Market research: Led Lighting Industry in Vietnam

I. Key drivers of led lighting development

1.Rapid urbanization and economic growth

Viet Nam’s economy grew at an average of 5.96 % per year since 2011. This strong growth is expected to continue for decades to come as the country transitions from a centrally planned to a market-based economy. Vietnam is also one of the fastest urbanizing countries in Southeast Asia, the proportion of the population living in urban areas nationwide has increased from 19% (1986) to 34.4%. (in 2019) and 40% in 2020. Rapid urbanization and economic growth have led to a proliferation of buildings with an accompanying surge in lighting demand.

2. State Support

Currently, according to the statistics of Vietnam Electricity (EVN), the electricity consumption of lighting systems nationwide accounts for about 25% of the total electricity consumption, much higher than the average of 20% in the world. Total energy consumption in Vietnam has continued to increase rapidly over the years to serve the economic development of the country. According to the Vietnam Electricity (EVN), electricity demand will recover and grow at a rate of 8 – 10% in 2021. This comes from research organizations assessing the Vietnam’s economy will see a positive recovery in 2021 and international commitments to reduce greenhouse gas emissions.

Under this circumstance, the Government of Vietnam is promoting the adoption of LED lights to combat high electricity consumption in the country. In line with this, it has also introduced programs, such as Vietnam Energy Efficient Public Lighting Project (VEEPL) and Vietnam National Energy Efficiency Plan (VNEEP), which are creating a positive outlook for the market. This represents one of the key trends in the Vietnam LED lighting market.

Specifically, the data are as follows, according to the draft of a project titled “Proposed roadmap for the development of the LED lighting industry until 2025”, the demand for electricity use and consumption for lighting in Vietnam. The South is estimated to be about 83.5 billion kWh by 2020 and could double up to 10 years.

The speed of urbanization in urban areas is very fast, along with the need for planning urban lighting systems that need synchronous development for development. The smart urban development policy was officially included in the Resolution No. 52-NQ/TW of the Central Committee on a number of guidelines and policies to actively participate in the Fourth Industrial Revolution

In the smart city development strategy, the Government pays great attention to the smart lighting system in ensuring the goal of sustainable development and saving energy. A series of industries and public sectors have been replaced, gradually shifting from traditional lamps to LEDs in order to bring about benefits in terms of energy saving and environmental friendliness.

Smart urban development projects, LED fair public lighting are to create more motivation for the LED lighting industry in Vietnam. This is followed by the participation of foreign organizations implementing public-private partnerships. For example, the Asian Development Bank (ADB) is building a Smart Lighting and Energy Efficiency Project (SELP) and has conducted surveys in provinces such as Can Tho, Da Nang, HCMC, Quang Nam, Hanoi. Based on the completed assessment, ADB proposed localities to borrow ODA capital from this bank for the period of 2021-2025 and implement public-private partnership (PPP) in the period from 2026-2030.

II. Competition

The major key players in the Vietnam LED lighting market include Rang Dong Light Source and Vacuum Flask JSC (Ralaco), Dien Quang Light Source Company, and Asled Co., Ltd, among others. The key players included in the global market are Signify (Philips Lighting), Osram Licht AG, Nichia Corporation, Cree Inc., Seoul Semiconductor Co Ltd, and others.

Dien Quang and Rang Dong are the two leading companies in the lighting industry in Vietnam for many years, possessing an extensive distribution network and popular brands. These two companies also have many similarities in size and market. Rang Dong dominate in the North and Dien Quang dominate in the South).

According to a report by IMARC Group, the size of the LED lighting market in Vietnam in 2019 will reach about 570 million USD and will reach 818.2 million USD by 2024 with a compound annual growth rate (CAGR- Compounded Annual Growth Rate) of over 21% in the period 2019-2024. The growth driver comes from the low penetration of LEDs in Vietnam, only about 15-20% of the demand, lower than the even penetration of LED in the world. Increasing price competition while rapid urbanization growth will make LED products easier to penetrate into the market. In addition, led lights are also encouraged by the state to replace current bulbs.

Source : Statistic

Unlike traditional products, LED products have to compete more with foreign-invested enterprises such as Philips, Osram, Seoul Semiconductor, … and cheap products imported from China. Currently, the import tax on LED products is 0%, so the competition in the market is fiercer. Over 60% market share of Vietnam’s LED lights are imported products from China.

Presently Rang Dong created “Made in Vietnam” LED products and invested in an R&D center, gradually localising many components and products. However, up to now, Rang Dong still has to import LED chips from foreign partners (mainly from Samsung).

Another domestic enterprise, Dien Quang, has recently boosted R&D activities associated with LED technology as well as promoting the operation of Vietnam’s first LED chip factory.

Big players like Philips know very well to take advantage of the opportunity to penetrate into a promising market Like Vietnam. With strong financial potential, along with a major brand in the LED lighting business, Philips is willing to lower its prices to compete, to gain the most market share.

Big companies City Lighting or E-GM Tech of Korea moved LED factories from China. Quoc returned to Vietnam. Besides, many Chinese investors are also trying to capture this potential market share.

Source : TVSI

III. Product Segment

1. Product Segment

There are 3 distinct classes focusing mainly on the lighting market in Vietnam:

Low-range price classification: focusing mainly on Chinese LEDs with extremely cheap prices, but always accompanied by the rapid decline in product quality after a period of use. Chinese LED lights with the advantage of diverse designs, beautiful design, but using low-light LED chips, flammable and not real color.

Mid-range price classification: focus on domestically produced products with two strong brands in the current lighting market, Rang Dong and Dien Quang.

High price classification: Focusing on LED products imported directly from countries with famous brands such as Korea, Japan, USA, Thailand.

