Stimulating the transition to LED lighting in Asia

99 Pages·2011·7.4 MB·English

ROTTERDAM SCHOOL OF MANAGEMENT, ERASMUS UNIVERSITY ROTTERDAM

Stimulating the transition to LED
lighting in Asia
How do standards for LED lighting emerge in developing countries in Asia?

Master Thesis

24-11-2011

Author: Welmoed Altena – 336943
MScBA Chinese Economy & Business
Coach: Mark Greeven
Co-reader: Peter van Baalen
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Stimulating the transition to LED lighting in Asia
Master Thesis

Preface
The copyright of the Master thesis rests with the author. The author is responsible for its contents.
RSM is only responsible for the educational coaching and cannot be held liable for the content.
Stimulating the transition to LED lighting in Asia
Master Thesis

Acknowledgement
This thesis is written as the final work of my MScBA Chinese Economy and Business at the Rotterdam
School of Management, Erasmus University Rotterdam.
I would like to thank my coach Mark Greeven for his everlasting enthusiasm, profound support and
valuable guidance during the entire thesis process and my co-reader Peter van Baalen of RSM
Erasmus University.
Furthermore, I would like to thank Piet Derks, General Manager Lighting R&D China, Philips
Innovations Campus Shanghai for giving me the opportunity to do my internship at Philips Shanghai,
China as well as the HR-department of Philips Singapore for their support and cooperation. I would
also like to thank Jag Arora, Managing Director of the Asia Lighting Compact (ALC) for sharing her
expertise and her invaluable support.
In addition my thanks go out to Frank Altena, who introduced me to Philips Shanghai and helped me
to arrange the internship.
Moreover I thank the interviewees Mr. Roberto C. Cristobal, Ms. Raquel S. Huliganga, Ms. Napaporn
Phumaraphand, Mr. Luong Van Phan, Mr. My K. Ton, Mr. Stuart Jeffcott, Ms. Kathryn M. Conway, Mr.
T. Sujendan, and Mr. Jürgen Sturm for offering their time and sharing valuable insights.
Finally I would like to thank my parents who encouraged and supported me all the time.

Rotterdam, 24 November 2011

Welmoed Altena
Stimulating the transition to LED lighting in Asia
Master Thesis

Executive Summary
Nowadays it is widely acknowledged that climate change is a severe threat to global development
and top priority on the international agenda. In order to fight climate change, reducing greenhouse
gas emission is essential. Taking into account that energy consumption is the main cause of
greenhouse gas emission, energy efficiency plays an important role within the international debate
on climate change. Within this context, LED lighting, as one of the existing energy-efficient
technologies, provides a lighting solution which uses less energy than most other types of lamps.
Considering that developing economies account for 51 percent of the global energy demand, they
play a major role in reducing greenhouse gas emissions. In many countries in South Asia the demand
for energy is even dominated by lighting. In other words, stimulation of the transitions towards the
adoption of LED lighting across developing countries in Asia, can contribute to reduce greenhouse
gas emissions. Research shows that standard setting is essential to achieve significant improvements
in energy efficiency. However, currently regional standards for lighting quality for LED do not exist in
developing countries in Asia. In order to stimulate the transition to LED lighting, international
organizations and regional associations can be instrumental to set standards within the Asian region.
Numerous organizations and associations are involved in the standard setting procedures and
influence each other, which makes this process complex. Moreover, the great differences between
the countries involved in terms of local conditions make it difficult to develop one overall standard
that can be applied to these countries.
The question arises what how standards for LED emerge in developing countries in Asia and what
stakeholders are involved in this process. In this research paper, both theory on standardization
processes, institutional theory and stakeholder theory will be applied to answer this research
question and analyze which actors influence the standardization of LED lighting in developing
countries in Asia. The scope of this project is developing countries in Asia, including Philippines,
Thailand, Vietnam, Indonesia, and China. The analysis of transnational standard setting of LED in
developing countries in Asia gives us insight into the process of standardization and fits into a
growing academic interest in standardization processes. This study contributes to the existing
literature on standardization theory. Standardization theory is often applied on a technical level, but
research in the field of business is still very limited. In addition, it provides insight into the
institutional and industrial actors that influence the standard setting process of LED lighting in
developing countries in Asia. Especially in this geographical area research in the field of
standardization is limited.
From the case studies we find evidence that diverging institutional environments in developing
countries in Asia have resulted in different perceptions of the relevance, validity and acceptance of
various stakeholders into the standardization process of LED in this region. Institutional variation
influences the effectiveness of specific stakeholders within a particular institutional context. In
conclusion both the context and the role of each stakeholder within the standardization process
affect how standards for LED emerge and what the most important drivers for the standardization
process are.
The countries involved all have to deal with challenges related to the standardization of LED. In China
it is of major importance that small manufacturers gain more knowledge on LED, buy equipment so
Stimulating the transition to LED lighting in Asia
Master Thesis

