22 March 2017
Lighting Industry in Hong Kong
- 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 decreased 8% in 2016.
Hong Kong exports a wide range of lighting products, which 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 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, marketing and logistic support. They usually undertake product design, plastics injection moulding, vacuum coating, enamel plating and assembly production in-house.
Against the fast changing markets and advancement in technology, Hong Kong companies emphasise quick response to ensure effective services to their customers. Also, many Hong Kong companies have further strengthened their quality assurance and environmental management systems, and are accredited with ISO 9000 – an internationally recognised standard for quality management system, ISO 14000 – a standard for environmental management system, etc.
Performance of Hong Kong’s Exports of Lighting Products
Hong Kong’s total exports of lighting products decreased 8% in 2016. Exports to major markets like the EU and the Chinese mainland were lacklustre, despite the steady exports to the US.
Hong Kong’s lighting manufacturers mostly produce for overseas importers and distributors, including reputable American and European brands. In view of intensified competition, ODM has outpaced OEM as their major business. A few companies also promote lighting products with their own brand names or trademarks.
Hong Kong companies also sell directly to overseas buyers of hardware and general merchandise, including volume importers and regional distributors. Some 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.
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.
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.
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: (1) change in tariff heading; (2) performance of specific manufacturing process in Hong Kong; and (3) 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. With effect from 1 April 2012, costs of raw materials and component parts originating in the mainland can also be included in calculating the value-added percentage, provided that the value-added content originating in Hong Kong is greater than or equal to 15%.
Detailed information, as well as the origin rules for lighting items, is available from the following hyperlink: http://www.tid.gov.hk/english/cepa/tradegoods/rules_origin.html
Compliance with Overseas Requirements
Hong Kong companies are capable of meeting the technical requirements of relevant authorities in overseas markets. These include the safety requirements of UL/ETL listing or equivalent in the US, as well as the relevant safety directives and CE requirements of the EU. 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.
Meanwhile, Hong Kong companies are also attentive to the growing popularity of green consumerism in the marketplace. Especially in Europe, consumers are generally conscious of environmental protection. Not surprisingly, the EU has adopted a number of directives for environmental protection, which may have an impact on the sales of electronic products. These include the restrictions on batteries and accumulators that contain mercury, the Directive on Waste Electrical and Electronic Equipment (WEEE) and the Directive on Restriction of Hazardous Substances (RoHS), under which lighting products are among the affected items.
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 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 completely banned such sales since September 2012 and 2014 respectively. The Chinese mainland has also phased out the imports and sale of most incandescent light bulbs since October 2016.
As a result, energy-efficient items like the integrated electronic compact fluorescent lamps are in demand. Nevertheless, 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.
As regards future development, the industry is keeping an eye on the so-called “smart” lighting system on the advent of the Internet of Things (IoT), which is a technology to connect different devices at home and beyond by a smart platform, including the lighting apparatus, other installed appliances and mobile devices.