Ralaco expands on Vietnam’s LED lighting market boom

As construction began in June 2018, Le Grand Jardin complex located 6 km (3.7 miles) east of Hanoi's center initially had its lighting system part awarded to a foreign company. But Hanco3, the Vietnamese investor of the complex, soon found out the foreign contractor's shortcomings as it had failed to timely respond to problems during the construction of the project's nine residential buildings. Hanoi-based Ralaco, or fully known as Rang Dong Light Source & Vacuum Flask JSC., one of the key LED lighting manufacturers in Vietnam, was then named as the new contractor to take care of the lighting system.

The switch to a domestic firm reflects the latest trend highlighting the preference of Vietnamese lighting brands to their foreign competitors.

Winning property developers' trust has led to an extraordinary expansion of LED lighting manufacturers in Vietnam in recent years. The share of the fully locally produced LED lamps in Vietnam's lighting market jumped to 49 percent in 2019 from below 10 percent in 2014, said a report compiled by the United Nations Development Program, the Vietnam Academy of Science and Technology and Global Environment Facility, and published in December 2019.

Government support and corporate innovation initiatives have actively contributed to the rise.

The Vietnamese government has implemented many projects to raise the efficiency of energy consumption and promote greater use of LED products by supporting domestic LED manufacturers in the transfer of skills, knowledge, and technology as well as raising public awareness about LED lighting benefits. 

On the other hand, initiatives taken by key LED lighting manufacturers in Vietnam have contributed to significant growth. The LED market revenues were estimated at USD 249 million in 2018, a surge from USD 95 million in 2016, and the value is projected to more than triple to USD 818 million in 2024, or a CAGR of 21 percent, the LED Vietnam project report said.

It said Vietnam’s LED lighting industry, with an estimated 200 companies operational, could be divided into three groups, with the first comprising just 3 percent of companies but accounting for a fifth of the market share. Ralaco and Ho Chi Minh City-based Dien Quang, the country's long-standing leaders with modern production lines, standard testing facilities, and R&D centers belong to this group.

Back in 2014, the two held a combined 80 percent of Vietnam's compact fluorescent lamp market share. However, Ralaco, which began LED lamp production in 2008, still struggled in boosting sales of the products, Chairman Nguyen Doan Thang said in 2015.

The company decided to make the most of the advantages offered by the government to domestic manufacturers by actively participating in national-scale lighting projects.

At the same time, it banked on the country's rocket demand for LED lighting given rapid urbanization and the fast growth of the infrastructure sector.

Ralaco has gradually taken control of LED lighting technology, having switched to solid-state lighting technology from discharge lamps in 2019, and gained positive attention for its LED lighting products.

In 2020, Ralaco initiated a digital transformation campaign for the 2020-2025 period, with vision to 2030, under which it has targeted to transform itself into a high-tech company, providing the market with high-quality LED lighting products that meet G7 and G20 standards.

In April 2021, Ralaco signed contracts with Vietnam's top telecommunication group VNPT and the country's leading technology firm FPT to broaden the use of its smart lighting products. 

In the same month, Ralaco secured authority approval to invest VND 2.33 trillion (USD 101.7 million) in building a plant outside Hanoi to manufacture LED products, software, and solutions for lighting systems as well as those for high-tech agriculture.

Ralaco reported the after-tax profit in January-June 2021 jumped 38 percent from a year ago to nearly VND 190 billion. In 2020, the company said its after-tax profit nearly tripled to VND 336.08 billion, from VND 125.17 billion the previous year.

Foreign-invested enterprises represent the second group in Vietnam’s LED lighting industry, formed by some 13 percent of the total LED lighting manufacturers but which account for a market share of up to 20 percent. They target large-scale, premium lighting projects and exports. Therefore, their prices often double to triple the market average.

Furthermore, these companies have invested in high-tech manufacturing plants to meet hyper-competitive demand from their offshore customers. They’ve picked Vietnam which offers the advantage of low labor costs to balance the huge investment.

Small and medium-sized companies, holding between 60-70 percent of the market share and comprising 84 percent of the total companies, make up the third group. In general, these are often newcomers with limited funding, technology, and facility resources. Hence they have to rely heavily on imports, mainly from China, to assemble LED lighting products.

Given the government’s drive on energy saving, coupling with consumers’ switch toward LED lighting products, LED lighting manufacturers in Vietnam are expected to further develop production and expand sales in coming years.  

Inside Rang Dong factory. USA's LED Surface Mount Technology (SMT) production line system with high speed and accuracy, producing 8.5 million sets of drivers and modules monthly

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