China lighting Industry export Situation Report for the first three quarters of 2020

In September 2020, the export volume of China's lighting industry was US $5.113 billion, with a year-on-year growth of 44.18%, recording the largest year-on-year growth in a single month this year and achieving double-digit growth for four consecutive months since June. Among them, LED lighting products exports amounted to $3.4 billion, up 40.5% year on year, five consecutive monthly growth since May, including four consecutive monthly double-digit growth since June.

From January to September 2020, China's lighting industry has exported 35.423 billion US dollars, with a year-on-year growth of 5.70%. Among them, LED lighting products exported 23.46 billion US dollars from January to September, with a year-on-year growth of 5.45%. The trend of recovery is very obvious.

In terms of month by month, January 2020 is normal. However, after the trough of domestic epidemic in February, the overall export of lighting has recovered significantly since March, with the continuous decline narrowing in 3 to 5 months until the consecutive double-digit growth in 6 to 9 months. The overall situation and shipping industry "resumed work in March, ran out of goods in April, reduced ships in May and June, increased prices in July, lacked containers in August, and exploded cargo space in September". That's pretty much the same.

Quarter by quarter, lighting exports as a whole showed a "dismal first quarter, the second quarter warming, the third quarter endeavour" trend. It is judged that the momentum of the fourth quarter will fall slightly compared with the third quarter, but with the good foundation laid in the second and third quarters, the annual export will realize positive growth, and the total export volume will hit a record high, which will be a probability event.

According to data from the General Administration of Customs, China's exports of goods in September reached 1.66 trillion yuan, with a year-on-year growth of 8.7%. The growth rate was slightly lower than that in the previous two months. In dollar terms, it was $239.8 billion, up 9.9% from a year earlier and up 0.4 percentage points from the previous month. It is worth mentioning that imports turned positive for the first time this year, with year-on-year growth accelerating sharply to 13.2 per cent in September. From January to September, China's total exports of goods totaled 12.71 trillion yuan, expanding to 1.8% year-on-year after the negative trend in the previous month. In dollar terms, it fell 0.8 per cent year on year to $1.81tn, a decline that continued to narrow from the previous month to 1.5 percentage points less. As a result, lighting exports have outperformed the market for three consecutive months since July.

One reason for the slight slowdown in growth is the appreciation of the renminbi against the dollar. The other is that the growth rate of epidemic prevention goods, as an export booster, tends to be flat, and its pulling effect on the overall export is somewhat weakened. In addition, with the resumption of work and production in overseas countries, the external demand margin has been further improved, but at the same time, the proportion of Chinese manufacturing in the global export trade has increased significantly due to the stagnation of overseas production, which has gradually returned to normal.

Reasons for growth

Overall, although lighting export data in September fell slightly compared with the previous two months, but in the majority of lighting export enterprises to forge ahead, still maintained a considerable growth rate. That has helped exports in the first three quarters of the year well ahead of consensus expectations.

Analyze the reasons for the growth:

1. The negative pull of General lighting products is lower than expected, which reflects the rigidity and resilience of lighting products in the national social and economic life, as well as The unshakeable status of China as the global lighting manufacturing center and supply chain hub.

2. Overseas epidemics continue to crop up, and the export of epidemic prevention and home-related products has maintained a growth momentum, which has boosted the overall export to some extent. In particular, there has been a significant increase in lighting products related to epidemic prevention, such as scientific research, medical lamps, ultraviolet lamps and plant lighting products.

3. The previous backlog of orders has entered the late stage of execution, but major economies in Europe and the United States are under pressure to restart their economies, external demand margin has significantly improved, and new orders are gradually picking up.

4. "Substitution transfer effect" is significant. China is one of the few fully contain outbreaks of major economies, to return to work and production, led by the world, the rapid recovery of made in China to further highlight the production and supply chain advantage, effectively compensate for the global supply gap caused by the outbreak, and replaced by other countries' export quotas in the short term, prompting a number of overseas demand phase transfer to China.

China's share of the global export market reached 17.2 percent in the second quarter of this year, a record high, according to research data from relevant institutions. By contrast, China accounted for 13.3 percent of the global export market in 2019, according to the WORLD Trade Organization.

Export products

1. LED light source price continues to decline: It is worth noting that the average export price of LED light source continues the downward trend in the past two years, and with the increase of the price of fluorescent light source products this year, the average export price of the two has even appeared upside down. It should be seen that some enterprises, faced with the challenge of the epidemic and industry competition, have sacrificed profits to seize market share or retain the hope of survival.

2. High increase in LED filament lamp shipments: currently, the monthly shipments of LED filament lamps are as high as 50 million, a 40-50% increase over the same period last year, and there have been enterprises with monthly shipments of more than 10 million.

3. Export surge of epidemic prevention products: In the first three quarters of this year, the export of epidemic prevention related lighting products, such as scientific research, medical lamps and ULTRAVIOLET lamps, has witnessed an explosive growth against the background of explosive demand caused by the global epidemic. The export of related products in the first three quarters of this year has reached 386 million US dollars, with a year-on-year increase of 520%.

4. Rapid development of plant lighting: Driven by multiple factors such as the legalization of cannabis commercial in North America and the shortage of food and medical supplies caused by the global coVID-19 epidemic as well as the increase in home quarantine, the export of plant lighting in the first three quarters increased by more than five times compared with the same period last year. The North American market is still the largest, accounting for over 70% of the market share.

5. The overall situation of consumption-related products is better than that of engineering products: consumption-related products have stronger stiffness attributes, and the stagnation or delay of overseas projects caused by the epidemic has a direct impact on engineering products.