they are able to test LED, and train their employees so they can reach the international level of
quality control. Another challenge is that China has different regional requirements, especially for
outdoor lighting, given the country’s size and temperature differences between different regions.
Moreover, the patent issue and new industries moving into the lighting market slow down the
standardization process of LEDs. For the Philippines major challenges are related to time and
technical competence. In Thailand, Vietnam and Indonesia lack of testing facilities is the main
challenge. Another challenge in Indonesia is the lack of resources applied to lamps. For all countries
involved it will be a challenge that even if a country adopts the IEC standard for LED, that particular
product that can meet the IEC standards might be too expensive for the local market. Especially for
Indonesia this will be a big challenge.
This study has several practical implications. First of all organizations involved in the standardization
process of LED in Asia should be aware of the developmental nature of the countries which might be
more complex and has its own specific institutional challenges and barriers related to the
standardization process. Moreover, it implies that harmonization of performance standards of LED
lighting across the Asian region is needed to enhance the adoption of quality LEDs in Asia. Since this
study gives insight into the dynamics of standard setting in developing countries and the main
stakeholders involved, it provides a road map what stakeholder to approach and involve in this
harmonization process. In order to achieve harmonization of LED standards regional institutions play
a major role, especially Asia Lighting Compact (ALC), Lites.Asia, En.Lighten and the Regional Centre
for Lighting (RCL). It is important that these organizations cooperate and complement each other.
While Lites.Asia and En.Lighten are more focused on policymakers, ALC is involved with a wider range
of stakeholders, such as the industry, lighting associations and testing laboratories. Since regulation
and standardization go hand in hand, it is important to create a platform to link industry and
government to stimulate discussion between them, for instance about the parameters and levels of
the performance standards. In this way stakeholders involved can build on feedback to give an Asian
perspective on the standardization of LED. Based on this study, it is recommended to first focus on
the standardization of the general lighting segment of LED. However, more research is needed to
analyze what the focus areas are in other Asian countries. Lastly, given the fact that conditions and
needs in developing countries in Asia are different from the developing world, the use of a tier
system (such as the one developed by ALC), will be beneficial. Reason for this is that this takes
minimum performance standards into account, while at the same time it is able to meet specific
needs of Asian countries. In this way good enough will be the way forward for better in the future.

Key words: standardization, LED, energy efficient lighting, climate change, stakeholder theory, Asia,
institutions
Stimulating the transition to LED lighting in Asia
Master Thesis

Table of contents
1 Introduction .......................................................................................................................................... 1
1.1 The international debate on global climate change...................................................................... 1
1.1.1 Energy efficiency and LED lighting .......................................................................................... 1
1.1.2 The role of developing countries ............................................................................................ 2
1.1.3 The role of international organizations and regional associations ........................................ 2
1.2 Research objective and scope ....................................................................................................... 3
1.3 Thesis outline................................................................................................................................. 3
2 Literature review .................................................................................................................................. 4
2.1 Standardization ............................................................................................................................. 4
2.1.1 Definition ................................................................................................................................ 4
2.1.2 Types of standards ................................................................................................................. 4
2.1.3 The standardization process................................................................................................... 5
2.1.4 Standardization regimes ......................................................................................................... 8
2.2 Stakeholder theory ...................................................................................................................... 10
2.2.1 Typologies of stakeholder theory ......................................................................................... 10
2.2.2 Identification and classification of stakeholders .................................................................. 11
2.2.3 The Stakeholder Salience Model: stakeholder attributes .................................................... 13
2.2.4 The Stakeholder Salience Model: the degree of salience .................................................... 14
2.2.5 Summary stakeholder theory ............................................................................................... 17
2.3 Problem statement and research question ................................................................................. 18
3 Methodology ...................................................................................................................................... 19
3.1 Research method and data collection ......................................................................................... 19
3.2 Case selection .............................................................................................................................. 20
4 Results ................................................................................................................................................ 22
4.1 International and regional stakeholders ..................................................................................... 22
4.1.1 Stakeholder identification .................................................................................................... 22
4.1.2 Stakeholder analysis ............................................................................................................. 27
4.1.3 Discussion ............................................................................................................................. 28
4.2 China ............................................................................................................................................ 29
4.2.1 Institutional overview ........................................................................................................... 29
4.2.2 Stakeholder identification China .......................................................................................... 31
4.2.3 Stakeholder analysis ............................................................................................................. 35
4.2.4 Discussion ............................................................................................................................. 36
Stimulating the transition to LED lighting in Asia
Master Thesis

