China's light-emitted diode (LED) lighting market will more than double to $7.4 billion in 2017 from $3.1 billion, as ongoing urbanization, local energy savings targets, and price cuts make the technology more appealing, according to Lux Research. Both residential and commercial segments will drive LED lighting to a compound annual growth rate (CAGR) of 24%, far outpacing the 5.6% CAGR for the broader lighting market. As a result, LED lighting will grow its share of the lighting market from 9.6% to 18%.
"LED lighting has changed from expensive products outside the cost-conscious sweet-spot of Chinese buyers to value-adding solutions, gaining market share and realizing sustainable growth," said Jerrold Wang, Lux Research Associate and the lead author of the report titled, "Running to the Light: Sizing China's LED Lighting Market."
Lux Research studied the Chinese LED market and industry value chain to assess opportunities for global players and investors. Among their findings:
- Guangdong, Shanghai, Zhejiang, and Jiangsu are premium markets. In Lux's Market Adoption Grid, these provinces emerged as the upper tier of "premium" markets for LED adoption. Guangdong offers the best overall combination, driven by the largest new and existing building floor space in 2015.
- Residential segment shows fastest growth. The Chinese residential LED market will grow from $23 million in 2013 to $310 million in 2017, a CAGR of 92%, the highest among five market segments - as average prices fall the fastest, from $6.02 per fixture in 2013 to $3.13 in 2017.
- Consolidation is coming.
China's end-product market is highly disaggregated, with more than 5,000 players. The top 50 suppliers account for only 33% of the market and the top 10 take merely 18%. Industry consolidation is imminent over the next five years, with suppliers of poor-quality products facing elimination.