Export target market

Global LED lighting exports in the first three quarters of the year show that the performance of the Asia-Pacific market dominated by emerging economies is significantly better than that of the European and American markets dominated by developed economies. In the Asia-Pacific market, East Asia, West Asia, Southeast Asia and Oceania markets all have a good performance, but South Asia market is affected by the decline of India market, which accounts for more than 60%, and becomes a drag on the whole Asia-Pacific market. Among the European and American markets, the North American market recovered better than the European market and The South American market. Among them, the European market suffered the biggest decline, with the overall export volume dropping by more than 10% year on year, accounting for as much as 4.6 percentage points compared with the same period of last year.

Once again LED lighting export country, specific points in the third quarter, anglo-dutch method such as the major European economies have different degrees of decline, thus affecting the overall performance of the European market, Brazil and India also depressed, north American performance than half a year before the United States Canada improved markedly, while Saudi Arabia, South Korea, Thailand, respectively, as the representative of west Asia, east Asia and southeast Asia are still under the negative impact of the epidemic for high growth, several areas reflects the thriving economic vitality. It is worth mentioning that the total amount of LED lighting products exported to Iraq also nearly doubled in the first three quarters, bringing the war-torn West Asian country to the edge of the top 20 destination countries. In the first three quarters of 2020, the total amount of LED lighting products exported to the top 20 countries and regions in China accounts for about 75% of the entire export volume, and the concentration ratio of key markets is still high.

Among them, LED light source products export situation. Exports to the top 20 companies totaled 3.02 billion, 160 million more than the same period last year, but their share of total exports fell by 3 percentage points to 61.4 percent. Exports totaled us $3.087 billion, up only US $54 million from the same period last year and down 2 percentage points to 73 percent of the total. The epidemic has fragmented the LED light market. On the other hand, in terms of the average price of export products, more than 70% of the target markets have declined to different degrees, which also reflects the situation of fierce competition in the export market price of LED light sources.

The challenges ahead

While the export status quo is encouraging, it is not suitable to be blindly optimistic about the whole situation, and the uncertainty of its outlook still exists. At present, the threat of the global epidemic has not been removed, and the resumption of global flows of people and goods is still a long way off. Some of the major challenges facing future exports include:

1. Increased uncertainties in the outlook: The uncertainty brought by the epidemic and the decline in the willingness of enterprises to invest and the deterioration of the asset-liability ratio due to weak demand will, to a certain extent, restrict the repair process of external demand; Uncertainties such as the global economic situation, China-Us trade frictions and the RMB exchange rate still exist, which have a negative impact on the planning and decision-making of relevant export enterprises.

2. It is difficult to maintain the high increase in the export of epidemic prevention materials for a long time: At present, except for the high-growth epidemic prevention and home-related products, external demand orders are still under pressure, especially the export of labor-intensive products is still sluggish. The export of materials related to epidemic prevention and housing economy is expected to decline in the future. Moreover, from the perspective of the recent two months, the export of products related to the epidemic has slowed down, with a flat growth rate, and its contribution to boosting the total export has decreased.

3. The sustainability of the export substitution effect "transfer" remains to be seen: spend in the future as other manufacturing countries, and gradually return to work and production, supply ability recover gradually, China's exports to other countries weakened the substitution effect is inevitable, the export market share will return to normal level, and then weakening support for the overall export growth.

Spillover risk remains: 4. Supply chain in the world economic downturn is a foregone conclusion, sino-us trade frictions escalating, under the background of the global industrial chain de-sinification undercurrent, lighting industry chain of the risk of spillover after the operation of the system, the supply chain's efficiency and cost performance, future overseas merchants, most likely will supply chain security in important considerations, some orders shunt to Mexico, Vietnam, India and other related manufacturer will be hard to avoid.

5. The continuous decline of profits increases the pressure on the survival of enterprises: with the increase of the rigid cost of labor, land, raw materials and other necessary manufacturing, the prices of export products have been falling in the increasingly fierce competition environment, and the already thin profitability has been compressed. It has caused great pressure on the living space of relevant export enterprises, especially small and micro enterprises.

Total knot

A recent meeting of the Political Bureau of the CPC Central Committee set the tone that the domestic and international double circulation, dominated by domestic circulation, would become the underlying logic of China's economic pattern during the 14th five-year Plan period. The correct understanding of this should be to open up the double cycle eventually and enhance the international competitiveness of Chinese manufacturing, rather than to simply roll in.

In the lighting industry, we have realized the dual cycle, more than half of the output value of exported to more than 200 countries and regions in the world, at the same time also nearly half of the output value is to supply the domestic market, so the domestic lighting market is saturated, export enterprises, especially pure blind "shifted" export business, will face the domestic market, including brands, channels, products, services, team, and the threshold of the cultural aspects, will also intensify structural overcapacity, the low price competition, product homogeneity existing contradictions, such as the end result is likely to be "you don't have the ashore, but also put down others." The landing of the double cycle should also consider the characteristics of the industry. The road from lighting export to domestic sales is full of thorns, which is not applicable to all enterprises. Therefore, enterprises need to make clear positioning, adjust measures according to local conditions, and treat it prudently.

Numerous facts and data in the past have fully reflected the rigidity and toughness of lighting products and China's irreplaceable position as the center of global lighting manufacturing and supply chain. Therefore, at the present stage, the majority of lighting export enterprises should strengthen their confidence and focus on their main business.

As one of the few major economies in the world that has fully contained the epidemic, China has turned its economic data into a positive in the first three quarters of this year, and its society has almost returned to the right track. We should be full of expectations for China's future. But at the same time, the world is in the grip of the epidemic. We are still not immune from it, and we need to be sufficiently alert to the profound changes in the world under the impact of the epidemic. The epidemic is almost a crisis. How to eliminate danger and seize opportunities is a problem that needs to be considered by our enterprises and even the whole industry and even the whole society.