Long ago, they used to light up palaces. Then, mansions and five-star hotels. But thanks to China, today they light up the living rooms of even commoners in India. Made in China chandeliers are today available at just a fraction of the price at which the Made in India variety is marketed. And so, importing these bright danglers can mean profits!

Neha Dewan | September 2015 Issue | The Dollar Business

While travelling through the lanes and bylanes of Old Delhi’s Chandni Chowk area, it’s hard not to feel a tug back to the past. Right from the flurry of rickshaw pullers to the scores of vendors offering street food to their enthusiastic patrons, from the hustle bustle reverberating across the crowded streets to the array of shops selling goods at throwaway prices, walking through Chandni Chowk is almost like stepping into an alternate world of charm and mystique. What adds to this is Bhagirath Palace – one of India’s largest wholesale markets for lighting equipment, including chandeliers. Spend a couple of hours in Bhagirath Palace and you can find the best of chandeliers, better than those you have seen even in the most majestic of palaces. Bargain a bit and you can have one of them in your living room. How? Thank China.

Deluge of light

Sitting in his quaint office in Chandni Chowk, Anurag Gupta, Partner, Imperial Glass Emporium, a manufacturer and importer of lights and chandeliers, has an impressive line-up of the latter, most of them manufactured in China. “For a customer, it’s much better to buy a chandelier imported from China. It offers much more value for money. You can’t get the same value for money in an Indian product. Imported chandeliers aren’t cheap. Their prices are roughly the same as those manufactured here. But they are of better quality and last longer,” he replies, when asked why Chinese chandeliers are selling like hot cakes in India.

The reason behind asking the question to Gupta in the first place is Ministry of Commerce’s data, which reveals that India’s chandelier imports have grown at an unbelievable CAGR of 26.7% in the last 10 years, with China accounting for 83% of those imported in FY2015. Interestingly, although much lower in absolute terms, the per unit price of chandeliers exported by India is much higher than that of imported chandeliers. In fact, while the same for imported chandeliers has more or less remained steady over the last decade, that for exported chandeliers has risen almost 3x. Does that mean India is an exporter of high-end chandeliers and importer of cheap varieties? Not really. Firstly, the credit for India being able to import cheap chandeliers should go to China, its manufacturing prowess and the economies of scale it enjoys. Secondly, the per unit price of India’s chandelier exports being high is more a function of just a few high-value products being exported than anything else. “The difference might just be a function of the fact that very few products are being exported from India. When you are manufacturing in small lots, your cost of production is high. The Chinese benefit from economies of scale and hence, are able to export at much lower prices,” adds Gupta.  

Other than the fact that Chinese chandeliers are much cheaper than those made in India, surging imports are also a function of the fact that (a) they are of better quality and (b) it’s easy to import them. For instance, among the many lighting fixtures in Gupta’s shop, one can find a medium-sized Chinese chandelier, which can change colours and can be operated using a remote. What price does it come at? A mere Rs.4,500, including all add-ons – a price unheard of just a few years back.

Thanks to Chinese manufacturing brilliance, chandeliers have become affordable for most middle-class Indians.

In the dump

In the chandelier importing business, margins on offer hover around 10-15% – another reason why chandelier manufacturing has all but stopped in India. This, despite the fact that not so long ago, Firozabad was a major glass making cluster in the country. “Availability of raw materials is a problem in Firozabad. There’s also a lack of interest among manufacturers to invest in machinery, since importing them is a big headache. We don’t even have basic infrastructure here. There is an acute power crisis. Most businesses in Firozabad have shut shop. Some are just doing some handicraft work to export. The industry badly lacks in technology,” Monis Ahmed, Founder, Emanate Home, one of the very few manufacturers and exporters of chandeliers in the country, tells The Dollar Business.  

When asked why did his company get into manufacturing chandeliers, when very high margins are there for the taking by easily importing chandeliers from China, Ahmed replies, “As a brand, we want to distinguish ourselves from others. If we do what everyone is doing, then we will never be able to stand out. These days, everyone is importing. There is no ingenuity when it comes to the product itself. Moreover, since importing is easy, a lot of people try their hand at it, thereby squeezing each other’s margins. Hence, we decided to stay off this crowded trade and created something of our own.”

