▲ Booths of companies participating in the '2019 Guangzhou International Lighting Exhibition' (Photo = Jung-Bae Kim)     © World Lighting News.

 

 

Written by : Jung-Bae Kim. Publisher & Editor. Lighting Critic.

 

For the past 20 years, lighting companies around the world have continued to produce

products in China as OEMs, or import finished products from China and sell them to the

domestic and overseas markets.

 

I thought it would cost less and had a much better margin. But in everything there is a

light side and a dark side. The same is true of “Chinese OEM production and finished

product import”. The “situation” experienced by lighting companies around the world that have been dependent on “China” shows this reality well. <Editor's note>
 
Companies that relied on “Chinese OEMs” lost all of their technology, products, and customers “Chinese OEMs” are entering the global market with technology and products
Without “my own technology and products,” the reality is that even Chinese companies

are being pushed.
 
"Have you been to the exhibition booth of lighting A in the US? What about the

exhibition booth of lighting B in Taiwan? Perhaps there, he also introduced various

products, saying'this is our company's new product this year'.

 

But all of those products are made in China. Of course, some products are made by OEMs in China, and some products are imported from China. However, it is true that the

products are made in China.

 

This is the situation facing lighting companies around the world, regardless of country or

company. Without Chinese OEM products and Chinese imported products, one cannot

properly decorate an exhibition booth of this size. They don't have their own products.

 

Besides, look at that OPPLE over there. Chinese companies are participating in the “Light+Building” (Frankfurt International Lighting Exhibition) by decorating a bigger booth than

global companies such as Toshiba, Osram and Samsung Electronics? It was difficult to

dream in the past.

 

But look at O'ple's booth now. The most crowded place in this exhibition hall (Hall 6.2) is

right there. Probably, among the companies that participated in this exhibition, the only

companies that came out with products made by their own company may be our

company and to go OEM in China.

.

Fortunately, some company has its own factories both locally and in China, so we can develop and produce our own products. However, if a lighting company does not have its

own factory in China, the situation is similar.

In the end, it's just buying and selling Chinese products. So, they don't have their own

technology, they don't have their own products, and in the export market, they bump into the products of Chinese companies that make products for their company. Then it gets

harder and harder to do the lighting business.”

 

On March 21st, 2018, an executive in charge of overseas marketing of a global LED chip

and module company met at exhibition hall 6.2 of ‘Light+Building 2018 (2018 Frankfurt International Lighting Fair)’ told reporters:

 

The essence of what he said was that "lighting companies that do not have their own

technology and products, and their own factories in China, are still in business, but will be more difficult to do business in the future."

 

As he said, at least based on Exhibition Hall 6.2, it was true that the exhibitors had a

relatively small number and type of products, although the booth size may have been

large. And unlike in the past exhibitions, the number of products introduced as new

products has drastically decreased. A Japanese exhibitor had only three new products

exhibited throughout the exhibition booth.

 

“Something is different from the past.” This would make sense to summarize in one word the feelings I received at Exhibition Hall 6.2 of this year's Frankfurt International Lighting

Fair. You may not be able to pinpoint something, but it is definitely different from the

past.

 

What caused the feeling and atmosphere to change like this? The conclusion that came

out was'Aha! You don't have your own technology and products. The number of

differentiated technologies and products to attract the attention of customers and buyers has decreased.”

 

◆ Lighting companies without their own technology and products

Regardless of any business, the basics of a “business” are products that can be sold in the market, catching customers' thoughts and minds, and opening a wallet to make a

purchase.

 

If a company doesn't have such a product, it's obvious that you don't have to see the

results. Products are not sold and inventory and deficits accumulate. If this happens a few times, the company can no longer afford the deficit and eventually close the company.

 

This is what has happened in the'business world' so far. Of course, this is happening now and will continue to happen. This is no different in terms of domestic lighting industry or overseas lighting companies.

 

The problem is that the causes of this happening are slightly different for each era,

country, and company. In simple terms, it means "what was right then is wrong now."

 

Let's talk in a more understandable and direct language. In the early 1990s, relocating the factory to China was "right". Especially for lighting companies in Korea and Taiwan. This is because buyers demanded'lower prices' from lighting companies in Korea or Taiwan.

