Implementation of CRS rein in Chinese LED manufacturers for some time, but India’s large LED market demand potential spurred them to change their export strategies
While boycott Chinese products has in recent days been a populist belief in India, a major market chunk of technology here, especially LED lighting, is still dominated by Chinese products. In quite a few instances, it is observed that Chinese companies are acquiring, or venturing with, Indian LED lighting manufactories to benefit from the much hyped ‘Make In India’ and giving native companies a tough fight. Notably, since the beginning of an economic slowdown and saturation in their domestic market in 2013, Chinese companies have been eyeing international turfs and eventually India has become the second most favourable destination for them.
Chinese consumers, now, have sophisticated and complex demands while costs and wages are on a rise. Meanwhile, the Indian lighting industry is foreseen to become the second biggest in the year to come with sales touching a new high. India is easily penetrable as both Indian and Chinese markets have similar structures. Being a Free-Market, distribution in India is easy and the enhanced focused on infrastructure development has allowed big players like MLS and Opple to cement their position here. Owing to bulk production, cheap products have allowed the Chinese to put their feet down in the Indian market.
Decline in Chinese LED Products
Despite all this, there is no denial of that fact that the last couple of years has witnessed steep decline in Chinese LED lighting products entering Indian market. Initially, it was presumed that boycott of Chinese products on Indian social media websites cause this dip while the fact was somehow different as Chinese LED exports to India hugely plummeted because of the recently introduced Compulsory Registration Scheme according to which all the electrical and electronic products, whether imported or manufactured domestically, are tested to the relevant standards at BIS-accredited laboratories in India.
BIS is the government agency responsible for certifying LED lighting products in India implemented in May 2015 that is similar to China’s 3C certification, and the implementation of which has barred Chinese LED manufacturers without BIS approval from entering the Indian market. However, this wasn’t the beginning of the process to reign in substandard products as agency introduced standards for LEDs and LED-based products way back in 2012, making them compulsory for any such products to be sold in India.
It was time when low-quality products were entering the market and adversely affecting users’ beliefs because of their unsubstantiated and inaccurate quality claims. Furthermore, instability on the part of LED technology owing to the advancement at breakneck pace wasn’t seemed conducive for the purpose.
Finding a Way-out
Interestingly, stringent implementation of the certification standards that tumbled the sales of Chinese LED products led majority of the Chinese manufacturers to re-strategise their stand on doing business with India focusing especially on LED components and high-end LEDs to continue the trading activities in the future. No wonder, it was the basis over which, Silkroad Development Holdings Ltd (SRD), the VIP unit of Guangdong Chamber of Commerce in India signed two MoUs (Memorandum of Understanding) – one with Alpha Test House and another with China Trade Forum in New Delhi.
The aim for signing these two MoUs was to increase the trade between India and China. It was a step to create conducive environment for both the business communities of the two countries, to enhance trade industry, joint venture, cooperation collaboration in terms of increasing the bilateral trade between the neighbouring nations. By having these two MOUs signed, a single window solution got open for Chinese entrepreneurs wherein through United Electric Lab, they get certifications consultations in a hassle-free manner and display center highlights their products making a mark in the domestic market.
SRD was founded with a mission to closely follow the ‘Make in India’ initiative. Having sample centres as one of the unique concepts and pillar of its business, SRD caters the buyers with majority of high quality and cost effective products by Chinese manufacturers under one roof; whereas Alpha Test House is one of the prominent service providers in the field of Testing Services like BIS certification, ROHS certification, WEEE certification and so on. These associations were meant to lead Chinese manufacturers to get faster consultation on BIS and allied requirements on electronic and electrical products in turn to help India in importing such products properly and will open doors for other overseas manufacturers to enter into India.
Moreover, the implementation of CRS was part of the many policies that the Centre has devised to boost energy-efficient lighting systems, especially LED lighting. Although, it was also pushing for ‘Make-In-India’ to help domestic industry gain some status so as to be able to compete with the international giants but didn’t anyway restrict foreign players, especially Chinese, to market their products in India. However, with this step, it was made clear that the Country, which eventually had become a dumping ground for Chinese substandard products, would not allow any such items to creep in.
Industry experts were happy to express their concern that with government coming forward, creating a somewhat level-playing field for domestic lighting manufacturers in accordance with those of Chinese counterparts who are enjoying immense state support, would surly reap the benefits sometime in future. And that it was badly needed to maintain standard and curb the reliance on foreign components and products to achieve consistent quality and cost effectiveness despite the fact that short-term challenges would still be there owing to the paucity of experienced local suppliers and effective midstream and upstream LED chain.