Lone ranger

Ahmed’s main export destination is UAE, which he describes as a market keen on ‘ridiculous stuff’. He also mentions that China is not being able to compete in the genre he is in, since bulk production, which the country specialises in, makes customisation difficult. “We are being able to compete only because we do things differently. Neither do we lack in will. We think out the box. We try to keep our finger on the pulse and understand the trend. We manufacture products that are not available in the market. We try and manufacturer products even before similar products could be imported into India by others,” he adds with a lot of pride. The prices of blown glass chandeliers that Ahmed’s company manufactures, on an average, start from about Rs.15,000, with crystal ones starting at around Rs.12,000. “Though crystal chandeliers are more aesthetic, it is also difficult to maintain them. They cannot be cleaned easily as each crystal is different and needs to be cleaned separately. The trend is moving more towards metal ones, where there is lesser hassle involved in maintenance,” he says, while explaining the changing trends in the chandelier market, particularly given that the average size of homes in India is getting smaller by the day. Ahmed claims that chandeliers are becoming more retro. “There's demand for the 1920s look,” he adds.

Bright and shiny

Ahmed, however, is a rare breed. The Chinese have an absolute stranglehold over the Indian chandelier market. And making hay while imports surge are importers like Gupta. “Today, there is absolutely no demand for Firozabad’s glass. A buyer gets a lot more value for his/her money if he/she buys Chinese products. Firozabad’s sales will increase only when it starts offering products that offer more value for money. But that will require a lot of factors falling in place. In some ways, you can say the glass industry in Firozabad has backed off completely,” he adds.

So, even though the government is trying to revive India's manufacturing sector, it’s unlikely that Indian manufacturers will pose any threat to Chinese dominance in the near future. An evening in Bhagirath Palace is enough to realise this. The difference in the prices of Chinese and Indian chandeliers is just too wide. It’s difficult to imagine a parity between them anytime soon. Bottom line – if you want to get the royal feel of the bygone era in your living room, buy a Chinese chandelier. But if you want to live like royalty, start importing them!  

Anurag Gupta, Partner, Imperial Glass Emporium

 

TDB: Which countries do you mostly import chandeliers from?
Anurag Gupta (AG): We purchase chandeliers from some local vendors who import from Austria, Egypt and Germany. There are also a few Italian companies present in China who we import from. All of the rest of our imports are from China. In terms of a breakup, European products account for just about 2% of our imports, with rest of the 98% being sourced from China.

TDB: Despite the fact that Firozabad is a major hub for the glass industry, why do you think are India’s chandelier imports continuously rising?
AG: Today, there is absolutely no demand for Firozabad’s glass. A buyer gets a lot more value for his/her money if he/she buys Chinese products. Firozabad’s sales will increase only when it starts offering products that offer more value for money. But that will require a lot of factors falling in place. In some ways, you can say the glass industry in Firozabad has backed off completely. The government too hasn’t offered any support.

TDB: How do Chinese chandeliers differ, in terms of quality, from those made in India?
AG: Chinese chandeliers are of better quality and are also priced better. I think these two factors are more than enough for a customer to make a purchase decision. Chinese glass too is crystal clear, unlike what is manufactured here. Hence, even crystals, which are a major component in chandeliers, are manufactured in China. For a customer, it’s much better to buy a chandelier imported from China. It offers much more value for money. You can’t get the same value for money in an Indian product. Imported chandeliers aren’t cheap. Their prices are roughly the same as those manufactured here. But they are of better quality and last longer. There’s not a single large Indian company, which is into lighting or chandeliers. We don’t even have one big chandelier factory in the country. But in China, there’re lots of large brands that into chandelier manufacturing. It has now become the lighting capital of the world.

TDB: When it comes to pricing, on an average, how cheaper are Chinese chandeliers?
AG: There is no comparison at all. Their product quality is different and they don’t make what is manufactured here. So, no comparison can be drawn between Indian and Chinese chandeliers.

