LEDinside: What is Next for Japanese LED Lighting Industry

As the price downtrend persists, LED light bulb market has descended into a cut-throat competition, and the future does not look bright. In order to survive, LED lighting firms have been seeking other markets such as convenient store lighting and office lighting, aiming to increase their products’ added value and increase their market acceptance.

“We won Aeon’s bidding process for its first project, acquiring the opportunity to expand the company’s business in Japan. Although we did not win the second project, we will keep looking for other chances,” Philips Electronics Japan’s Lighting Division Head Mr. Kazuki Kishi said.

Aeon announced in November 2011 that the company will replace the lights of its 1,200 retail stores with LED lights, and Philips was the first company to score a contract with Aeon on replacing its fluorescent ceiling lights.

In terms of shape, LED light tubes look no different from the traditional fluorescent light tubes. LED light tube is seen as the next star product besides LED light bulb, and Philips acquiring Aeon’s orders makes a splash in the Japanese lighting industry.

In fact, Aeon’s  30 retail stores adopted Philips’ LED light tubes during the first project. As for the second project, Aeon went with Toshiba and IRIS Life’s products. Although Philips did not acquire all Aeon’s business, the fact that Philips was able to score the first orders without any proven track record  in Japan put a lot of pressure on the company’s Japanese counterparts.

Currently Japan’s fluorescent light tube needs amount to 300 million, and 20 million of them will be replaced with LED light tubes by the end of 2012; the room for growth remains plenty. Some prediction says LED light tube market value will be 2.5 times more than that of LED light bulb market by the end of 2015.

However, the competition in the LED light tube market has been intensifying – besides Philips, ROHM, IRIS Life and Otsuka Corporation also have been striving to make inroads into the market.

Recently ROHM’s acquirement of LED light tube large account generated quite a fuss in the industry – starting from June 2012, the company supplied SLYLARK’s 2,450 restaurants such as Gusto and Bamiyan with approximately 6,0000 LED light tubes. On the other hand, since January 2011, IRIS Life has been striving to increase its LED light tube business – the company replace sports appliances stores XEBIO’s 30 chain stores’ fluorescent lights with LED lights. IRIS plans to increase LED lighting revenue from 2011 fiscal year’s JPY 10 billion to 2012 fiscal year’s JPY 35 billion.

“The fact that stores can return the investment in roughly three years if they adopt our LED light tubes makes clients choose us. We are leading in the LED light tube industry.”IRIS Life’s Chairman said.

Otsuka Corporation’s Chiarman also noted: “demand for LED light tube has been surging.”The company is focusing on the prospects in the office lighting area.

War on Light Tube Sockets
Panasonic and Toshiba are also targeting at the LED light tube market, and their edge lies in the LED light tube socket.
Panasonic, Toshiba, and NEC Lighting only manufacture and sell LED light tube with L-shaped socket that meets the “JEL” standard established by Japan Electric Lamp Manufacturers Association (JELMA). Due to the fact that JEL light tube socket is different from traditional fluorescent light tube socket “G13,” the JEL type is not compatible with the existing fluorescent lighting fixtures.

If G13 type LED light tube is installed on the existing fluorescent lighting fixtures, it may cause safety concerns. Therefore, even though going with JEL type LED products costs more, but it is much safer. Panasonic and Toshiba both see high safety as the selling point of their products.

However, some people believe that the reason that Japanese lighting firming are proactively developing JEL type products is because they want to acquire the market before Philips and other emerging companies’ G13 products do.
The war between JEL and G13 is still ongoing. Although new housing projects usually go with JEL, large LED projects to replace fluorescent lights choose G12. SKYLARK chose ROHM’s G13 products because G13 lights are compatible with the old fluorescent lighting fixtures.

IRIS Life manufactures both types but focuses on G13. Chairman said the existing buildings all choose G13 due to its lower cost, which may make Japan JEL’s only market.
Added Value is the Key

Nonetheless, LED light tube market may go down the same road like LED light bulb market did. Hence, Toshiba is aiming to increase its products’ added value to break out the possible crisis.

Toshiba said that as LED lighting’s penetration rate continues to go up, demand for lights maintenance and lights replacement is bound to drop. In order to cancel out the loss, the company plans to increase the value of its products. For example, the company increased the prices of its LED ceiling lamps from JPY 10,000 to JPY 50,000. 

Global Market

Eying the prospects brought by LED lighting, Panasonic puts its focus on the global market. Many foreign companies have entered the Japanese market, intensifying the competition. Also, LED lights’ long lifespan is another reason that propels Japanese lighting firms to make inroads into the global markets.

Panasonic stressed LED lighting prospects bring companies which rely heavily on domestic demand an opportunity to break into other foreign markets. The company plans to increase its lighting revenue from 2012’s JPY 300 billion to JPY 400 billion by 2015, half of which will be attributed to LED lighting. The company aims to make the foreign LED lighting revenue account for 20% of the total revenue.

Facing the fierce competition, Panasonic draws up different strategies for different countries. In the United States, the company will not export its lighting products into it; instead, the company will sell thermal dissipation components and powers to the local companies, making profit by selling lighting components.  

On the other hand, given the climbing demand for LED lighting products in China, Panasonic will set up stores at large lighting malls. The companies aim to increase its retail stores in China to 5,000 as of March 2016, two times more than the current amount.
Moreover, the company has release new lines of LED light bulb in Europe in July 2012, aiming to replace the incandescent light bulbs.
The steep dive in LED products prices in Japan reminds people of flat-screen TV market that is currently in a slump. LED’s long lifespan will be another concern for the LED industry in the future.

The market can not be underpinned solely by the energy-saving policy by the government. The overly fast pace of LED lighting popularization may eventually be the death of the lighting industry.
However, incandescent light market has been gradually eaten up by LED lighting. Japanese lighting firms need to bring their A game in order to have a fighting chance against Philips and OSRAM and not let the history in the flat-screen TV industry repeat.

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