Ban on Full Moon Lights Loses Half of Government Orders

This is a lighting forum. A Central Party school scholar's speech on urbanization has raised the spirit of the boss of the lamp company. A business owner, who had been careless, had picked up his pen and began to listen carefully. "The central policy is very important," he told reporters.

Following the liquor, potted, catering and performance industries, lamps have become another industry in which the central government is thriving. At a time when the China Office and the State Administration of the People’s Republic of China had issued a “ban on the construction of new buildings and halls and museums” at the time of the full moon release, many lighting industry personnel revealed in an interview with reporters that many government orders had been lost.

Some companies try to escape the “government dependency syndrome” by expanding emerging markets such as South America, and some industry players are looking forward to “policy and countermeasures”. A responsible person from a building decoration association said that the building can not be built but can be renovated, and a building can be renovated about ten times. This is also an opportunity for the lighting industry.

Darkness remains

“Last year and August of last year’s business, we were able to achieve three to four million yuan per month (turnover). This year we can't do it.” Song Songsheng, head of a lighting company from Changzhou, Jiangsu, shook his head while sighing.

At the recent China Light Industry Summit held in Guzhen Town, Zhongshan, Guangdong, similar complaints were not lacking. At the forum on the same day, a lighting company from Jiangsu told reporters that according to her understanding, sales of lighting companies in this year's six cities and Chengdu are declining, with about two percent of companies maintaining a balance, and only one percent of corporate sales are rising.

A number of lighting industry sources told reporters that this year's lighting company sales generally fell by 20% to 30%, behind the reasons include the full stop of the new party and government agencies, the impact of the building's policy and the real estate market cooling and other factors.

At the end of July, the Central Government issued the “Notice on Party and Government Organs Stopping the Construction of New Buildings, Halls, and Clearance of Office Spaces” (hereinafter referred to as the “Notice”). It was clarified that within five years, all party and government organs at all levels must not build any form or reason. The building hall office strictly controls the maintenance and renovation projects of office buildings and prohibits luxury decoration.

Huang Pinhua, general manager of a lighting company in Shenzhen, told reporters that they had previously focused on government projects, and this year’s business from the government even declined by more than half. On the one hand, it is because there are no major events like the Olympic Games and the Asian Games this year. On the other hand, it is affected by macroeconomic policies and the economic situation.

The decline in sales is also reflected in logistics to some extent. A logistics businessman in Guzhen Town, Zhongshan, said that this year's business volume has dropped by about 20%.

According to the person in charge of a local lighting factory, compared to home lighting companies, the cooling of the Loutang Pavilion has a greater impact on the companies that mainly deal in commercial lighting business.

A government official in Guangzhou revealed to reporters that some functional departments of the Guangzhou Municipal Government had originally planned to relocate to a new office building this year. Even the specific "moving" date has been fixed, but it was terminated due to the issuance of the "notice."

According to the government source, in the process of promoting urban-rural integration in a county in central China, it was originally intended to build a new office building in the new district to promote the land price and supporting development in the new district. The central government also issued the above-mentioned “Notice” “Farewell to the New Building”.

The government official stated that similar to this, the situation in the newly-built government office building driving a certain area to be developed abounds in the third and fourth tier cities. The aforementioned "Notice" has changed this situation.

The building cannot be newly built but can be renovated. The “optimism” of the above-mentioned decoration associations is not a single case. A person in charge of a lighting factory in Guzhen Town, Zhongshan, said that 30% of the company's business comes from government orders, and this year's business is still stable. The person in charge said bluntly that, despite the “notice”, local governments can still use other names to create projects. The lighting company has spared no effort in maintaining government relations, so even if the cake becomes smaller, they can still get a share.

This month, the central media such as the Xinhua News Agency continuously exposed the practice of some local government’s dark positions, saying that some localities and departments built office space in various names such as “business center”, “integrated business building” and “civil service center” to pass approvals. Escape regulation.

What is the way out?

Contrary to the trend, lighting merchants have shown their way through the magical powers.

Huang Pinhua said that many of his peers who have made lamps and lanterns have shifted their focus from government projects to the mass consumer market. “The government has a limited number of projects and is affected by the policy too much.”

Shi Yan, general manager of a lighting company in Shanghai, told reporters that emerging markets are their "secrets." This company’s export sales accounted for 70% of the total business. This year, Venezuela’s customers have just signed a large single of 100 million yuan, and another government procurement order with similar amount from South Africa has also been successfully negotiated. The company’s turnover rose by 30% this year.

Combining lighting with the home improvement industry more closely is also a way out. Another person in charge of the Zhongshan Guzhen Lamp Factory stated that the plan in the future is to expand the sales channels into home stores. “The integration of furniture and home appliances is the future direction.”

According to Hua Jingyou, the Secretary General of the Electrical Committee of the China Building Decoration Association, the output value of lighting currently accounts for 8% of the total value of the home decoration industry. The output value of the Chinese architectural decoration industry has increased at a double-digit rate every year for the last ten years.

In 2012, the town of Guzhen Town, Zhongshan had a GDP of 9.8 billion yuan. It is worth noting that the total output value of the local lighting industry reached 15.81 billion yuan, accounting for more than 60% of the national market share.

“In my hometown in Henan, every 10,000 to 20,000 people build a living quarters and the house rises.” He said that this is an opportunity for the entire architectural decoration industry, including the lighting industry.

Many traditional lighting companies will focus more on the emerging LED industry. At the above-mentioned Everlight Industry Summit, the relevant person in charge of the China Lighting Association stated that in 2012, the output value of lighting appliances in the entire industry was 400 billion yuan, of which one-third were electric light sources and two-thirds were light fixtures. The daily updated Taobao index (according to the daily operation data of Taobao and Tmall.com) shows that the turnover index of LED lamps in the last 30 days increased by 7.9% from the previous period, and increased by 247.3% compared with the same period of last year. The province with the largest number of LED lamps purchased was Guangdong (18.85%), and the second was Jiangsu (7.86%).

In spite of this, due to increased competition in the industry and increased transparency, the profits of LED lamps are also shrinking. The Ali Index (calculated based on the basic data of Alibaba's daily operations) shows that since the beginning of this year, the price of LED lamps has been falling all the way, and the supply index has been rising.

What can't be ignored is that in this industry, which still relies on government subsidies to a considerable degree, the troubles of growth have already emerged. Last week, some Dongguan LED company officials told reporters that the industry has a serious excess capacity. In the bad market competition, a large number of enterprises in Dongguan and Shenzhen have closed down. They believe that the reason why the LED industry has come to the present situation is that a large part of it is spoiled by overly favorable policies.