For starters, the lighting presence was substantially bigger than in previous years. While the overall show had a bit of a bump to 33,000 attendees, up from 32,000 last year in Las Vegas (where the show tends to historically outdraw the Orlando version), InfoComm sources told PLSN that the number of lighting exhibitors was up “substantially” from previous years.
“There was a lot of action there,” says Norman Wright, VP in charge of lighting technology and a partner at Group One, which owns Elektralite and represents Pulsar. “We got a lot of questions about LED. And there was a lot more interest in lighting on the part of AV integrators, people who have traditionally done more with video. They showed a lot more interest in how it fits into their business this year.”
The New Mott Street?
The presence of Asian exhibitors in general, and Chinese companies in particular, was also larger, an InfoComm source confirmed. Not surprisingly, considering that the InfoComm China show in Beijing two months earlier was the organization’s biggest event there yet, with 10,758 visitors, an increase of 16 percent over the last show there in 2009.
A decade ago, the lighting industry was using China and other Asian countries as their manufacturing resource, which, despite the occasional design infringement, helped expand the business and meet growing demand, especially for LED products. But until recent years, there remained a wall between the companies that manufactured the lights and the companies that sold them. This year’s InfoComm indicates that, like a certain wall that used to be in Berlin, each year it’s missing a few more bricks than before.
To a casual observer, it might have seemed that the Chinese manufacturer booths had relatively little traffic. If so, that might have been partially due to a language barrier — I was surprised at how little fluent English was spoken at the booths I stopped by. By comparison, Jay Choi at South Korea-based Evertechno had plenty of traffic at his booth and, in better conversational English than I get at the deli across the street from my apartment in Manhattan, he affirmed to me that we’ll likely be seeing more and more Asian lighting manufacturers that once were back-end manufacturing partners and now are brands unto themselves at U.S. trade shows.
Group One president Jack Kelly says the issue is less about language than it is about the awareness that brands are important in the western marketplace. “I don’t think that the Chinese [business] culture has fully embraced the concept of creating brands yet,” he says. “They’ve embraced luxury brands like Mercedes Benz and Rolex, and they know they can buy brands, as they did when the bought Lenovo from IBM, but they’re still not up to speed when it comes to creating them. On the other hand, China’s been a significant member of the world economic community for barely two decades. Given time, they’ll begin to figure it out.”
But Kelly, whose products are nearly all made in China, points out one critical change that’s taking place: Chinese manufacturing costs are rising. He estimates he’s seen increases between 10 and 20 percent in the last year. This is due to combination of upward pressure on the Chinese Yuan, which has been kept artificially low thus boosting China’s export leverage, and rising wages of Chinese workers, many of whom are part of the country’s burgeoning middle class. As China’s economy matures along western lines, manufacturing is going to start seeking out new, less costly places to make products.
Labor Pains
Troels Volver, formerly with Martin and more recently the export manager for Italy-based lighting manufacturer SGM, agrees, pointing out that his Chinese labor costs have increased 23 percent in the last year, which is fueling a surge in China’s nascent middle class and which will, ultimately, transform the country from an oasis of cheap manufacturing to an end consumer. That, says Volver, will compel some fundamental changes for lighting companies that have relied on China’s previous paradigm.
“Those companies that have invested in China are going to be burned,” he says, referring to overseas lighting brands that have capitalized manufacturing ventures in China. “They will have to develop a domestic market for those same products in China or find new, more cost-effective manufacturing locations in the world, or both.” What Volver does not see is any realistic chance of competitive Chinese brands developing any world-class stature. “They are, simply, copy cats,” he says, using a comparatively mild epithet.
Nonetheless, the China presence at InfoComm is a harbinger of things to come. Two weeks later, at the biannual Paris Air Show, COMAC, the Chinese aircraft builder established in 2008, showed a mockup of its C919 airliner. And the same kind of commentary dogged it — the aviation blogs dubbed it “the Asian Airbus 380” and reminded readers that Airbus has a manufacturing plant in China, presumably where certain blueprints might have been readily available. But that didn’t stop Ireland’s low-cost carrier Ryanair from signing a memorandum of understanding with COMAC at the Paris show, likely motivated to no small degree by the fact that China’s own airlines will buy the aircraft in large numbers, thus inducing an economy of scale before the ink on the agreement is dry. It underscores the challenge we’ll all face moving forward into what will be an increasingly red 21st century: are products that are approximations of the tools we need that are available at lower costs better than the alternative? We’ll see.
