GE Lighting to exit Asia and Latin America markets

GE Lighting to exit Asia and Latin America markets

Business news |
By Julien Happich

Revealed by LEDinside, the memo explains that ending its business in Asia and Latin American will enable the company to focus its market in North America, Europe, and the Middle East and continue to expand the scale and improve the company’s profitability.

According to Trendforce, GE Lighting gets less than 18 percent of its total revenue from Asia and Latin America combined, of which the Chinese market represents over a third, or 8%. But increasing price pressure in China where LED bulbs are being commoditized makes GE Lighting turn its back on markets where it sees diminishing margins. Rising market competition, notably in Asia, pushed several western LED manufacturers to turn their attention to less commoditized and more profitable lighting products.

Instead, the company plans to focus on more profitable smart lighting and integrated LED lighting systems, with a new R&D laboratory to accelerate innovation.

The laboratory will focus on developing and testing connected home technologies, such as creating GE Lighting intelligent node functions. The company intends to start a pilot project in the second half of 2016 related to intelligent nodes. The lab will also bring new ecosystem partners to develop intelligent lighting solutions that are both creative and flexible. The laboratory will jointly support resources around the world, including the GE Lighting Chinese technical team. However, GE Lighting plans to cease direct business operations in China.

These strategic decisions are in line with the future closing of two U.S. factories that produce CFL bulbs in Lexington Kentucky in 2017, progressively phasing out the production and sales of CFLs to switch to ramp up LED lighting. The company has recently shut down six traditional bulb manufacturing plants in the U.S, including incandescent and halogen bulb plants.

The U.S. market is GE Lighting’s top revenue source contributing to 55% of its US $2.86 billion revenue in 2015, followed by Europe (25%), and other regional markets (12%), according to LEDinside. GE Lighting estimates that LEDs will account for 80% of its global revenues by 2020, with the US providing half of the company’s revenue.

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