New policies dim lighting firms' sales

Updated: 2013-08-28 07:58

By Yu Ran in Shanghai (China Daily)

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New policies dim lighting firms' sales

China's restrictions on new property construction and on extravagant official spending are hitting the lighting industry. Pan Chaoyue / Xinhua

Lighting companies say they are struggling with fewer individual customers and shrinking sales revenue because of recent government limits on the construction of new properties and restrictions on extravagant official galas.

An appeal by President Xi Jinping to against extravagance in December impacted companies that supply lighting products for large events and construction projects organized by regional governments, according to lighting industry associations and companies interviewed by China Daily.

In July, the central government issued a notice to ban all levels of Party and government offices from building new properties over the next five years. Lavish decorations in governmental office buildings were also banned.

"My company had a drop of over 50 percent in sales last year and the decline continues this year," said Ye Xiaoming, owner of Zhongshan Oriental Pearl Lighting Co Ltd in Guangdong province.

Ye said he expected government policies that will support struggling lighting companies.

Zhang Hua, secretary-general of the Foshan Lighting Association in Guangdong, where many lighting product manufacturers are based, said the drop in sales volumes has affected the entire industry.

Zhang added that manufacturers are trying to focus more on making low-cost products that are not seen as extravagant.

LED product manufacturers and suppliers, which have long relied on government cooperation on property projects because of the high cost of making and installing LED products, have also switched strategies, moving away from government agencies to large enterprises.

"Most of us LED light producers used to have regular cooperation projects with regional governments as LED lights were mostly applied in the government buildings, but now we have to switch to a larger market for better opportunities," said Wan Xiaojun, general manager of Wenzhou Juguang Lighting Co Ltd in Zhejiang province.

Total sales of lighting products, according to statistics from the China Association of Lighting Industry, reached 400 billion yuan last year, with one-third of that coming from the sales of LED products.

Wan added LED products are more widely accepted by individuals and private households rather than government-related institutions because the cost of raw materials is currently lower.

Zhang said as LED technology improves, LED products will replace traditional lighting products in the near future.

"The businesses of traditional lighting companies weakened because of the rush of LED product enterprises, which supply higher-quality lights at reasonable prices," Zhang said.

Zhang also said the lighting industry also has been affected by the downturn in real estate industry because fewer people are purchasing new apartments.