OSRAM’s Key to Success Lies in Their Devotion, Product Quality, and Innovation——Interview with Osram China’s CEO Ai Xiaoming

Global lighting tycoon OSRAM made a name for itself with outstanding lighting products which have been featured globally at well known locations such as the Shanghai 2010 expo, the Beijing National Stadium, and Guangzhou International Finance Center. The role that OSRAM will play in the development of the LED industry in China is a hot topic. In an interview with LEDinside, OSRAM CEO Ai Xiaoming gave her/his opinion on the matter.



 

Fully Devoted to the Lighting Industry
 
OSRAM is the world’s only company that is completely focused on the lighting field. The company’s products cover the entire lighting industry value chain, providing a wide range of products from electronic components (including light source and photoelectric solid state lighting components like light-emitting diode (LED) ) to electronic controlling units, light fixture sets, lighting management systems down to lighting solutions. OSRAM China, just like other Osram global branches, is made up of three main components, which are general lighting (GL), special lighting (SP), and optoelectronics (OS).

General Lighting (GL)

General lighting is OSRAM China’s main area of development. With the Chinese lighting market currently transitioning from energy saving lamps to LED lighting, OSRAM is hoping to make a place for itself within this fast growing market. Therefore, quick increase in market share is essential.


OSRAM continues to dominate in the traditional lighting business by increasing the budget for building up their distribution channel. Breakthroughs have been made in the second and third tier city markets and Midwestern channel networks. It is important for the channel construction to follow the rapid development speed of the market. After ten years, OSRAM China has developed a very mature sales agent network whom they fully support, encouraging strengthening in order to expand market coverage.  Aside from traditional retail business, OSRAM will increase support for agents through additional small projects

The 2013 focus on building sales channels will be on entering second tier cities. OSRAM has selected leading cities that are at the top of China’s GDP as well as retail firms to build up the sales channels. For instance, OSRAM stores can be found in every lighting city providing professional products and services, helping consumers to have a deeper understanding of lighting sources and luminaries. OSRAM CEO Ai Xiaoming made special mention to the initiative in finding new sales channels in the consumer market. One important method is that through e-commerce platforms. OSRAM currently has a flagship store set up on JD.com and two more in the works at Taobao.com and Suning.com. The consumer demands e-commerce channels face are different than those of traditional channels. The main products being sold online are household lighting products. With consumer online buying habits already formed, the e-commerce channel is a good supplement for internet sales.

Special lighting Opened Up the Automobile Aftermarket

Automobile lighting is the most important part of OSRAM’s special lighting section, with every one out of two new cars globally using OSRAM’s lighting products. With the Chinese automobile market maintaining rapid growth, OSRAM predicts there is still room for growth in the future and plans to continue strengthening and working with current OEM clients, as well as opening up the domestic market for new automobile manufacturing clients.

Aside from maintaining market dominance in the automobile market, OSRAM looks highly on the potential of the aftermarket. The aftermarket has become very valuable following the increased penetration rate of the Chinese automobile market and presents an important breakthrough opportunity for OSRAM.

Apart from automotive lighting, OSRAM China’s special lighting section also continues to develop projector and medical lighting.


Optoelectronics (OS)

The opto semiconductor market geographically is not that different. With OSRAM conducting cooperation in the global market on many different levels, and pushing high quality and high priced products into the expanding Chinese market, it is creating future competition for the market. OSRAM has also set up an LED production line in China which future results are much anticipated.



 

OSRAM Puts Product Quality First

Within the past few years, the Chinese government has been pushing a series of polices to put development of China’s LED industry into the fast lane. Huge financial subsidies attract companies to invest more into LED. With 60% of global production capacity being concentrated in China, this will soon put China into a predicament of overcapacity. The future in market regulation will have a major impact on development.

As the global representative in the lighting industry for high quality products, OSRAM plans to use its robust technical strength to balance out the Chinese market. The lowering of LED product prices is the inevitable trend for the developing market, with technological advancements decreasing the cost of wafers. No company on the market is an exception to this trend. OSRAM LED product prices will also drop due to the decrease in cost. However, having low prices is not OSRAM’s market strategy. Instead, the company focuses on providing consumers with high quality products.

In 2012 OSRAM spent hundreds of millions of Euros on the construction of their new factory in Wuxi which is expected to open for operation in the beginning of 2014. The first phase was investing 1 billion Euros in the construction of the LED packaging factory making the Wuxi plant the world’s second largest OSRAM packaging factory.

OSRAM currently has two research and development centers in China. The center located in Shenzhen has a large number of researchers in employment and is responsible for the entire production chain product research. The second center in Shanghai is responsible for cutting edge technology research. OSRAM also has locations in Foshan, Panyu, Kunshan, Langfang, and Yixing. Having R&D and production located in China will help OSRAM to increase the localization process. 艾 CEO believes that Chinese consumers are more sensitive to  product price, which makes the balancing of price and quality critical for suppliers. Localization of R&D can make OSRAM products better adapted to the Chinese market standards. OSRAM China investing in lower cost and rapid product research allows the company to introduce many products that meet the needs of Chinese consumers.

Continuous Research in Lighting Technology Innovation

OSRAM is committed to being a provider of lighting solutions. With their more than 100 years of experience, the company focuses on providing it’s consumers with a better quality lighting experience by continuing to  pursue more advanced light sources and luminaries, and dynamic lighting technology. OSRAM has become a fully integrated supplier of LED wafers, bulbs, luminaries, lighting control systems, and lighting solutions with a world renowned reputation for superior products. OSRAM’s worldwide extent stems from their r&d testing, industrial manufacturing production, and product service adherence to the most stringent quality management system.

OSRAM plays an important part in the lighting industry’s development over the past 100 years by being in the forefront in technology and innovation. OSRAM currently has up to 20,000 paten technology cases in the LED field, covering new materials, product design, and production manufacturing. The R&D investment accounts for 6.5% of the company’s total revenue, exceeding the lighting industry average. 

Strengthening China’s Localization Development

Date from LEDinside shows that the Asia-Pacific market will lead the way for the future global market. The sales for this region are expected to increase globally to 47% within the next five years, with 45% of Asia-Pacific sales being in the Chinese market. This also means that the Chinese market will make up 20% or more of the total global market. No company can ignore such a fast growing market, not even OSRAM. Ai Xiaoming expressed that China is an important market for the OSRAM group. OSRAM continues to strengthen their localization development by inputting more research and production into the Chinese market and implementing a management team, responsibility, products and solutions, a research team, and 5 localization produced by purchasing, all to actively combine Eastern and Western technology and culture. 
 

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