Update on the LED revolution

A recent global industry poll of construction and property development executives showed that over half believe that demand for energy/power efficient products/ services will grow between 10 and 20 per cent in 2011-2012.

This is good news for LED lighting. But it’s not so good to learn that regulatory initiatives in Australia lag behind other developed nations in the region.

LED lighting brands from Asia could dominate global markets but the lighting is still highly fragmented with many start-up competitors. As the technology matures, industry consolidation will occur, and there will be a flight to quality and to established brands. Multinational and local LED lighting manufacturers, such as Philips, Osram, Toshiba, Kingsun and Neo-Neon are among the many strong contenders for market dominance in their home and overseas markets.

Government initiatives

Active government involvement is one key factor. Favourable legislation and incentive programs encouraging LED lighting purchases include measures to lower the end consumer price, such as utility rebate programs, and programs and policies that offer manufacturers direct subsidies. In countries such as China and South Korea, government initiatives have helped spur the industry’s recent growth.

In most countries, high competitive intensity among a small number of large lighting players can lead to situations where aggressive pricing is the chosen tool. This helps to promote innovation as brands try to gain first-mover advantage in local markets.

Here’s how large countries in our region compare:

Japan

Government legislation supports the adoption of energy-saving technology. Its 2012 ban on household use of incandescent lamps and stringent energy conservation laws have created a favourable regulatory environment for lighting industry players to promote LED technology.

China

There are many incentive programs in China for LED lighting manufacturers. These include the Project 863 and “10 thousands
lights in 10 cities”. Older, nonenergy efficient lamp technology is
being discouraged, with usage of incandescent lamps scheduled to
stop after 2018.

South Korea and Taiwan

Both countries have favourable regulatory regimes with bans on incandescent lamps in 2012 and several incentive programs.

India

The Indian LED lighting market has lagged behind its neighbours
previously, However, regulatory support has been building recently,
with various programs at state and national levels either subsidising or
encouraging LED lighting.

Australia

Australia lags behind other Asian countries in terms of LED lighting adoption. While it has banned the use of incandescent lighting from 2010 and has started drafting LED-specific lighting standards, it offers little in the way of incentive programs to encourage the market.

Indonesia

Indonesia is still very much focused on older energy-saving lighting technologies like CFLs and does not have a supportive regulatory environment for LED lighting yet.

In conclusion

Construction players and property developers are likely to find that the local supply pool for LED lighting is most active in Japan and China for the time being.

Green technology, products and services are where many see potential for growth today, as we become increasingly vulnerable to the rising cost of raw materials, stiff global competition and economic
instabilities around the world.

Kelvin Inn, Consulting Director, Global Intelligence Alliance

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