Hong Kong Industry Profiles

Overview

• Hong Kong exports a wide range of lighting products, including table, bedside, floor-standing and portable lamps. Other major products include wall and ceiling lighting, chandeliers and lighting fittings, as well as decorative items like Christmas tree lighting sets and lamp shades.
  
  
• Hong Kong’s total exports of lighting products rose by 2% in 2011. Although exports to the EU and the US were lacklustre, sales to Japan rose sharply in the period.
  
  
• Due to environmental concerns, energy-efficient items like the integrated electronic compact fluorescent lamps are in demand. In addition, the industry is focusing on the development of LED lamps and lighting apparatus, which are more energy-efficient with an even longer lifetime than the compact fluorescent lamps.

Industry Features

The lighting industry of Hong Kong is largely made up of small- and medium-sized companies. Their products are usually meant for home improvement and domestic purposes. The largest export categories include battery-operated portable lamps, such as torches, hand lanterns, hand-held incandescent lamps and LED lamps for outdoor, sports and/or diving uses.

Meanwhile, there are a number of companies engaging in the business of electric table, desk, bedside and floor-standing. Other exports include wall and ceiling lighting, chandeliers and lighting fittings, as well as decorative items like Christmas tree lighting sets and lamp shades. The materials used for casings and shades include plastics, die-cast metals, crystals, glasses, ceramics and polished brasses. Some companies also produce neon lights, illuminated signs and illuminated name-plates for advertising purposes and interior decoration.

Most Hong Kong lighting product manufacturers have relocated their production facilities to the Chinese mainland. Their offices in Hong Kong are mainly responsible for product development, marketing and logistic support. Many manufacturers are able to undertake product design, plastics injection moulding, vacuum coating, enamel plating and assembly production in-house.

The success of Hong Kong’s lighting industries also lies in efficient management. Against the fast changing market, Hong Kong companies emphasise quick response to the market, while keeping a close eye on product trends. Due to the growing quality consciousness of overseas buyers, many companies have strengthened their quality assurance systems by complying with ISO 9000, which is an internationally recognized standard for quality management system.

Performance of Hong Kong’s Exports of Lighting Products ^

* Insignificant
^ Since offshore trade has not been recorded by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.

Hong Kong’s total exports of lighting products rose by 2% in 2011, after growing by 10% in 2010. Sales of electric lamps performed well, while exports of portable lamps were steady. But exports of discharge lamps and filament lamps declined in 2011.

The EU and the US are the largest markets, together absorbing about half of Hong Kong’s lighting exports. Exports to the two markets, however, were lacklustre in 2011. Exports to the Chinese mainland also declined in the period. But exports to Japan and Australia surged by 61% and 13% respectively.

Sales Channels

Hong Kong’s lighting manufacturers mostly produce on OEM and ODM basis for overseas importers and distributors. In view of intensified competition, ODM has outpaced OEM as their major business. A few manufacturers and traders also promote lighting products with their own brand names or trademarks.

Hong Kong companies usually sell directly to overseas buyers, including volume importers and regional distributors of hardware and general merchandise. Some of the companies also deal with buying offices set up by overseas buyers in Hong Kong. Some large Hong Kong companies even sell directly to large-scale retailers like hypermarkets, supermarkets and chain stores, as well as buying groups/co-operatives of smaller retailers in North America and Europe in order to reduce the levels of distribution and associated costs.

Major trade fairs such as the International Home and Housewares Show held in Chicago, the Cologne International Hardware Fair, and the Japan DIY Homecentre Show provide promotion opportunities for Hong Kong traders. The Hong Kong International Lighting Fair organised by the Hong Kong Trade Development Council (HKTDC) is another major event for companies to exhibit their products to overseas buyers.

Industry Trends

Intensified competition from mainland and other Asian suppliers, which are increasingly equipped with automatic production machines, has long been a threat to Hong Kong companies. In response, Hong Kong manufacturers have differentiated their products by enhancing product features and aesthetic design, and enriched their product assortment by exploring new product lines.

In recent years, overseas importers and distributors tend to make smaller-sized orders with higher frequency and shorter delivery lead times in order to minimise inventory. Some Hong Kong companies have therefore re-engineered their procurement and production management systems, in a bid to shorten their manufacturing cycle time and reduce costs in order to meet the market demand.

On the other hand, there are an increasing number of Hong Kong manufacturers applying advanced technology for product design and production. For instance, computer aided design (CAD) has been adopted to improve the aesthetic and mechanical designs of lighting products. Applications such as the use of 3-dimension computer aided industrial design (CAID) also facilitate companies to enhance their design capabilities. Modern technology for plating, polishing, sheet metal cutting, die-casting, etc. has also been applied to improve the product precision and quality.

CEPA Provisions

Since the implementation of the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariffs. According to the stipulated procedures, products which have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met.

In the main, the CEPA origin criteria for Hong Kong items include change in tariff heading, performance of specific manufacturing process in Hong Kong, as well as fulfillment of value-added requirement, under which at least 30% of the FOB value of the products, and that the final manufacturing or processing operations should be completed in Hong Kong.

Product development cost incurred in Hong Kong, in addition to material costs and labour costs, can be taken into account in calculating the value-added percentage. Pursuant to Supplement VIII to CEPA, the value of raw materials and component parts originated from the mainland (up to half of the value-added content of the products) can also be included when calculating the value-added percentage.

Detailed information, as well as the origin rules for lighting products, is available from the following hyperlink:
http://www.tid.gov.hk/english/cepa/tradegoods/files/mainland_2012.pdf

General Trade Measures Affecting Exports of Lighting Products

Exports of electric lighting products that required external power for operation are usually subject to relevant safety requirements in overseas markets. For instance, a certain electrical items sold to the US have to comply with the mandatory requirements of UL/ETL listing or equivalent, in order to meet the federal safety standards. Likewise, products exporting to the EU have to comply with certain directives for safety, and carry a CE-mark accordingly. Others include the CSA safety standards for exports to Canada, and the safety and quality requirements of the China Compulsory Certification (or CCC) system for products sold in the Chinese mainland.

Hong Kong exporters should be attentive to the growing popularity of green concept in the marketplace. Especially in Europe, consumers are generally conscious towards environmental protection. Not surprisingly, the EU has adopted a number of directives for environmental protection, which may have an impact on the sales of lighting products. These include the restrictions on batteries and accumulators that contain mercury, as well as the Directive on Waste Electrical and Electronic Equipment (WEEE) implemented in August 2005, and the Directive on Restriction of Hazardous Substances (RoHS) that came into effect in July 2006, under which lighting products are among the affected items.

Product Trends

One of the significant developments in the lighting industry is the booming of DIY (do-it-yourself) market. DIY products are increasingly popular, especially in North America and Western Europe. Hence, a wide range of hardware items, including lighting products, are offered for DIY purposes. Meanwhile, decorative items are no longer limited to Christmas lighting sets. They also include a wide range of domestic lighting products, such as track lights, linear lights and spotlights of different novelty designs.

Due to environmental concerns, lighting products of higher energy efficiency and longer lifetime are preferred. Notably, Australia has banned the sale of most incandescent light bulbs that cannot meet the minimum energy efficiency requirements since 2010. The EU and the US have also started to phase out certain incandescent light bulbs by 2012 and 2014 respectively. As a result, energy-efficient items like the integrated electronic compact fluorescent lamps are in demand. In addition, the industry is focusing on the development of LED lamps and lighting apparatus, which are more energy-efficient with an even longer lifetime than the compact fluorescent lamps.