Now that CRS is a must, all the foreign manufacturers of regulated electrical and electronic products intending to export to India are required to obtain the mandatory BIS product certification license. The outcome of this policy is pretty exciting as it has aroused interests of those foreign players who specialise in components manufacturing and do not need to follow compulsory registration for certification as it is not yet essential for them like for complete product manufacturers. However, those with complete products have made it aptly clear that in whatever ways they won’t go to leave a flourishing market like India which guarantees a secure future.
Changing Market Dynamics
Accordingly, quite a few components suppliers as well as finished products manufacturers started looking forward to make the best out of the opportunities lying in the burgeoning Indian LED lighting industry. In stead of opting to become an indigenous manufacturer, many of them decided to continue with their suppliers’ status and keep feeding the Indian market from outside with products meeting the mandatory quality standard as prescribed by the BIS. At, LED World, we met a few of those overseas giants both, components’ manufacturers and lighting solution providers, who were recently here in India to explore the viability of their respective businesses.
Experts believe that LED bulb sales are difficult to estimate because they are mostly done by retailers. In fact, most Indian buyers in China made contact with low-end LED manufacturers, which enabled traders to act as the middle man, resulting in low-end LED companies clinching India’s non-bidding market. But with the implementation of BIS certification, Chinese made LED bulbs and luminaires low pricing advantages has been a tale of the past. The prices of Indian manufactured BIS certified LED bulbs are nearing those of Chinese competitors, which have greatly diminished the price appeal Chinese bulbs once had in the market.
While most of the Chinese manufacturers still believe that India’s volatile electric voltage surges has made it difficult to create an effective environment to use LEDs. At the same time, the market here is chaotic and price sensitive, retailers are only concerned about LED prices that may put Chinese LED bulbs at a distinct disadvantage. The price-difference of Chinese LED bulbs that meet BIS and those without can be up to three times. This is why most LED companies exporting to India have been SMEs.
Eager Exporters from China
One of the Chinese manufacturers, Shenzhen Yanshuoda Technology Co., Ltd. (YSD), which is a technology company and specialises in LED power research, development, produce, sale and service. The main products from its counter are LED waterproof power supplies and LED drivers. “Thanks to the benefit of location and senior professional technical team, we have developed steadily and rapidly as one of the top manufacturers in this line. Now, we have produced a series of popular and useful items after a good connection with marketing and uninterrupted testing,” says Ken Wu of YSD.
YSD always tries to bring the best to the LED line, with independent intellectual property rights. “With excellent structure, high performance and competitive price (high power factor and synchronous rectifier), our products meet the specific requirements of our valued customers. Almost all items that we produce have got CE, FCC, RoHS, CCC, SAA, GS, CB and ETL approvals. Now going in line with the policy framework of the Indian government, we do have the mandatory BIS certification for all these products so as to remain connected with our customers in the Indian market,” asserts Wu.
Another name in that of Adair Lighting Co., Limited, which has changed its punchline to be read as ‘BIS drivers and lighting products manufacturer’, indicating that India is fixed on its radar and the company would explore the potential for its gamut of BIS certified products. Established in 2007 with facility spread across 4,000 sqm, the company is very much focused on LED drivers and LED lighting products for around a decade now. The company boasts of its dedicated team of experienced professionals capable of handling the technical as well as design issue at any level.
Speaking on the business prospects in India, Shelly suggests that the company is now ready with all its products also carrying the BIS certification along with other quality certifications to market them in India. Shelly looks after Overseas Marketing for Adair Lighting. “Indian lighting market is on the uptick but it is still lacking volumes. However, we can supply smaller quantity too. We already have a commendable clientele there in China and soon expect to develop a base here in India. We can see the demand for LED lighting products and drivers are on the up following a rather increased focus of the government on infrastructure,” she says.
Amidst many such incumbents who are expecting a good return from Indian lighting market was also ZhongShan GuZhen ChuanShuo Electric Factory. The on-going sufficient investment in R&D allows the company to constantly improve the lighting fixtures matching the trends and stylish accent. Over the years, the company has built up a manufacturing chain through relative lighting products R&D, high-quality LED lighting fixtures, compatible housing, LED drivers along with various other parts that are produced to be assembled as finished products, followed by distribution & sales based on precise marketing position ensure the successful biding on many project lightings right from domestic market to overseas.
According to Liang Chunsheng, who was representing ZhongShan GuZhen ChuanShuo Electric Factory, India is a huge market for quality manufacturers from China and the world. “We, being at the forefront with all our products BIS-certified would never like to lose even a bit of it. Now that the Chinese LED lighting market is nearing saturation, India has automatically been the next best destination for us. This is why; we opted for the mandatory testing and certifications of our products to make the same valid in the Indian market. Based on the pace of the development here, we can easily asses the future potential and try capping them up with our reasonable prices, efficient production time and good after-sales service as our tenet.”
