AtomSvet: reliable products cannot be cheap
About two years ago our magazine published an article about AtomSvet, a new company in the market of LED lighting products. Vadim Dadyka, the General Director of the Company gives an account of what has changed since that time and what new objectives the company sets for itself.
— We would like to know what strategic changes took place since that time and what the Company and its products are now.
— Firstly, I would like to note considerable progress in certification of our products. Today AtomSvet is the only Russian manufacturer possessing both CE and GS certificates. After the certification the Company may brand its products with quality marks. The first mark, CE can be literally translated as “European Conformance.” The CE marking is mandatory for goods to enter European market, it evidences that the product conforms to the safety requirements of European public health and environment protection regulations and grants the goods the right of free circulation within the EU states (that is more than 27 countries). The GS, “Proven Safety,” is the German quality mark of legislative confirmation of reliability and fitness of a product for sale. In order to guarantee the high quality production facilities, critical assembly stages and internal record keeping, etc., were audited. The certification also involves a number of annual production compliance audits throughout the duration of certificate’s term of validity (5 years) to ensure consistent high quality of production. The RohS Certificate confirms restricted use of hazardous materials, and guarantees protection of consumer health and conservation of the environment.
Furthermore in spring of 2013 AtomSvet completed certification of the Quality Management System for compliance with the international standard ISO 9001-2008. This is extremely important considering the fact that nowadays the reputation of an enterprise in terms of quality becomes the determining factor in its ability to compete in a market. The ISO 9001 Standard comprises universal requirements for all fields of production; however during its implementation experts can adapt the system for a specific enterprise. The specific nature of this type of certification is that not the quality of products is evaluated, but production and management processes of a company. This implies enhancement of effectiveness of all business processes of a company and promotes their integration for the achievement of a company’s strategic targets. To carry out the certification AtomSvet selected the German representative of one of the leading European companies, TÜV SÜD, as the certifying agency.
Certification for compliance with the above-mentioned systems is crucial since it enables us to promote our products in the European market, while in Russia these certification marks are not so valued: there is no confidence in their authenticity and there is an opinion that certification systems are ineffective as such. The inoperative quality control facilities of our market prevent civilized product marketing, they permit the presence of every kind of counterfeit goods and accept unpredictable results of negotiations. On the other hand there are no Chinese products on the European market; they stay in a sort of “spread” where cheap and low-quality products are restrained by certification system and decent, high-quality (Chinese) goods are similar in cost to German or other European goods hence they also do not find a place in the market even if they undergo certification. For this reason the European market is unambiguous and civilized and the main market for China is India, Russia, Asia, i.e. the countries with no quality management market controls.
— Nevertheless these certificates carry no weight in our motherland, while AtomSvet’s products clearly do not belong to the cheap segment. How does the Company conquer the market?
— From the start AtomSvet was oriented on manufacturing a high quality product, perhaps not the cheapest product, actually not cheap in principle. This is based partially on rather expensive Nichia LEDs used by AtomSvet from the very beginning and right up to now. Our product is aimed at a “special” consumer, the one who knows that a good product cannot be cheap.
As an example, in the case with illumination of production facilities, I can make this comparison. Lamp lighting systems (based on metal halide lamps) accumulate a lot of dirt during operation due to the high operating temperatures of lamps and deposition of dust from air circulating at high speed. After the light sources have burned out in lighting fixtures mounted at heights of 20-30 metres they are generally replaced only after a certain number have burned out – so as to make replacement cheaper. That is why illumination of the facility stays much lower than required due to both dirtying of working lamps and presence of burned-out lamps. At the same time it is well-known that reliable LED lighting fixtures with long service life guarantee absence of such problems while saving considerable amount of power. Nevertheless nobody wishes to consider that although LED lighting systems are more expensive to buy, they prove to be much cheaper than lamp-based systems in the course of operation. And when discussing distinction in quality of LED lighting systems it can be compared to the difference in cars made in Germany and those made in Germany, where each finds its buyer but it is obvious that the former will have a much longer life than the latter.
— To promote the industry’s products on the market many producers form associations or partnerships similar to trade unions. This helps to solve many issues collectively, including issues of quality control, and shape a worthy market. AtomSvet is not a member of a partnership of LED or LED-based products producers...
— We believe it to be inexpedient and we value neutrality. Such associations do not solve the majority of issues of product promotion however they tend to take up much time for public activities and lobbying the government.
— Within the recent period AtomSvet significantly increased its expenditure and time dedicated to product engineering, the Company has developed its own optics, casings, etc. What product ranges proved to be the most promising and realistic and what technical innovations of the Company’s engineers and designers appeared to be the most sought after?
