THE JAPANESE LED LIGHT INDUSTRY AND HOW TO ENTER INTO THE MARKET

By: Nara Dinh

Team: R & A
Date: 23.12.07

Executive summary: market trends, consumer behavior, and industry players, regulatory environment
The potential of Japan LED light market and the purpose of the report to make decide to export Led light
from Vietnam to Japan
Japan maintains its position as a significant contributor to the dynamic evolution of the LED light market,
commanding a substantial market size. The research report serves a dual purpose: firstly, to assess the
Japan LED light market comprehensively, considering trends, consumer behavior, and regulatory
aspects. Secondly, it aims to guide decisions on the export of LED lights from Vietnam to Japan by
evaluating market demand, regulatory compliance, and competitive factors. The goal is to provide
concise and insightful information for informed decision-making in successfully entering the Japanese
LED light market.

I. Introduction
A brief overview and assessment of the Japan LED light market in Japan.
The Japan LED light market stands as a global leader, characterized by its dynamic blend of technological
innovation, energy efficiency, and a robust consumer base. Renowned for its technological prowess and
commitment to energy efficiency, Japan has emerged as a significant player in the adoption and
advancement of LED lighting technology. The Japan LED Market Size was valued at USD 5.63 Billion in
2022 (Sphericalinsights, 2023), and will be expected to grow quickly to 2032. As of the assessment,
Japan continues to become a key contributor to the evolving landscape of the LED light market
command a substantial market size.

II. Analysis
1. Market Overview
1.1 Market trends and Industry player of Led Lighting in Japan

With rapid advancements in LED technology and the rising environmental concerns are contributing to
the increased demand for LED lights (Imarcgroup, 2020). Moreover, the emphasis on LED
standardization serves as a critical market driver in Japan's LED lighting industry ensuring uniformity and
quality across products (Technavio, 2014), and the use of LEDs not only being use for residential setting
but also being used in commercial purposes causing the LED driver market to increase
(Actualmarketresearch, 2022).

The LED lighting market in Japan has shown substantial growth. According to IMARC Group's report, the
market is expected to reach US$ 9.5 billion by 2028, displaying a robust compound annual growth rate
(CAGR) of 8.64% from 2023 to 2028.
 (Source: Sphericalinsights, 2023)

Additionally, Sphericalinsights' latest research estimates even further growth, projecting the Japan LED
lighting market to reach USD 13.82 billion by 2032, at a CAGR of 9.4% during the forecast period from
2022 to 2032. This information implies a positive outlook for the LED lighting sector in Japan, indicating
sustained demand and continuous development over the specified time frame.
According to Markwideresearch (2023), top 3 renowned companies such as Nichia, Toshiba, and
Panasonic wield significant influence, not only domestically but also on the global stage, followed by 7
other companies in the Led market. These industry giants are celebrated for their pioneering
contributions to LED technology, continuous innovation, and substantial production capacities,
solidifying their positions as key players in Japan's thriving LED lighting sector.
For Vietnamese manufacturers aspiring to export to Japan, this scenario presents both challenges and
opportunities. While the strong presence of these renowned companies signifies a competitive
landscape, it also emphasizes the importance of meeting high-quality standards and fostering innovation
to compete effectively. Entering this market requires Vietnamese manufacturers to strategically position
themselves, possibly through partnerships, differentiation in product offerings, and a keen focus on
meeting or exceeding the technological and quality benchmarks set by the established giants in Japan's
thriving LED lighting sector.

1.2 Consumer Preferences for Led Lighting in Japan

With the rise of smart homes and cities, the combination of LED technology with IoT and AI promises
more flexible and efficient lighting solutions, Japanese consumer preferences have changed quickly. This
shift in Japanese consumer preferences underscores the need for manufacturers to swiftly adapt and
provide solutions that align with these evolving trends and continuous commitment to driving efficiency
improvements, cost reductions, and the exploration of new applications for LED technology, ensuring
that manufacturers remain responsive to the dynamic needs of the market and can satisfactorily meet
the expectations of their customers.

2. Government regulations and its changllenge in energy-efficient lighting for foreign companies.
Although the LED market is lucrative, there are several challenges and restrictions for foreign companies
aiming to enter. Notable barriers include stringent regulations on product safety and quality (Rpclab,
2012; Mipro Japan, 2013, METI, 2021) can add another layer of challenge for newcomers in meeting
Japan's high standards of LED imports and exports. Additionally, Japanese gorvernment launched many
campaigns to support the led light energy-efficient technologies (Japanf, 2010, 2012, 2017). Despite the
early effort of promoting environmental technology from Japanese government, the effectiveness and
drawbacks of governmental assistance policies, initiatives, funding, and regulatory frameworks aimed at
promoting the development and adoption of environmental technologies in Japan (Miller & Moore,
1994).

