Russian LED market developments
Manufacturers, who hope to leave the fiercely competitive Chinese lighting market and other mature lighting markets, are turning their attention to Russia and emerging Southeast Asian markets.
The Russian LED market value in 2014 is estimated at around US$ 1.01 billion, and LED market penetration rates are much higher than in Southeast Asia at about 30% to 40%. Another similarity is limited understanding of LED technology in the Russian market.
An incentive for more LED manufacturers to enter the market, which contributes to the high market penetration rates has been LED bulb prices. Bulb prices are also much higher than in Southeast Asia. A 60W equivalent LED bulb is sold about 30% to 40% higher than in Taiwan, higher living costs in Russia might be a reason behind why consumers find the higher prices acceptable. Additionally, LED streetlights for government projects can be sold doubled the price than in Taiwan.
Spanning 4,000 kilometers, a major Russian gas line project, The Power of Siberia, is also stimulating demands for LED products. Lighting demands in the project amounted to 2 billion Russian Rubles (US $60 million) out of the total 2 trillion ruble project. The ongoing gas line project launched in 2012 aims to transmit natural gas from Russia to China, and is expected to be completed by 2017.
To enter the Russian lighting market, manufacturers will need to closely form partnerships with local government agencies, suppliers, lighting manufacturers, and distributors. It will be difficult to enter the Russian market, if the approach is just to sell products, partnerships will be essential in entering the Russian market.