— We believe industrial and street lighting to be the most sizable and promising area of development. It is a rather knowledge and engineering-intensive segment with opportunities to compete with high-quality technical products, and the market for this sector is made up by the most competent and reasonable customers with regard to requirements and price. It is even more attractive since we offer our customers lighting products designed for a full range of temperatures from –60 to +60 °С; thus there is no need to elaborate or overpay for a certain climate-specific version. Naturally the segment of household, office and architectural lighting is large but it is the very sector that is loaded with counterfeit and unworthy low-priced goods. As the result it is not feasible to compete with such a composition, and entry into this market makes no sense. Largely these are the reasons why this segment of the market remains as it is for so long, and as yet we see no way out of this situation. The only remedy to this is the development of certification system in our country and product quality control, naturally with government support.
As I have said AtomSvet uses expensive and high-quality Nichia LEDs that are poorly suited for use in cheap products (e.g., community lighting systems, retrofitted lamps, etc.) that is why we are in constant search for alternatives: we purchase the latest products from the most reputable manufacturers, we test them, we produce mockups and engineering prototypes; nevertheless we have so far not found products that would compare to Nichia’s in characteristics: the majority fall short either in luminous efficiency or lose it sharply when heated. At the same time Nichia understands that we are looking for a substitute and it offers its products at a considerable discount, which suits us well.
— What about your own LED? Any prospects of that?
— No, we do not plan to produce LEDs, we understand how complex that would be. We cannot make this sector profitable by starting from scratch, besides no one can guarantee that we can come up with something good.
— What is your opinion on the chip-on-board technology? It is considered to be to be the cutting edge of production of most types of lighting systems. Do you use it?
— This technique raises certain doubts concerning its level of quality in practice: in our opinion it has not yet been brought technologically to an adequate level that is why we do not look to it strategically. Nevertheless we follow the technologies used globally and assess their potential. In this respect we aim to avoid the fallacy of Polaroid, which perfected its photographic equipment with instant picture printout and filled the entire world with these products some time ago. But riding on this success Polaroid missed the more advanced technology of digital photography entirely, it did not recognize its prospects, failed to redirect its R&D efforts and financial investments in time and consequently lost the photo products market hopelessly and completely as soon the new products started gaining consumer popularity. This is not the only example of the battles of technology and it is bound to draw our attention when looking at innovation at our industry.
— We know that you offer your customers not a product, a lighting system, alone, but also a lighting project, lighting design, and a number of related services of product selection for specific order. These all imply investments, time, labour inputs, which will not always be required; moreover some of them may be used by the others for different orders. How profitable is this and does this approach pay off?
— We offer an integrated design and production cycle of LED light sources and lighting systems as well as ready-made solution (turnkey) of transfer to energy efficient lighting systems which comply to every requirement of our customers. Yes, oftentimes we spend time and resources on calculations that are used by the others, sometimes they are not used at all. But, firstly, we know very well to whom we should offer this kind of service, and secondly, our experience is that that sooner or later this customer will come back to us and a project gained will offset the expenses that are not that high, by the way. On the other hand we believe this approach to be our competitive advantage and we always find a way to use it. The Company employs an entire design department that provides full spectrum of engineering services – from designing of facilities of any complexity to warranty and post-warranty servicing of the installed equipment. The experts build lighting and electrical projects with due consideration of all specifications: lighting design with the Dialux software, feasibility study, designing, manufacturing, delivery, installation and warranty servicing.
— As far as I remember this very approach was declared by the Company on the Interlight 2013 exhibition…
— Yes, at that exhibition we took up a large booth in the Forum Hall. We also plan to participate in the oncoming expos: in Frankfurt we have already booked a booth for Interlight 2014. The last exhibition revealed a wide interest in our products by the customers most interested in high quality products. This interest proved to be more pronounced in foreign consumers than in the domestic ones since they saw in the product everything they wished to see there.
— Do you believe that AtomSvet’s products can compete strongly with the existing street lighting systems based on sodium arc lamps?
— Let me make an example from history which directly applies to development and use of lamps. The famous war hero of every major battle of early XX century Semyon Boudyonny felt certain that the cavalry army under his command would defeat any enemy. It was clear, however, that at a certain stage this army will be nothing of a match for tanks and airplanes… The commander, nevertheless, retained the confidence till the very end. This is just the case with LED-based lighting. However you put it progress takes its course and it cannot be stopped despite the hopes of those who try not to notice it. LED light sources have taken deep roots in lighting systems and the confidence alone that lamp-based systems would solve lighting problems is not enough. In this relation AtomAvet has developed a special design of a lighting system intended for highways. Where such a system is installed to replace the existing sodium arc lamp it shows no external difference – the casing is virtually identical to the former one, but it has lighting properties of a LED device.
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