Overview

• Hong Kong exports a wide range of lighting products, including table or desk lamps, bedside or floor-standing lamps, and portable lamps like torches, hand lanterns and hand-held incandescent and LED 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 export of lighting products was HK$11 billion in 2008, down by a slight 3% compared to the previous year. Export to traditional markets experienced overall decline in 2008, except for a slight increase to Japan and to emerging markets such as Poland, India and ASEAN countries.
  
   
• Spurred by concerns over environmental protection, the industry has focused on 'green' lighting products of higher energy efficiency and longer lifetime.  

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 engaged in the business of electric table, desk, bedside or floor standing lamps.  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, management, marketing and logistic support. Amid intensified competition, most companies have focused on original design manufacturing (ODM) business, apart from original equipment manufacturing (OEM) orders. 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 emphasize quick response to the market, while keeping a close eye on product trends. Moreover, due to the growing quality consciousness of overseas buyers, many companies have strengthened their quality assurance systems. This is evidenced by a growing number of Hong Kong companies certified as complying with the 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. 

Total export of lighting products decreased slightly by 3% in 2008. Battery-operated portable lamps and electric lamps & lighting fittings formed the majority (62%) of Hong Kong's exports and the remaining products were mostly table, desk, bedside or floor-standing lamps, chandeliers and discharge lamps. Electric lamps & lighting fittings, as well as discharge lamps, recorded moderate export growth in 2008. 

The US was among the largest export markets, accounting for around 25% of Hong Kong's total lighting exports. Exports to most countries declined in 2008, including the US. There is a slight decrease of 1% for exports to the Chinese mainland, while exports to Japan, on the other hand, rose by 7% in 2008. Exports to emerging markets such as Poland, India and ASEAN countries also experienced moderate increase. 

Sales Channels 

Hong Kong's lighting manufacturers mostly produce on OEM and ODM basis for overseas importers and distributors. In view of intensified competition from other Asian suppliers, however, ODM has outpaced OEM as the major business of many Hong Kong manufacturers in the industry. A few manufacturers and traders also promote 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 major buyers in Hong Kong.  Some large 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. 

Major trade fairs such as the International Home and Housewares Show held in Chicago, the Cologne International Hardware Fair, and the Japan DIY Show Tokyo 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. Business missions organized by the HKTDC to the Chinese mainland and other emerging markets provide further opportunities for Hong Kong companies to establish connections with potential buyers. 

Industry Trends 

Hong Kong's lighting industry is increasingly subject to challenges from other Asian suppliers. In the case of medium- to high-end items, Taiwanese manufacturers, who are largely equipped with automatic production machines, are major competitors to Hong Kong in the region. As for simple and low-end articles that involve less technological and design inputs, Hong Kong exporters have been subject to fierce competition from other Southeast Asian countries and local Chinese enterprises. 

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. While preserving the traditional OEM products and subcontract assembly works to maintain economy of scale, emphasis is placed more on design engineering as well as production quality. Hong Kong companies are well known for their adaptability and responsiveness to the rapidly evolving consumer tastes, and quick response has been among their keys to success. They are capable of offering items that appeal to both quality and price-conscious customers in a timely manner. 

As more product design works are undertaken by Hong Kong companies, there is a tendency of overseas importers to shift liabilities arising from defective products to the manufacturers and traders. Especially for electrical items, overseas buyers usually demand guarantee or warranty on product quality by the manufacturers. It has thus become increasingly critical for Hong Kong exporters to evaluate the likely impacts before making deals with their buyers, and observe relevant laws and regulations in relation to consumer protection, warranty and product liabilities in overseas markets. 

Meanwhile, overseas buyers have placed more pressures not only on prices, but also order quantity amid intensified competition in overseas retailing markets. Distributors and retailers tend to make smaller-sized orders with higher frequency in order to minimise inventory. This has resulted in smaller orders with shorter delivery lead times. Some Hong Kong companies therefore re-engineer their procurement and production management systems, in a bid to shorten their manufacturing cycle time and reduce costs. 

On the other hand, there are an increasing number of Hong Kong manufacturers applying modern 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 and power tools, while reducing time and costs involved. 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 tariff. 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. 

List of goods entitled to CEPA zero tariff preference in 2009 is available from the following hyperlink:
http://www.tid.gov.hk/english/cepa/tradegoods/files/mainland_2009.pdf 

General Trade Measures Affecting Exports of Lighting Products 

Exports of electric lighting products required external power for operation are 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 product and quality standards of the State General Administration for Quality Supervision and Inspection and Quarantine 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. The European law on chemicals, REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals), was also operational since June 2007. REACH requires registration of all substances and substances in articles manufactured in, or imported into, the EU market in quantities of 1 tonne or more per year.

Product Trends 

Lighting products seem to be targeted first for reform in many countries environmetal protection plans. In the Chinese mainland, the National Development and Reform Commission (NDRC) and the Ministry of Finance launched a nationwide campaign to subsidize and promote the use of 150 million energy-efficient lamps since January 2008. A 30 percent subsidy on wholesale purchases and 50 percent on retail sales of energy-efficient bulbs is being offered. The European Commission has also adopted regulations to improve the energy efficiency of household lamps and of office, street and industrial light products in March this year and to progressively phase out incandescent light bulbs from the market by 2012. 

Global shipment of LED streetlights is expected to surge 1.3-folds from 2008 to a total of 2.1 million systems in 2009. Many governments worldwide, as part of their environmental protection efforts and economic stimulus programs to combat the global downturn, have indicated plans to replace traditional streetlights with eco-friendly types to save energy in public work projects. It has been estimated that in 2009, around 2.5 million energy-efficient streetlights will be installed in the Chinese mainland. Taiwan also budgeted US$3.7 million to install more LED streetlights this year.

'Green' is definitely the word for lighting products. The use of minimalist design, natural materials and green energy are some of the key features of consumer lighting products in the next few years. There is a growing popularity of LED lighting for residential as well as commercial applications. Not only is LED more energy efficient than conventional light sources, it offers more colors which allows for more flexibility in lighting products design. However, the adoption of the costlier LED lamps among individual consumers might take some time. 

Besides LED products, cold cathode fluroscent (CCFL) lamps are being considered for general lighting to cash in on the rising eco-friendly trend. CCFLs have long been commonly used as the backlight source in liquid-crystal display TVs, notebook displays and computer monitors. It has the potential of becoming the next-generation light source if a common interface standard could be agreed upon.