GE Lighting’s decision to leave the Asian lighting market has sent another shock wave within the global lighting industry. LEDinside, a division of TrendForce, pointed out that less than 10% of GE Lighting’s total lighting revenue comes from China. Other markets in Asia also make up a very small percentage. At the same time, pricing and brand competition in the region has intensified. By withdrawing from this region and reinforcing its presence in North America, GE Lighting has also shown that the industry’s thinking has shifted from expanding channel network and market share to maintaining profitability and one’s survival.
According to LEDinside, the value of the worldwide general lighting market (excluding automotive and specialty lighting segments) totaled US$82 billion in 2015, and LED products accounted for about US$25.6 billion of that amount. The penetration rate of LED lighting has now arrived at 31%. However, the increasing penetration of LED lighting and the fierce competition within the LED lighting industry are also driving major lighting brands out of the general lighting business that they used to dominate.
Globally established vendors including Philips Lighting and OSRAM have strategically sold off parts of their lighting businesses. Likewise, GE Lighting has decided to retreat from Asia and protect its market share in North America. Their activities indicate a general change in vendors’ strategies. Rather than developing overseas channels and compete for market shares, vendors are now focused on raising their margins to survive.
China and the rest of Asia have been a smart part of GE Lighting’s revenue
LEDinside’s analysis finds that while GE Lighting has been a strong brand in North America, the company’s attempts to enter Asia has not been as rewarding as initially expected. China constitutes less than 10% of the company’s business revenue, and other Asian markets make up a very small share of the revenue as well. As a result, GE Lighting has decided to leave Asia and Latin America and committed to strengthening its position in its home market North America. In the age of semiconductor-based light sources, the lighting industry has moved far away from the development paths set by the traditional lighting market. There were earlier rumors that GE Lighting would sell off its general lighting business as the company has not made a smooth transition to using the LED technology.
Though traditional lighting products offers higher margins, GE Lighting eventually started to make LED lighting products due to market demand. LEDinside noted that the main contributors to GE Lighting’s profits in recent years include specialty lighting applications such as street lights and industrial lighting products. As GE Lighting exits from Asia and Latin America, the company will be able to concentrate its resources on North America and aggressively develop niche applications such as horticultural lighting and smart lighting. This strategy will ensure that company will stay profitable in the future.
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