4.2.5 Standardization regime ........................................................................................................ 38
4.3 The Philippines ............................................................................................................................ 39
4.3.1 Institutional overview ........................................................................................................... 39
4.3.2 Stakeholder identification .................................................................................................... 39
4.3.3 Stakeholder analysis ............................................................................................................. 42
4.3.4 Discussion ............................................................................................................................. 42
4.3.5 Standardization regime ........................................................................................................ 44
4.4 Thailand ....................................................................................................................................... 45
4.4.1 Institutional overview ........................................................................................................... 45
4.4.2 Stakeholder identification .................................................................................................... 46
4.4.3 Stakeholder Analysis............................................................................................................. 47
4.4.4Discussion .............................................................................................................................. 48
4.4.5 Standardization regime ........................................................................................................ 49
4.5 Vietnam ....................................................................................................................................... 50
4.5.1 Institutional overview ........................................................................................................... 50
4.5.2 Stakeholder identification .................................................................................................... 51
4.5.3 Stakeholder Analysis............................................................................................................. 52
4.5.4 Discussion ............................................................................................................................. 53
4.5.5 Standardization regime ........................................................................................................ 54
4.6 Indonesia ..................................................................................................................................... 55
4.6.1 Institutional overview ........................................................................................................... 55
4.6.2 Stakeholder identification Indonesia ................................................................................... 56
4.6.3 Stakeholder analysis ............................................................................................................. 58
4.6.4 Discussion ............................................................................................................................. 58
4.6.5 Standardization regime ........................................................................................................ 60
4.7 Comparative discussion ............................................................................................................... 60
4.7.1 Comparative discussion across countries ............................................................................. 60
4.7.2 Comparative analysis standardization regimes .................................................................... 61
5 Conclusion and recommendations ..................................................................................................... 64
5.1 Conclusion ................................................................................................................................... 64
5.2 Limitations and recommendations ............................................................................................. 65
References ............................................................................................................................................. 66
Interviews .......................................................................................................................................... 66
The Philippines .............................................................................................................................. 66
Stimulating the transition to LED lighting in Asia
Master Thesis

Thailand ......................................................................................................................................... 66
Vietnam ......................................................................................................................................... 66
Indonesia ....................................................................................................................................... 66
China .............................................................................................................................................. 66
International & regional ................................................................................................................ 66
Articles ............................................................................................................................................... 66
Books ................................................................................................................................................. 73
Websites ............................................................................................................................................ 73
Appendices ............................................................................................................................................ 78
Appendix 1: Stakeholder questionnaire and basis of questions ....................................................... 78
Appendix 2: Singapore Lighting Energy Efficiency Week .................................................................. 81
Appendix 3: List of laboratories ........................................................................................................ 87
Appendix 4: Existing standards for LED in China ............................................................................... 91
Stimulating the transition to LED lighting in Asia
Master Thesis

