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Project:LightingMarketPreparedby:ReciprocusInternationalDate:December2016
TableofContents
ExecutiveSummary 2
MacroeconomicOutlookoftheIndustry 3
IndustryOutlook andAnalysis 4
RegionalLandscapeandAnalysis 5
OpportunitySpotlightandAnalysis 6
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ExecutiveSummary
ReciprocusisdelightedtopresenttoyouourinitialviewsonpotentialgrowthoflightingintheUnitedStatesofAmerica.
• OurindicativeviewispredictedonpubliclyavailableinformationandourknowledgeoflightingmarketintheUnitedStatesofAmerica.
• TheglobalLEDlightingmarketisforecastedtogrowatCAGRof12.4%.• Thisgrowthissupportedbythekeydriver,whichismainlyspurredbytheincreasingdemandfor
energyefficientlightingsuchasLight EmittingDiode(LED)andCompactFluorescent Lights (CFL)lighting.
• EuropeholdsthelargestmarketshareintheLEDlightingmarketandAPACregionisexpectedtohavethehighestgrowthrate.
• Wehaveidentifiedonemainmarketwithpotentialgrowthopportunity– theUS• Basedonourresearch,theUShasthehighestimportvolumeofLEDlightsfromASEANcountries,
inparticular,thePhilippinesandIndonesia.• ThekeydrivertotheUSmarketisthegrowthresidinginapplicationssuchas
commercial/industriallighting,horticulturallightingandmarinelighting.• WeobservedthatkeyvendorssuchasGELighting,PhilipsLightingandCreehavecontinuedto
engageinR&Dtodeveloptechnologiesandcostsavingmeasures.ThiswillbecrucialforLEDlightvendorstosustaintheircompetitiveness.
• GiventheexcitingprospectsintheUnitedStates,wewouldrecommendSingaporecompaniesinthelightingindustrytoexploreandexpandintotheUSmarket.
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MacroeconomicOutlookoftheIndustry
BusinessOverview
KeyRevenueDrivers
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Ø SteadyGlobalTrade:TheglobalmarketforLEDlightingisprojectedtogrowatatremendousrateataCAGRof12.4%during2016to2020andreachUS$56billionby2020.
Ø KeyDrivers:ThehighpenetrationrateofLEDlightingismainlydrivenbythedemandforenergyefficientlightingaswellastheincreasingLEDapplication,suchassportslightingaswellasarchitecturalusage.TheapplicationofLEDswaslimitedtocertainspecificlightingneedsinthepast,buttherealizationofitsenergyefficiencymeansitisnowwidelyusedinmostlightingapplications.
Ø MarketLeaders:The5largestexportersareChina,Germany,USA,ItalyandMexico.MalaysiaandIndonesiaarethelargestASEANexporters,ranked22nd and28th respectively.
Ø RegionAnalysis: ThedevelopmentofEuropeanLEDlightingaswellastheEuropeangovernment’sincentivestopromoteenergy-efficientlightsallowedtheregiontoholdthelargestmarketshare.ThisisfollowedbyNorthAmericaandChina.However,theAsiaPacificregionistowitnessfastestgrowthrateinLEDlighting.
Favorable Government Policy
Increasing LED Applications
Growth in Urban Projects
Demand for Energy Efficiency
Home Ownership Rate
Phasing Out of Conventional Lighting
Falling prices of LED Lighting
Increasing Green Construction
IndustryOutlookandAnalysis
AnalysisBreakdown
4StrictlyPrivate&Confidential
Porter’s5ForcesAnalysis Ø Power of Buyers: Due to the lack of substitutes, the demand for LED lighting is relatively constant and inelastic. However, the LED light manufacturers adopted aggressive sales promotions which drives the prices down. As such, LED light buyers have a high bargaining power.
Ø Power of Sellers: Suppliers of raw materials for LED lights generally have a certain level of bargaining power and price control strategy.
Ø Degree of Rivalry: The LED lighting market has strong growth and high potential which leads to high degree of rivalry. Key producers such as OSRAM Sylvania, Philips Lighting, General Electric and many other players seek to gain market share via continuous innovations in technology and seeking patents on their products.
Ø Substitute Threat: As LED lighting has taken over conventional lighting, there is currently a lack of substitutes in the market.
Ø Likelihood of New Entry: The lack of legal restrictions and high growth market makes new companies want to enter the LED lighting market. However, huge market players have high economies of scale to produce cheaper yet good quality products which may deter new entrants to the market.
