Illuminating the LED Lighting Market in China

We probably don’t have to tell you at this point, but the world is being lit by LEDs, as they are energy efficient, compact and brighter than traditional incandescent or fluorescent lights.

China in particular is seeing high adoption of LEDs. Demand from end-users in the commercial, industrial, outdoor and residential sectors is a key factor contributing to growth of the LED Lighting Market in China, which is posting a CAGR of 26.9 percent from 2013-2018.

LED Lighting Market in China

TechNavio analysts have taken a closer look at some of the major drivers behind this market growth, which include government support, declining process and growing urbanization in the region.

Strong Government Support

China’s 12th Five Year Plan (2011-2015) focuses mainly on energy conservation. The government is looking at reducing power generation from coal plants, expanding nuclear power generation, encouraging green, energy efficient technologies in all areas of manufacturing, and promoting efficient lighting technologies to reduce power consumption.

The Chinese government is even planning to ban the production and sale of high-power-consuming lighting sources and incandescent bulbs. To support this, they are planning to subsidize LED lighting manufacturers to scale up and encourage the production of innovating lighting solutions. All of these government efforts are focusing on increasing adoption of LEDs in the domestic market, which is in turn expected to increase the growth prospects of the market during the forecast period.

Declining Prices of LEDs and Fixtures

This one is relatively self-explanatory—the more economical option usually wins when it comes to consumers. In China, LED lamps that cost an average of US$10 per unit (for a 60-watt LED lamp) are expected to witness a price decline of 30-40 percent by 2018. Such a drastic decline in the price of LED lamps and fixtures is expected to propel growth in the market, especially in the residential segment.

Growing Urbanization

More and more people in China are adopting an urban lifestyle, increasing the customer base for LED lighting. Another implication of this rapid urbanization is a rise in disposable income, which is expected to increase spending on cost-effective lighting.

Increasing Demand from the Residential Segment

The residential segment in the LED Lighting Market in China has witnessed a growth of approximately 90 percent from 2012 to 2013. Moreover, the revenue contribution from this segment to the overall market is expected to grow at a CAGR of 42.1 percent during the forecast period. The major factors influencing the growth of this segment are the declining prices of LED lamps and fixtures as well as the increasing availability of LED lights in the domestic market.

To keep an eye on this growing market, view our LED Lighting Market in China 2014-2018 report.