After a decade of turning to mainland China as a low-cost production site, Taiwan lighting-fixture makers increasingly see their local start-ups in their neighbor to the west as a significant threat in low-margin markets, forcing them to exploit new niche markets higher up the industry's food chain.

One of the most promising markets is the high-end industrial/commercial lighting sector, where barriers to entry are relatively high and the number of competitors consequently low. In order to succeed, however, producers are finding they need strong research and development capabilities, high-quality products, and the right strategies to keep pace with an ever-changing market.

Producers tapping the high-end industrial/commercial lighting sector also need to meet higher safety requirements and precision levels, plus greater compatibility and durability. Most Taiwan companies in the segment have chosen to develop and produce selected key parts and components that are crucial in maximizing the safety and durability of their lamps. For example, many leading industrial/commercial lighting- product makers on the island, especially producers of high-intensity discharge (HID) lamps, have set up their own ballast plants to further elevate their competitiveness by cutting costs and to ensure product quality.

Another prerequisite for makers of high-end industrial/commercial lighting products is to obtain certifications under safety-standard regimes recognized around the world. Such certification is expensive to obtain and maintain, so many lighting makers in Taiwan have chosen to concentrate sales in a few targeted markets to minimize the number of safety certifications required.

While most of the local companies specializing in high-end industrial/commercial lighting have unique strategies for product and market development, all share a common commitment to continually turning out new products to stay abreast of the most powerful trends in the industry, such as the growing popularity of HID lamps.

Market Focus

Variable Luminaire Ltd., a leading maker of commercial lighting, has enjoyed considerable success over the past 13 years through a combination of high quality and a tight focus on the U.S. market, according to company president Chen Shih-huei. Chen also attributes his company's steady rise to its integrated operation strategy, including constant new-product development and streamlined operations.

Many of Variable Luminaire's products are inspired by commercial-lighting products developed by leading European makers, though modified to suit the U.S. market, Chen says.

This strategy, he says, is more difficult than it may at first appear, since European lighting products are often integrally designed, while in the U.S. market the safety-protection devices (including power- supply systems) used for recess lights and surface trims need to be separated. Such work, Chen says, involves complicated R&D work in the areas of materials, structures, and heat-dissipation, as well as knowledge of patent rights. Variable Luminaire prides itself in having a competitive edge in all of these regards.

Since Variable Luminaire concentrates exclusively on the U.S. market, its products only need to be UL certified. The company has an in-house lab that simulates UL testing procedures in order to accelerate product-development work. Chen claims that few local rivals are a true challenge to his company because Variable Luminaire is willing to pay the huge annual fees required for UL certification.

By producing only high-end items with high margins, he continues, the company can limit its head count (but employing more highly qualified people), and can as a result provide good employee benefits which reduces staff turnover.

In order to ensure the highest product quality, Variable Luminaire produces the transformers used in its halogen lights. Variable Luminaire recently demonstrated its T92 recess-light series (in models featuring one to six lights), which can serve as both spotlights and downlights with a simple adjustment of angle. The series is ideal for use in upscale commercial spaces. In addition, the high-end surface coating and elegant styling of the new series make the lamps an attractive decorative addition.

Variable Luminaire is now developing HID recess lamps with the latest 80W PL energy-saving tubes. The new line is expected, says a confident Chen, to set a new design paradigm in the high-end commercial-lighting market.

Recessed Lights

Another company that has found its niche in the high-end industrial/commercial lighting sector is L&C Lighting Enterprise Co., which was established in 1989 and has grown to become one of the largest recess-light makers in Taiwan. L&C's products, mainly high-end recess lights, are widely welcomed in the U.S. and Canada.

L&C has moved its production to an 800-employee plant in Guangdong Province, mainland China, maintaining its large R&D operation in Taiwan. The center has developed a host of new products over the years, helping L&C rapidly expand into new fields such as spotlights, light-emitting diode (LED) emergency lights, under-cabinet lights, and track lights. Mike Liao, L&C chief engineer, says that his company is the only recess-light maker in Asia with its own UL-1598 luminaries- certification laboratory, underscoring the company's commitment to R&D as well as quality control.

In recent years L&C has been actively developing HID lamps for high-end industrial/commercial illumination. The company's strategy in the new segment is to constantly turn out new products and develop and manufacture its own HID ballasts.

L&C offers a comprehensive selection of HID lamps suitable for 30W to 150W bulbs as well as PAR, single-end, and double-end bulbs. The company's HID ballast has been granted UL and ETL approval in both the U.S. and Canada.

According to Liao, L&C-made HID ballasts are highly compact and durable. Thanks to their sophisticated circuit designs, the ballasts compare well with those of the global leader, Matsushita of Japan. L&C HID ballasts are suitable for use in various environments, making them ideal for both high-end industrial and commercial applications.

In order to provide the highest-quality HID lamps, L&C buys its bulbs from the world's top brands, including GE, Osram, and Philips. The company also plans to provide a cutting-edge goniophotometer (a spectrum-distribution measurement instrument) for its design department to develop even better products for the high-end industrial/commercial market.

Other R&D projects on the drawing board at L&C include the development of 400W and possibly even 1,000W industrial-use sodium lights. Liao says that the ratio of high-end commercial and industrial lighting products in his company's overall production is expected to steadily increase in the coming years.

Ceramic Metal Halide

Another leading company in the high-end commercial lighting line is Carry Beam Co. Carry Beam concentrates on the production of high-end ceramic metal-halide lamps, which offer the best color-rendering among HID lamps and also command a high price premium.

Carry Beam chairman William Wen states that his company chose to concentrate on ceramic metal- halide lamps due to the high profit margins relative to other kinds of HID lamps, saying that his company's competitive advantage in the segment is its ability to design and produce the specialized ballasts used in the lamps.

Carry Beam also claims a cost advantage as the largest trader of Philips ceramic metal-halide bulbs in Asia. Wen claims that most of its customers seek to buy the complete lamp units (including bulbs) directly from Carry Beam in order to save costs and time--greatly enhancing the firm's overall competitiveness and customer satisfaction.

Carry Beam currently produces special- specification HID ballasts at its plant in Fujian Province, mainland China. Wen say that it takes a relatively long eight minutes to make customized compact ballasts for the ceramic metal-halide lamps. The company produces general-type ballasts elsewhere in the mainland at joint-venture facilities in which it has controlling stakes.