China's low-cost LED products swept the Korean lighting market

Light-emitting diode (LED) lighting has been excluded by the Korean government for 10 months in addition to SMEs, and the Korean market has gradually been captured by Chinese products. On the surface, Korean brand shipments have grown, but in fact more than 99% of them are Chinese products for outsourcing (OEM) or outsourcing design (ODM).

According to the Korean media company MoneyToday, the LED lighting industry and the Korea Optical Industry Promotion Association (KAPID) reported that the Korean LED lighting market that passed the certification in 2015 was about 1 trillion won (about 850 million US dollars). Over the years, the LED lighting market has been able to maintain a growth rate of 10-15%, but now it is due to oversupply, and it is hitting a low-cost bloodshed.

In early 2015, the Korean Commission for Corporate Partnership excluded the LED lighting industry, which is suitable for SMEs, in order to encourage large enterprises to invest in the private LED lighting market outside government procurement projects. Co-competition stimulates the growth of the LED market.

However, the situation was unexpected. What appeared on the market was not the competition between large and medium-sized small and medium-sized enterprises in South Korea, but the low-priced products of China gradually swept the market.

According to the Korea Optical Industry Promotion Association, LED lighting is still suitable for SMEs in 2013. The size of the private market is about 500 billion won, of which 99% is estimated to be produced in China.

In the industry, the industry believes that in the government procurement market of 300 billion won, LEDs are still limited to the competitive field of small and medium-sized enterprises, and can maintain 100% domestic production in Korea. But in the private market, whether it is B2B or B2C, it is almost the world of Chinese LED products.

Recently, the report released by the Korea Consumer Protection Agency (KCA) also pointed out that according to the sales volume and popularity survey, 17 of the 19 LED lighting products in Korea are produced in China by OEM and ODM.

According to the analysis, although LEDs have been lifted from suitable industries, Korean companies are still eager to import low-cost land-based products, mainly because they have no confidence in the LED market. LED lighting industry sources said that large companies are rushing to import low-priced products in China, mainly to compensate for the losses of the previous LED lighting business sector and increase the rate of return.

However, as the threat of low-priced goods in China is deepening, the phenomenon at this time is that more and more small and medium-sized enterprises are giving up their own development of LED modules. The industry believes that after the self-developed model organization in South Korea, the SMEs have not yet reached the stage of mass production, and the decree that is suitable for the industry is lifted, so that SMEs face the need to compete with the low-priced bloody Chinese products imported by large enterprises, resulting in SMEs. The industry has gradually abandoned the development of original technology. It is not known whether the Korean government’s LED lighting policy will change in the future.

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