified by a local country. The implementation of the unified standard will undoubtedly bring significant benefits to the export of products to the Southeast Asian market. For LED manufacturers, entering the Southeast Asian market does not require multiple standards certification, which directly saves export costs and time. And increased trading opportunities, once the products exported to Southeast Asia can be sold throughout the ASEAN. For the local market and consumers, the implementation of uniform standards allows more healthy competition to be added, which will help improve product quality and standards, thereby improving market acceptance.

With the rapid growth of the market and favorable policies, the Southeast Asian market is bound to become an important overseas battlefield for the future development of Chinese LED manufacturers. However, manufacturers need to select channels and models that are suitable for themselves and the local market in order to quickly and effectively open up the market.

Taking the lighting products imported from China as an example, the lighting industry chain structure in Southeast Asia can be divided into five types:

1. Providing devices for local lighting manufacturers by Chinese manufacturers;

2. Imported semi-finished products + local assembly;

3. Import light source + local assembly;

4. Chinese OEMs ship directly to countries after ODM;

5. Chinese manufacturers own brand sales through engineering or wholesale channels.

In general, due to the lack of local manufacturing capacity, Southeast Asian countries still have the highest share of international manufacturers such as Philips, Bizarre and Toshiba, followed by local manufacturers. The international and local manufacturers usually choose to ship directly to ODMs from Chinese OEMs. The OEM relationship is relatively fixed and the order volume is large. Therefore, the industrial chain structure has the highest proportion in Southeast Asia, with an average of more than 50%. . Chinese manufacturers also sell about 25% of their shares from local brands.

In the market positioning strategy, due to the fact that the Southeast Asian civilian market has not yet been opened up, the replacement demand is still dominated by commercial and outdoor projects. Therefore, the local large manufacturers generally use engineering channels as the main channels, and retail and wholesale channels account for relatively small amounts. As a pioneer in the market, international manufacturers usually have retail wholesale channels and engineering channels involved. Overall, retail sales channels will be slightly higher than the engineering channels, and slightly higher than the local manufacturers. In addition, some manufacturers mainly sell products through channels such as retail and wholesale, mostly for small and medium sized companies. Compared with those who take the engineering channels, the prices are lower, and the main market is the low-end market, and the share is the smallest.

Positioning Strategy 1: Both B2C channels and engineering channels are involved. Overall, the proportion of B2C channels will be slightly higher than that of engineering channels.

Positioning strategy 2: The engineering channel is the main source, and B2C channels account for relatively small proportions.

Positioning Strategy 3: Products are basically all sold through engineering channels.

Positioning strategy 4: Sell products mainly through retail and wholesale channels, mostly small and medium-sized manufacturers.

It can be seen that currently in the industry chain model of Southeast Asian manufacturers, Chinese manufacturers occupy a very important position. Chinese manufacturers looking for local partners and mastering orders for OEMs can be regarded as an effective way to quickly explore the Southeast Asian market. In addition, they establish a brand image, grasp the advantages of local channels, and then export their own brands to Southeast Asia, to more scale and brands. For the advantage of Chinese manufacturers, it is also beneficial to occupy a place in the Southeast Asian market, and the profit rate of products with own-brand products will be higher.

In general, manufacturers need to do a self-assessment, make appropriate channel choices based on brand and channel conditions, and plan product specifications and prices based on local market demand. Regardless of high-end or low-end, engineering or retail, private label or OEM, a good positioning strategy is a key element for entering the Southeast Asian market.