 

To meet the “lower price” buyers want, the factory had to be moved to a place where

wages and factory rent were cheaper. That is China. At that time, China implemented a

policy to actively attract foreign lighting companies, providing factory sites free of charge

for 50 to 100 years, exempting taxes, and even building factory buildings for free.

 

80% of Taiwanese companies that received such a Chinese “love call” moved their

factories to China between 1993 and 1996. In Korea, large and small lighting companies

have moved their factories to China.
 
Even lighting companies that have not moved their factories have increased their “reliance on China” by continuing to change their business patterns toward importing parts from

China and then producing domestic assembly → OEM production in China → importing

finished products made by Chinese companies.

 

This type of lighting business was beneficial to both overseas lighting companies and

Chinese lighting companies. Overseas companies were able to easily, conveniently, and

import products at low prices and sell them in the domestic and overseas markets at high prices.

 

Chinese companies also made money by producing and supplying products with low

wages ahead of them despite low technology and product quality. This “win-win structure” is the reason why “Chinese OEMs” and “imports of Chinese products” have continued to

increase among lighting industries and lighting companies around the world over the past 20 years.

 

However, this “win-win structure” could not continue forever. When Chinese locals who

had learned and learned skills while working for foreign lighting companies in China left

the company and started their business by setting up a lighting company, the ‘win-win

structure’ up to now quickly changed to a ‘competitive structure.’

 

Even more, “Chinese OEMs” quickly learned technology and product design to create

similar products and supply them to the Chinese market as well as overseas markets.

After a “competitive structure” was formed between “Chinese lighting companies” and

“overseas lighting companies,” overseas lighting companies fell into a double dilemma.

 

One is that without'Chinese OEM' or'Chinese product import', there is no product to sell. Another is that they are in a position to compete directly in Chinese and foreign markets with Chinese lighting companies that do OEM production.

 

The only way to resolve these two dilemma is to stop ‘Chinese OEM’ or ‘Importing

Chinese-made products’, and sell products with superior technology, quality, and design

than Chinese-made products at a price equal to or slightly lower than the price of Chinese-made products.

 

However, over the past 20 years, lighting companies around the world have not made that decision. Meanwhile, Chinese lighting companies have been accumulating their own

competencies by increasing their technology, products, manpower, and overseas

marketing competitiveness.

And finally, with its own technology and products, strong price competitiveness, rich

export experience, and enhanced brand power as weapons, it enters the stage of direct

competition with foreign companies that have given'OEM' orders and'export orders' in the overseas market. did.

 

When this happened, the positions of Chinese and foreign companies quickly reversed.

Chinese companies are rapidly increasing their market share with high price

competitiveness for their own technologies and products, while overseas companies have

lost their own technologies, products, and price competitiveness, and their market share

has declined. And I became in a position where I had no choice but to endure with only

'brand'.

 

The result of this process was integrated into one, and it can be said that the atmosphere and change of exhibition hall 6.2 of this year's ‘Light+Building 2018 (2018 Frankfurt

International Lighting Exhibition)’.

 

To summarize this, Chinese OEMs and imports increase → Dependence on China increases → Chinese companies' technology, production facilities, products, and price

competitiveness increase → Technology development ability of foreign companies, new

product development ability, price competitiveness, and skilled production manpower

decrease → China Companies' entry into overseas markets → Chinese companies' overseas market share increase → overseas companies' customer and market share decrease →

overseas companies' decline or decline. What should be noted here is that the increase in Chinese OEMs and imports has resulted in the decline or decline of foreign companies.
 
◆ Is there any way to overcome China?

 

However, overseas lighting companies are not only deprived of the export market by

Chinese lighting companies. It means that even the domestic market, which was their own territory, is being occupied by Chinese companies.

 

During this 'Light+Building 2018' exhibition, a number of VIP journalists from overseas

countries actively covered the situation of the local lighting market. ▲India lighting

market is about 90% ▲Indonesian lighting market is 80% Above ▲It was revealed that

80% of the lighting market in Middle East ▲more than 70% of the lighting market in

South America was engulfed by Chinese lighting products.

 

▲ In the US market, it is said that there are an overwhelming number of lighting products made in China. Chinese lighting products have already invaded the export market as well as the domestic market of each country.

If so, what should lighting companies from countries other than China do in the future to dominate the global lighting export and domestic markets?

 

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