Moreover, the trade agreements between Japan and Vietnam has provided a potential opportunity. To
leverage the existing trade agreements between Vietnam and Japan, according to the CPTPP agreement,
Japan commits to eliminating tariffs on 86% of tariff lines, equivalent to 93.6% of Vietnam's export value
to Japan, equivalent to 93.6% of Vietnam's export value to Japan and nearly 90% of tariff lines after 5
years. Ms. Trinh Hien, Head of the Origin of Goods Division, Import-Export Department (Ministry of
Industry and Trade), believes that there are significant opportunities for Vietnam to leverage the
advantages in this Agreement, especially the supply chain (Vnembassy-jp, 2023). However, the detailed
information for Vietnames manufacturers seeking the benefit with tax and tariff to export into Japan's
LED market need to be further analyzed (Appendix 1).

3. Comparative Analysis

3.1. Comparison Import-Export Dynamics in Led light between Japan and other countries (Vietnam,
China, India)
According to Volza's Export Import, the top 3 exporters of Led light are China with 2,659,805 shipments
followed by Vietnam with 213,613 and India at the 3rd spot with 97,254 shipments. Moreover, the
purpose of the research is to consider entering Japan Led light market. The table, thus, provides the
comparison the LED light industry between Japan and other countries (Vietnam, China, India) to get an
overview picture of competitive market across various key factors such as Market Size and Growth,
Market segments, Major Competitiveness, Export and Import Dynamics, Technological Advancements,
Consumer Preferences and Trends, Supply Chain and Manufacturing Costs, Government Policies and
Incentives, and finally with Future Outlook (Appendix 0).

3.2 Data collection

In the LED light trading market, Volza's Export Import data, updated until December 3, 2023, provides
insights into Japan's import and Vietnam's export dynamics. The information from Volza's Export Import
data highlights the current scenario of LED light exports from Vietnam and the corresponding imports by
Japan.
Table 1: Led light export from Vietnam
Vietnam Data and number
Led light export shipments 213.6K
Vietnam exporters 6,999
Buyers 6,841
Top destination to export LedSouth Korea and United States
light
Top product categories of Led HSN Code 94054099
light Exports from Vietnam HSN Code 85414010
HSN Code 85129020
Cre: https://www.volza.com/p/led-light/export/export-from-vietnam/

Table 2: Led light import in Japan

Japan Data and number
Led light import shipments 65K
Japan imports 1,022
Suppliers 957
Japan imports most of Led light Vietnam, Indonesia and
from Philippines
Top product categories of Led HSN Code 84433191
light Import in Japan HSN Code 94056090
HSN Code 84433199
Cre: https://www.volza.com/p/led/import/import-in-japan/
Analyze key findings in table
Drawing upon the data collected, it is evident that the potential of the Japanese market presents a
lucrative opportunity for Vietnamese exporters to seriously contemplate entry. Despite the relatively
low historical export volume of LED lights from Vietnam to Japan, the substantial demand observed in
the Japanese market provides a compelling target for Vietnamese exporters. The scarcity in past exports
suggests an untapped market segment, making it a strategic move for Vietnamese exporters to
capitalize on the significant demand in Japan. This potential hinges not only on addressing the existing
market demand but also on the prospect of establishing a robust presence in a market that has
demonstrated an appetite for LED lighting products. Therefore, a well-thought-out market entry strategy
could position Vietnamese exporters favorably in catering to the substantial and largely untapped
demand for LED lights in Japan.

3.3 Highlight potential advantages or challenges to enter the LED industry.

To make the decision to enter Japan led light market, the strategic analysis tools stemming from the
TOWS and PEST model have been adopted to explore the Japan led lighting industry. Firstly, TOWS
Matrix was introduced by Heinz Weirich (1982), and it is a strategic management tool often used for
analyzing the external opportunities and threats in conjunction with a company's internal strengths and
weaknesses. Secondly, applying the PEST model created by Harvard professor Francis Aguilar in the
1960s, the political, economic, social, and technological factors will be analyzed and help in
understanding the broader business environment and formulating strategic decisions for market entry
or expansion to the LED light industry in Japan. A detailed analysis will be given in Appendix 1 and 2.