What’s in the Kitty?
YSD is the specialist in LED drivers for which it already has developed a huge clientele back in China. “We are known for quality and the same will lead our campaign here in India. We are determined and hope that our drivers’ quality would appeal the lighting products manufacturers here,” avers Wu. Explaining about its one among the drivers’ family, he says that the ultra-thin with 0V-10V dimmable series drivers boast of small size and high efficiency up to 88%. “Boxed in alluminium housing, the IP67-rated drivers are made to withstand extreme power conditions where short circuit and overload are common attributes. With over 50,000 hours life, these drivers feature 100% full of high temperature aging and come with air natural convection cooling. While the input voltage is 50-60 Hz, the storage temperature varies between 40oC to 80oC,” elaborates Wu.
“In the meantime, we can assure that by virtue of tireless pursuit of the dream of the business combination with products, technology, talent, innovation and development, we focus on implementing of the embodiment of green, energy-saving and efficient development in future technology products for the global lighting energy waves. We have the ability and needed confidence. We look forward to cooperating with you,” asserts Wu.
Unlike YSD that specialises in drivers, Adair Lighting has a gamut of LED products for Indian that include flood light, street light, panel light, down light, tube light, driver, high bay light and garden light. “Apart from these, we do offer both SKD and finished products. For instance, our unique diamond- and odd-shaped edge light LED panel light feature CRI up to 80, while the input voltage ranges between 85V to 265V. Made of the combination of alluminium and acrylic, it comes in various power combinations 6W, 12W, 18W and 24W to match the interior of any architectural setup. These surface mounted lights carry a 3-year warranty,” elucidates Shelly.
Explaining about the drivers, she adds, “Our waterproof LED drivers have been made for varied power wattage 10W, 20W, 30W, 50W, 70W, 80W and 100W delivering corresponding output currents i.e. 300mA, 600mA, 900mA, 1500mA, 2100mA, 2400mA and 3000mA respectively. Featuring >0.95 power factor, these drivers are made to withstand two level of surge protections 2KV and 4KV depending upon the power wattage. These IP67-rated drivers come with input voltage ranging from 85V to 300V. Boxed in alluminium body, these drivers carry a 8- year warranty. The other variant is IP65-rated, come with a power factor >0.9 and input voltage range of 85V to 265V, and carry a 3-year warranty.”
Almost similar sentiments were put forth by Liang of ZhongShan GuZhen ChuanShuo Electric Factory. According to him, while a chunk of opportunities currently is from street lighting, owing to the rapid pace of infrastructure development, the company also eyes the other segments of lighting that include track lighting, flood lighting, spot lighting, etc. “We can offer our finished streetlights as well as housing for the same along with other products meant for outdoor applications. We have streetlights in both SMD and COB with wattage varying from 12W to 300W, depending upon the area of applications. These are other than the BIS-certified drivers, which we expect would fair well in the typical atmospheric pursuits of India,” he shares.
When it comes to trade terms, all the Chinese manufacturers speak in chorus that 30% of the value must be paid at the time of placing order, while rest must be cleared before or at the time of dispatch/delivery to avoid any payment hiccups. While most of them are looking to appoint an agent to start with, many want to supply directly to customers without getting in to the grove of channel partner. However, all have their own respective versions of minimum order quantity (MoQ) to deal in, depending upon the product category and the quantity requirements at the customers’ end. “We are looking for wholesalers for our drivers and retailers/direct customers for our LED strip. Our MoQ is 500 pcs, less than which would not be viable to dispatch the shipment,” says Wu of YSD Power.
It’s pretty imperative that the implementation of BIS certification has eroded Chinese LED manufacturers low price advantages, but India’s large LED market demand potential in the future has stimulated them to change their export strategies. No wonder why many Chinese companies are following the developments in Indian LED market closely and readying themselves to make the best out of it in the future. As anticipated, the LED trading has turned to LED components and high-end products with more professional services to Indian buyers.
Moreover, the extreme wealth gap in India, growing specialization in the local LED industry will urge Chinese traders to gravitate towards selling and trading high end LED products. As a matter of fact, the Indian LED market technology capacity is still at the LED packaging stage, and relies heavily on Chinese LED component imports because they do not have the kind of manufacturing capabilities to feed the future demand.
Meanwhile, last couple of years has witnessed how China’s LED chip and package industry recuperated and its market has now grown to an astronomical scale in light of the inpouring of capacity. The emergence of new applications such as automotive lighting, horticultural lighting, UV LED, and fine-pitch display that created new demands following which Chinese LED lighting products manufacturers have gone to great lengths to advance their production by upgrading their manufacturing technologies.