1 Introduction
1.1 The international debate on global climate change
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The 16 Conference of the Parties (COP-16) to the United Nations Framework Convention on Climate
Change (FCCC), held on November 29 to December 10, 2010 in Cancun, Mexico, emphasized the
need to urgently address climate change and stressed that climate change is currently one of the
greatest challenges to human development (COP-16, 2011). Today it is widely acknowledged that
climate change is a severe threat to global development. As a result of the growing evidence of the
importance of climate change action, the debate on climate change and the role of greenhouse gas
emissions attracts increasing international concern and is top priority on the international agenda
(WBCSD, 2008). The threat of global climate change has triggered the transition towards emissions
reduction and to global low carbon (CCICED, 2009). The major cause of climate change is greenhouse
gas emission, which is mainly a result of energy consumption. During the Climate Change Conference
in Mexico, the importance of energy efficient lighting solutions to save energy and reduce emissions
has been underlined (ESA, 2010).
1.1.1 Energy efficiency and LED lighting
A report of the McKinsey Global Institute (2008) stresses the importance of capturing the energy
efficiency opportunity as one of the main issues to address in order to drive abatement. So energy
demand can be worldwide reduced by using energy more efficiently. Reducing energy consumption
can be achieved by the adoption of already existing energy-efficient technologies. Taking into
account that these technologies pay for themselves in future energy savings, energy efficiency can be
regarded as the cheapest form of new energy (MGI, 2008a). According to another report of the
McKinsey Global Institute, which specifically focuses on developing countries, the application of
energy-efficient technologies can reduce growth in energy demand in developing countries by more
than half in the period 2008-2020, from 3.4 to 1.4 percent per year (MGI, 2008b). LED (Light Emitting
Diodes) lighting is one of these existing energy-efficient technologies that provides a lighting solution
which uses less energy than most other types of lamps. The main advantages of LED are its increased
luminous efficacy, long lifetime, and low power requirements (Bhusal et al., 2007). Especially in Asian
countries, where local grids are not always reliable, the ability of LED to endure fluctuating power
conditions is beneficial (RCL, 2011). Moreover, LED lighting is one of the very high-return
opportunities in energy-efficient appliances and potentially one of the most cost effective
approaches to abate global climate change by using existing technologies (MGI, 2008b). Hence,
stimulation of the transitions towards the adoption of LED lighting across developing countries and
Asia, can contribute to reduce greenhouse gas emissions and enormously reduce energy
consumption. Important to avoid is that LED will the follow the same path as compact fluorescent
lighting (CFLs), which suffered from poor product quality and lack of a regionally agreed-upon quality
standards. These low quality lighting products with low efficiency levels drastically undermine
energy-efficiency policies. So in order to assure that LED is able to achieve its energy efficiency
potential, clear standards for LED has to be developed and adopted. Currently this can be regarded
as one of the major limitations for the implementation of LED technologies (USAID, 2011).

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Stimulating the transition to LED lighting in Asia
Master Thesis

1.1.2 The role of developing countries
A Harvard Project on International Climate Agreements points out that energy-related carbon dioxide
emissions in the developing world, especially in China, have recently increased even more than
expected (Aldy & Stavins, 2007). Moreover, research of McKinsey emphasizes the important role of
developing economies in reducing greenhouse gas emissions by pointing out that developing
economies account for 51 percent of global energy demand. Along with the rapid economic growth
in this region, developing countries will be responsible for 60 percent of total global energy
consumption in 2020 if current political conditions would not change (MGI, 2008b). In other words,
they have an enormous abatement potential (Enkvist et al., 2007). While developing economies start
from a much lower base, they grow much faster than developed economies. Hence, they can adopt
the most recent technologies at lower cost (MGI, 2007). So although the opportunity to reduce
energy demand by the application of more energy-efficient technologies exists across the world,
especially developing countries have an exceptional opportunity to leapfrog to these energy-efficient
solutions. However, action is needed in order to seize this potential (MGI, 2008b). Also in terms of
constraining economic growth in developing countries, increasing energy demand and insufficient
energy supplies have become a major concern in this region. Energy efficiency will enhance
developing economies to make progress in terms of both energy security and sustained economic
growth (MGI, 2008b). In many countries in South Asia the demand for energy is even dominated by
lighting (RCL, 2011).
1.1.3 The role of international organizations and regional associations
Within the context of the international debate on global climate change, research shows that
governmental institutions play an important role in achieving significant improvements in energy
efficiency by creating the right policy environment that rewards energy-efficient choices and by
setting standards to achieve significant improvements in energy efficiency. Setting government
standards for appliances such as lighting products, is an effective, low-cost way to stimulate a
transition towards more energy efficiency (MGI, 2008b). Currently standards of many countries are
mainly focused on energy efficiency and energy performance, but do not include minimum quality
criteria such as energy, light output and lifetime performance for LED lighting. The incorporation of
quality criteria that are uniform throughout the region would streamline the harmonization process
(USAID, 2011). Besides stimulating the transition to LED lighting, developing performance standards
also enhances quality assurance of the lighting products sold and ensures that the product saves in
fact energy (RCL, 2011). However, currently these standards for LED lighting do not exist in
developing countries and Asia. In order to stimulate the transition to LED lighting, international
organizations and regional associations can be instrumental to set standards within the Asian region.
Numerous organizations and associations are currently involved in the standard setting procedures
and influence each other, which makes the standard setting process rather complex. Moreover, the
great differences between the countries involved in terms of local conditions make it difficult to
develop one overall standard that can be applied to these countries. Thus standard setting and
harmonization of these performance standards of LED lighting across the region are of paramount
importance to enhance the adoption of quality LEDs in Asia. Important to note is that setting
standards on paper requires a country to be able to test for actual compliance and verification
against standards. However, currently adequate testing facilities are often not available in the Asian
region.

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