III. Recommendations
Suggestions for companies looking to enter or expand in the Japanese LED market.
Based on the analysis, a strategic entry into the Japanese LED light market is recommended, positioning
Vietnam as an exporter. This proposition aligns with Vietnam's emphasis on trade and export-driven
economic to develop the country's international economic integration strategy (Deprez, 2018) and take
the advantage of the opportunities as market expand and internationalized (Pincus, 2015). The
untapped potential of the Japanese market offers a substantial growth opportunity for Vietnam, with
the prospect of leveraging its manufacturing capabilities for LED lights. This is because Vietnam aims to
be a key player at the end of the production and global value chain, which the goal is to export finished,
high-value manufactured products to the EU and other countries, benefiting from preferential market
access (Deprez, 2018).
Furthermore, a collaborative approach through a joint venture with a Japanese firm is suggested,
focusing on optimizing the supply chain and resource-sharing dynamics to bolster the LED light industry.
This strategic partnership capitalizes on Japan's ability to leverage Vietnam's cost-effective
manufacturing capabilities while simultaneously empowering Vietnam to enhance its technological
prowess in LED light solutions. The proposed collaboration fosters a mutually beneficial environment,
constituting a win-win situation. Given the nascent stage of LED light technology in Vietnam, this
venture not only addresses immediate market needs in Japan but also positions both parties
strategically for sustained growth in the evolving LED industry landscape within Vietnam.

Strategies for market entry or risk mitigation measures and potential future changes that might impact
the LED industry.
Strategies for entering the LED market in Japan should be rooted in a comprehensive understanding of
the industry dynamics. To mitigate risks and ensure a successful market entry, it is crucial to consider
approaches such as strategic partnerships with local distributors, compliance with Japanese quality and
safety standards, and a nuanced marketing strategy tailored to Japanese consumer preferences.
Additionally, fostering collaborations with Japanese companies or engaging in joint ventures can provide
insights into the local business culture and enhance market penetration.
Looking forward, potential future changes in environmental regulations and energy efficiency standards
may significantly impact the LED industry. Adapting to emerging trends such as smart lighting solutions,
sustainable practices, and advancements in IoT integration can position market entrants favorably in a
rapidly evolving industry landscape. Staying abreast of technological advancements and regulatory shifts
will be essential for sustained success in Japan's dynamic LED market.

IV. Conclusion
Key decision and key point from the analysis
The Japanese LED light market exhibits significant growth potential driven by technological
advancements and evolving consumer preferences. To capitalize on this opportunity, it is imperative for
companies to strategically plan their entry into the market. As Japan relies considerably on LED light
imports from Vietnam, there is a distinct advantage for companies to explore and participate in this
demand. Crafting a well-prepared market entry strategy, aligned with the technological efficiency and
consumer trends prevalent in Japan, will be crucial for success. The encouraging import data from
Vietnam underscores the market's receptivity to LED light products, making it an opportune time for
companies to consider and strategically position themselves within the Japanese LED light industry.

V. Appendix
1. Trade Relations with Japan
 Cre: Trade Data Overview (tridge.com)

2. Overview competitive Led light market among Japan, Vietnam, India and China..

Factors Japan Vietnam China India

Market Size andMature market,Rapid growth,Dominant market,Growing market,
Growth moderate growth emerging market steady growth increasing demand
Market Segments Residential, Residential, Residential, Residential,
Commercial, Commercial, Commercial, Commercial,
Industrial, Industrial, Industrial, Industrial,
Automotive, Display Automotive, Automotive, StreetAutomotive, Smart
Outdoor Lighting Lighting Lighting
Major Players Nichia, Panasonic,Rang Dong, DienMLS, Epistar, Osram Havells, Syska, Bajaj
Toshiba Quang, FSL
Export and ImportEstablished globalGrowing exporter,Dominant exporter,Increasing exporter,
Dynamics presence emerging player major globalexpanding global
supplier footprint
Technological Advanced Rapid adoption,Leading inGrowing technology
Advancements technology focus on innovation technology, R&Dadoption, emphasis
adoption, R&D focusing on innovation.
investments
Consumer Quality-driven Increasing demandDiverse preferences,Growing interest in
Preferences andpreferences, focusfor energy-efficientfocus on smartenergy-efficient and
Trends on efficiency lighting lighting smart lighting
Supply Chain andEstablished supplyEvolving supplyMature supplyDeveloping supply
Manufacturing chain, relativelychains, competitivechain, lowchains, competitive
Costs higher manufacturing manufacturing manufacturing
manufacturing costs costs costs
costs
Government Supportive policies,Incentives for LEDGovernment Incentives for
Policies andincentives foradoption, policyincentives, supportenergy-efficient
Incentives energy efficiency support for technologicallighting, policy
innovation support
Future Outlook Stable market withPromising growthContinued Growing market
innovations, focuswith technologydominance withwith increasing
on sustainability advancements innovations, globaltechnological
leadership adoption

2. PEST Analysis

2.TOWS Analysis
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