Energy efficiency emphasized despite high costs

An Expert's View about Sourcing in China

Posted on: 17 May 2010

Regular updates and more stringent requirements encourage companies to focus development on meeting Energy Star, EuP and MEPS standards.


Government efforts to boost usage of energy-saving products in key markets and growing awareness among end-consumers are fueling China's exports of "green" electronic and electrical devices. Additional testing and certification costs, however, are a concern particularly for voluntary standards.


The US remains one of the country's biggest markets. It absorbs more than 50 percent of China's V.htmLCD TV exports, 25 percent of DVD player shipments and 25 percent of amplifier sales. As such, many suppliers claim readiness to comply with Energy Star requirements.


Although an optional efficiency measure, the US' Environmental Protection Agency updates coverage provisions continuously. Version 5.0 for computer products, for example, was released July 1, 2009. Version 4.0 for TVs took effect on May 1 this year, with version 5.0 set for implementation in 2012. Version 2.0 tier 2 for A/V products, meanwhile, will be enforced on July 30, 2010.


The US government offers subsidies to consumers that purchase Energy Star-compliant household appliances and consumer electronics, with California the first state to impose mandatory energy efficiency requirements for TVs.


Most of the major China players that focus on the US are able to meet Energy Star standards, with the majority of products already carrying the label. While technology and additional R&D spending are a challenge, small and midsize suppliers are able to comply with the requirements by subcontracting product development and manufacturing.


The foray of new technologies, including LED backlights, into the mainstream has helped companies of all sizes to meet more stringent requirements, particularly for TVs. Years spent developing LED backlights have resulted in cost-effective solutions for both small and large screens. This, in turn, has encouraged major players to release LCD TVs with LED backlights. Xiamen Overseas Chinese Electronic Co. Ltd, which exports 70 percent of output to the US, has launched 17 new models ranging from 16 to 50in.


Many other tier 1 TV manufacturers such as Hisense, Konka, TCL and Skyworth have started offering full-sized LED-backlit units this year. Konka's TVs meet the Energy Star version 3.0 standard, with version 4.0-compliant prototypes currently under development.


Midsize businesses have also joined the fray, but are concentrating on 32in models and below.


While most makers have managed to work around technology issues, certification costs remain a challenge. Depending on the product, testing and confirmation fees are up to $1,000. This additional expense, while not prohibitive, compounds concerns over higher material and labor outlay.


Air conditioners that need MEPS certificates, for example, are roughly $30 to $40 more expensive than similar models that do not need to comply with the standard. MEPS is a mandatory energy efficiency requirement in Australia.


Moreover, lead times are longer because of more complex testing procedures, which often take a month to be completed. Larger suppliers such as Xiamen Overseas Chinese Electronic and Konka usually have in-house laboratories where inspection and evaluation are carried out before products are sent to third-party institutes.


Voluntary vs. mandatory


Implementing a commensurate price increase is not always a viable option as improved energy efficiency has no direct effect on product performance. As such, several manufacturers forego acquiring Energy Star certification as their US buyers do not require them to do so. In fact, some businesses are not even aware the standard has been updated simply because none of their US clients necessitate compliance.


In contrast, all companies producing home appliances and consumer electronics for the EU have their products tested against the mandatory EuP 1W energy-saving requirement. While mini component system supplier Dongguan Synst Electronics Co. Ltd makes sure EU-bound shipments meet the EuP standard, none of the products exported to the US carry the Energy Star label.


The same is true for Shenzhen Baoan Fenda Industrial Ltd, which sends out EuP-compliant home speakers to the EU and noncertified models to the US. The company, however, has taken steps to follow Energy Star requirements despite the lack of demand from US buyers. Some of its latest releases now meet both EuP and Energy Star standards, and consume less electricity than regular speaker systems.


Suppliers targeting Australia, meanwhile, have to monitor exports and developments closely. The country's commerce chamber meets once a week to audit the energy-saving features of air conditioner imports. Those not meeting MEPS requirements will be taken out of the market. The standard is updated almost every year.


At Guangdong Galanz Enterprise Group Co. Ltd, air conditioners shipped to Australia usually have better cooling performance and energy-saving features than models sent elsewhere. All Australia-bound units have R410A refrigerants, and EER of ?3.3 and ?2.93 for 7,000 to 9,000Btu and 18,000 to 20,000Btu models, respectively.




This article was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.

Posted: 17 May 2010

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