Why are LED Luminaire Prices Super Low in China?

What sets the Chinese LED luminaire market apart from others? It all really boils down to prices. The product’s technology, lifetimes, and warranty are all nothing more but a floating mirage. Buyers will always choose the cheapest LED luminaire, but should not expect manufacturers to willingly lose money by making acceptable quality products at these prices. Below is a comparison between LED bulb and ceiling spotlights to illustrate the manufacturing costs involved.

How are these cheap LED ceiling spotlights made? LED luminaire costs can be broken into three main components—the LED, the outer shell, and the driver. To lower costs altercations are made to these three components.

A 1W LED made in Guzhen Town in Guangdong Province, China can be sold as low as RMB 0.02. How is this possible? The answer lies in the replacement of gold wires within the LED with copper, and substituting other components with poor quality raw materials. Consumers are often unaware of these changes. Many LEDs with a 1W label might even only have an output of 0.5W when placed under inspection machines, again most consumers will not be testing these LEDs.

In terms of the shell, a bulb’s exterior casing might use aluminum scraps or plastic to keep prices at RMB 1 (US $0.16) to RMB 3.

Many poor quality LED drivers on the market are sold at about RMB 1 or even lower. These irresponsible LED driver manufacturers have made unknown sums of money, while many LED luminaire manufacturers have declared bankruptcy.

Based on these component prices, the price for a mid-class 3W LED ceiling spotlight that comprises three LEDs, one exterior shell, and power driver is about RMB 10.3. Breaking down component prices the LEDs would cost about RMB 2, outer shell RMB 3, the power driver RMB 2.8, worker wages RMB 1, packaging RMB 0.5, and on top of this other expenses of about RMB 1. Manufacturers still need to earn money, no one wants invest in a business that loses money. In addition, the costs involved cover management, inventory, R&D, others, and sales five percent commission. It is not too hard to figure out a 3W LED ceiling spotlight that has a retail price below RMB 10 is probably unqualified. As for high class 3W LED spotlight, a reasonable price is above RMB 21. Component prices for the spotlight as following LEDs at RMB 6, outer shell RMB 5, interior shell RMB 2, and worker fees RMB 1, packaging RMB 1, and other components 1 RMB. 

What are some of the criteria to look out for when picking a good LED luminaire? The factors below are worth considering:

  1. Prices will vary according to LED brightness. LEDs for luminaires must meet Class 1 Laser Standard.
  2. LEDs with high static electricity resistance and long lifetimes will have higher prices. Usually LEDs used in decorative luminaires must have a static electricity resistance above 700V.
  3. Colors are consistent among LEDs with the same wavelength, prices will be even higher for products that have color consistency requirements. Manufacturers without spectrometers will have a difficult time making LEDs with pure colors.
  4. LEDs with high power leakages will have shorter lifetime and cost less. LEDs are lighting sources powered by single direction electric currents, power leakages occur when electricity currents go in the opposite direction.
  5.  LEDs for different applications will have different beam angles, those with special beam angles will have much higher prices.
  6. Lifetime is also a key factor in determining LED luminaires quality. Luminous flux degradation determines the product’s lifetime. Products with smaller luminous flux degradation tend to have longer lifetimes and will be more costly.
  7. LED chip prices can also vary tremendously. In general, chips from American and Japanese manufacturers will be much more expensive. Taiwanese chip prices will be lower than chips from U.S. and Japan, while Chinese chips have the lowest prices.
  8. The most common glue used in LEDs is epoxy. LED glue that include UV and fire resistant solutions will have higher prices. High quality outdoor LED luminaires should come with anti-UV and fire resistance.

From a health perspective, LED luminaires with non-toxic material designs will be more costly. Consumers should especially avoid using odd smelling LED luminaires for indoor lighting. Only a few LED manufacturers actually use non-toxic materials. 

A simple scent test can help consumers set apart products that might have toxic components from non-toxic ones. Lower priced LED products tend to have stronger odors than non-toxic ones, and probably contains excessive levels of toxics including lead, mercury and cadmium that are way above safety standards. From an environmental adaptability and safety aspect, the products should have reliable dust and humid resistance design. LED products that are equipped with extra low thermal protection that prevent cracking under cold temperatures will also come with a higher price tag.

LED bulbs are also similar, take the key LED driver for instance, low-end products including large brand products will use Resistor-Capacity (RC) circuits to lower voltages. For instance under Alternating Current (AC) 220V input, the CBB can lower the capacitors to 400V 105J, full-bridge rectifier, internally packaged is four diodes arranged in full-wave rectifier circuits that are connected and packaged together. As for the Zener diode a filtered capacitor uses parallel connectors, and in terms of power output two 474 are used internally, and two 510 for external output. This method may be more extensive, but the peak power is often over the Zener diode and capacitor’s current-carrying capacity. 

As a result, the power circuit can break easily and trigger electrical fires. These LED luminaires present hidden risks for users. There are already several reports in China about cheap LED luminaires exploding to smithereens. Buying these cheap lights is equivalent to putting a time bomb in the house, and for safety measures should be removed.  

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