TDB: The per unit price of India’s chandelier exports is substantially higher than that of imports. Is there a big difference in quality as well?
AG:The difference might just be a function of the fact that very few products are being exported from India. When you are manufacturing in small lots, your cost of production is high. The Chinese benefit from economies of scale and, hence, are able to export at much lower prices.

TDB: What do you think needs to be done to boost chandelier manufacturing in India?
AG: About 90% of the chandeliers you see in the market today are imported. But I think, the new government is very keen to revive the country’s manufacturing sector via initiatives like ‘Make in India’. The main problem, however, is the mindset of customers. They are very suspicious of the quality of India-made products and hence, are just not ready to loosen their purse strings. On the other hand, when it comes to an imported product, they don’t even give a second thought to its price. It would be of great help if we can be taught how to manufacture top quality glass. To do that, the government needs to set up training centres. Even on the financial front, if the government subsidises the industry in certain areas, I am sure our ability to compete with the Chinese will rise significantly.

Monis Ahmed, Founder, Emanate Home

 

TDB: Most in the lighting industry in India import chandeliers from China, instead of manufacturing here. Why did you take the manufacturing route?
Monis Ahmed (MA): As a brand, we want to distinguish ourselves from others. If we do what everyone is doing, then we will never be able to stand out. These days, everyone is importing. There is no ingenuity when it comes to the product itself. What we have is a passion for manufacturing in India. Moreover, when you manufacture in your own country, you tend to create more jobs and give back to the society. Secondly, by manufacturing ourselves, we are being able to differentiate our finished products from the rest. On the other hand, since the Chinese manufacture in bulk, they can’t make customised and differentiated products for you.
TDB: What are the advantages and the disadvantages in manufacturing chandeliers vis-à-vis importing? Do you have plans to import in the future?
MA: Unless you import something in bulk and are able to sell the entire stock, importing doesn’t make sense. Moreover, since importing is easy, a lot of people try their hands at it, thereby squeezing each other’s margins. Hence, we decided to stay off this crowded trade and created something of our own. As a manufacturer, we also enjoy the advantage of being able to import something and then modify it as per requirements. Time is also an issue when it comes to imports. If we want a product in two weeks, we can’t rely on imports. But as a manufacturer, meeting deadlines is in our own hands. As far as importing in the future is concerned, yes we might. The technology that we have in India, to manufacture chandeliers, is not that great. Raw material availability isn’t too good either. Imported chandeliers are clearer than those made in India. This, since the glass they use is of far superior quality. The Chinese are being able to do all this because their government supports them. It gives them subsidies. It provides them land at a reasonable price. It also offers them tax rebates and good infrastructure. On the other hand, in Firozabad, forget everything else, even power is barely available for six hours a day. Given this, how do you expect us to compete with the Chinese?
TDB: Despite the presence of a major glass cluster in Firozabad, India’s chandelier imports have grown at a CAGR of 26.7% in the last 10 years. Where do you think lies the gap?
MA: The main gap is in quality. Availability of raw materials is a problem here. There’s also a lack of interest among manufacturers to invest in machinery, since importing them is a big headache. We don’t even have basic infrastructure here. There is an acute power crisis. Most businesses in Firozabad have shut shop. Some are just doing some handicraft work to export. The industry badly lacks in technology.
TDB: How then are you being able to compete?
MA: We are being able to compete only because we do things differently. Neither do we lack in will. We think out of the box. We try to keep our finger on the pulse and understand the trend. We manufacture products that are not available in the market. We try and manufacture products even before similar products could be imported into India by others. This is how we excel.
TDB: On an average, how cheaper are Chinese chandeliers?
MA: They can even be 50% to 80% cheaper. They enjoy economies of scale. The more they manufacture, the cheaper their products become. Their work ethics is better as well. They work hard and show up on time. In China, you will find women running stores and handling the front-end of the business, while men would be in factories handling the backend. They are very methodical.