012345
Power of Buyers
Power of Suppliers
Degree of Rivalry
Substitute threat
Likelihood of new entry
RegionalLandscapeandAnalysis
APACTheUnitedStatesis
observedasapotentialgrowthopportunity
AmericasEMEA
BubbleChart
Ø GrowingdemandforLEDlights:WiththeCanadiangovernment’sbanontraditionalincandescentlightbulbsandtheemergingdemandforindustriallightingintheUS,LEDlightsaccountfor45%ofthelightingindustryin2016andisprojectedtoreach70%in2020.
Ø EmergingopportunitiesinASEANexportmarket:DespitethegrowingdemandforLEDlights,NorthAmerica’simportvolumefromASEANisconsideredrelativelysmallascomparedtomajorplayerssuchasChinaandEU28.
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ASEANExportstoUSA:GrowthandVolumebyCountry
UnitedStates
Negative Growth
High Export Volume
Low Export Volume
Thailand
Malaysia
Positive Growth
Population:321.4millionTotalGDP(2015):US$17.95trillionLEDlightmarketsize(2015):US$5.4billion10-YearCAGR:13.4%
Philippines
Singapore
CambodiaVietnam
Indonesia
Incandescent,5% Halogen,
14%High
IntensityDischarge
,2%
LinearFluorescentLight,19%
CompactFluorescentLight,
25%
LEDRetrofit,
7%
LEDFull,29%
OpportunitiesSpotlightandAnalysis
WhyUSA?
Ø GrowthinSales: ThereisasteadydemandofLEDlightsinUS,withgrowthresidinginapplicationssuchascommercial/industriallighting,horticulturallightingandmarinelighting.Thefastestgrowthisfoundinindustrialapplicationssuchastroffers,panellights,tunnellightsandhigh/lowbaylights.
Ø EmergingTrends:HorticulturallightingisidentifiedasanemergingopportunityinUSasthereisagrowingdemandfortailor-madelightrecipesforplantscultivation.Also,thelegalizationofmarijuanatradeformedicalpurposesintheUSwillfurtherdrivethehorticulturelightingmarket.
Ø InternationalGreenConstructionCode:Thecodeestablishesaminimumgreenrequirementfornewandexistingbuildingsandhasbeenadoptedbyanevergreaternumberoflocaljurisdictions.ThecontinuedadoptionofthiscodewillcreategreaterdemandformoreenergyefficientlightingalternativesincludingLEDlighting.
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LightingsExporttoUSA(inmillions,FY2010– FY2014)
USLEDLightMarketDistribution(2016)
010203040506070
2010 2011 2012 2013 2014
Philippines Indonesia Singapore
Residential,46%
Hospitality,8%
Outdoor,7%
Office,14%
Architectural,3%
Shop, 12%
Industrial,10%
USLightingTechnologyMix(2016)
Conclusion:WehaveshortlistedtheUSAasakeypotentialopportunity,which,giventhegrowthofthelightingmarketandthetrendsdrivingit,shouldconvinceSingaporecompaniestocloselymonitorandconsiderexpansionintotheUSmarket.
AboutReciprocusWe specialize in assisting small and medium-sizedbusinesses with expansion into overseas markets:
• Selecting and Structuring Route to Entry;• Mergers, Acquisitions, Joint Ventures;• Distributorships, Franchising and Licensing;• Capital Raising.
For more information about our practice, visit our websiteat: www.reciprocus.com.
IESingaporeAssistanceTheSingaporeGovernmentco-fundsupto70%ofthethirdpartyprofessionalfeesforinternationalizationactivitiesunderthefollowingschemes:
MarketReadinessAssistanceGrant:Marketassessment,marketentryandbusinessmatchingactivities.
GlobalCompanyPartnershipGrant:Marketresearch,scoutingforoverseaspartnersandduediligenceactivities.
Moreinformationavailableat:http://www.iesingapore.gov.sg/Assistance.
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ContactDetails
ReciprocusInternationalInternationalPlaza10AnsonRoad#10-22Singapore079903
Tel:+65-6225-9986Fax:+65-6225-8223
ReciprocusAmericasEmpireStateBuilding3505thAve,Suite7610NewYork,NY10118
Tel:+1-212-565-0600Fax:+1-646-349-3532
ReciprocusEuropeTaefernstrasse22a5405Baden-DaettwilSwitzerland
Tel:+41564704270Fax:+41564704272
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