2. Importing volume.

The import volume of Vietnam reached $US 166,722 k in 2020. The figure increased by 4% compared to those of 2019. China is the largest export country to Vietnam in the data, accounted for 98.84 % out of total import volume in 2020.

France enjoyed the biggest increase in the growth rate of 100 % for the period of 2019-2020. Import volume from top exporters: Compared to the 2019’s import volume, South Korea reached $US 469 k, down to 2 %; next, Japan reached $US 422 k, decreased by 23 %; while Thailand reached $US 201 k, sharply increased 73%.

Major importing countries of Vietnam

Product: 853950 Light-emitting diode “LED” lamps

Unit: US Dollar thousand

  2017 2018 2019 2020 Growth rate during 2019-2020 (%)
Total 125,051 213,674 160,791 166,722 4%
China 122,932 211,530 158,119 164,784 4%
Korea, Republic of 259 794 477 469 -2%
Japan 615 470 519 422 -23%
Thailand 127 97 55 201 73%
Taipei, Chinese 256 408 417 198 -111%
Germany 130 41 428 138 -210%
Switzerland 8 102 132 131 -1%
Singapore 0 24 129 123 -5%
France 257 0 0 84 100%
Indonesia 1 1 1 37 97%

 

Source: Trade map & KOTRA

VI. Regulatory barriers

Electric LED lights, including self-ballasted LED bulb, LED tube, LED luminaire, LED spot light, and mobile and fixed common LED lamps, are under below mandatory approval to enter Vietnam:

(1) CR mark safety approval according to QCVN 19:2019/BKHCN of MOST Vietnam for Safety and EMC compliance (mandatory from Jan 01, 2021) (in accordance with amendment No. 1383/QD-BKHCN dated May 22, 2020 of the Vietnam MOST)

(2) Minimum Energy Performance Standard (MEPS) and Declaration of Conformity for Energy Efficiency (EE DoC) according to regulations of MOIT Vietnam (applicable for E27, B22 LED bulbs and G5, G13 LED tubes only)

(3) RoHS compliance according to Circular 30/2011/TT-BCT of MOIT Vietnam (LED bulbs only)

(4) LED lighting products use on transportation means (LED headlights) is under mandatory approval of Ministry of Transport

(5) LED lighting products use for lighting constructions (traffic lights, and LED light use for city public area) and outdoor media advertising are under mandatory approval of Ministry of Construction

Pursuant to regulations at Decree 74/2018/ND-CP of Vietnam Government and Decision No. 3810/QD-BKHCN of MOST Vietnam, LED lights are also required to do “Product Quality Inspection Registration” (PQIR) process for customs clearance.

List of LED lights and according HS codes under mandatory certification scope.

No.  Product description according to HS Code  HS Code  Scope of application
1 Light emitting diode (LED)  85395000 Self-ballasted LED lamp for general lighting working at voltages greater than 50V.Fixed common LED lamp.Mobile common LED lampDouble-headed LED tube designed to replace straight fluorescent tube.
2 Spot light  94051091 Fixed common LED lamp
3 Other  94052090 Mobile common LED lamp

 

2. Applicable national technical regulations and standards applicable for LED lights.

Decision No.1383/QD-BKHCN dated May 22, 2020 to adjust enforcement date of CR approval for LED lights

Circular 08/2019/TT-BTTTT of MOST Vietnam

QCVN 19:2019/BKHCN: National technical regulation on LED lighting products

TCVN 8782:2017 (IEC 62560:2015) – Self-ballasted LED-lamps for general lighting services by voltage > 50 V – Safety specifications

TCVN 7722-1:2017 (IEC 60598-1:2014 WITH AMD1:2017) : Luminaires – Part 1: General requirements and tests

TCVN 7722-2-x:2013 (IEC 60598-2-x): Luminaires – Part 2: Particular requirements applicable for specific kind of LED lights

TCVN 11846:2017 (IEC 62776:2014): Double-capped LED-lamps designed to retrofit linear fluorescent lamps – Safety specifications

TCVN 7186:2018 (CISPR 15:2018): Limits and methods of measurement of radio disturbance characteristics of electrical lighting and similar equipment

IEC 61547:2009 Ed 2.0: Equipment for general lighting purposes – EMC immunity requirements (enforced from Jan 01, 2022) (in accordance with amendment No. 1383/QD-BKHCN dated May 22, 2020 of the Vietnam MOST)

IEC 62471:2006:  Photobiological safety of lamps and lamp systems (enforced from Jan 01, 2022) (in accordance with amendment No. 1383/QD-BKHCN dated May 22, 2020 of the Vietnam MOST)

V. EXHIBITION

LEDTEC ASIA 2021 – Vietnam International LED/OLED Lighting – Digital Signage Show

Date August 5, 2021 – August 7, 2021
City / Country  Ho-Chi-Minh City Vietnam 
Venue Saigon Exhibition & Convention Center (SECC)
Items to be exhibited Lighting, Digital Signage, Solar, Energy Saving, LED.OLED Technology, Dislay, Smart Home, Smart City
For Visitors Eligibility : Trade only
Method of admission : Apply/register online / Registration/tickets available at event
For details, please contact the organizer directly.
Organizer EXPORUM
Address : 57 Ho Tung Mau, District 1
Tel : +84-28-3863-6063
Inquiry Form : http://ledtecasia.com
Message from organizer Vietnam’s Only professional Trade Show related LED/OLED Lighting & digital Signage
Held with a concurrent exhibition.
Frequency Annual
Official website For more detailed information of the trade fair, please check the official website  of the individual organizer.

https://www.jetro.go.jp/en/database/j-messe/tradefair/detail/106167

Source: KOTRA, GSO, IMARC, ITC and local news

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