South Korea’s disposable lighter industry is recovering.
Domestic disposable lighters, which once disappeared due to being overtaken by imported products from China or Vietnam, have now gained a firm foothold in the domestic market. This is the result of leading in not only quality but also price competition.
There is only one domestic disposable lighter, “ACE” produced by ACE Industry in Yangju, Gyeonggi Province.
ACE Industry was established in 1986 and has built a stronghold in the domestic demand market for more than 20 years by manufacturing lighters that consumers sell for 300 won.
From the fetal movement to the decline of disposable lighters
The manufacture of disposable lighters began in the late 1970s.
A certain industry, Samchi Industrial, etc. introduced technology from Japan to manufacture lighters, and the number of companies increased to more than 30 in the late 1980s. At that time, Samchi Industrial’s “Hot” and Male Match Industry’s “Spark” were among the “hot products of the year” as lighter brands.
Kim Dong-wook, the executive director of Shinwoo Corporation, has worked in the lighter distribution industry for more than 20 years. He believes that the biggest boom was during the 1987 presidential election. He said, “At that time, each candidate’s camp would lobby for orders of 200,000 to 300,000 lighters, and manufacturers could not fulfill the orders at all.” An ACE industry insider also said, “During the boom, the wholesale price of each lighter was 125 won, which is more expensive than now (95 won).”
However, after entering the 1990s, foreign-made low-priced lighters flooded in like a tide, and coupled with business failures, companies began to close down one after another. Due to the decline in the number of smokers and other reasons, the demand for lighters itself remained stagnant, and domestic lighter manufacturers could not see a way out.
Samji Industrial, which was once a representative company, failed after hastily entering the Chinese market and went bankrupt in November 1996. Male match businesses also imported expensive machines from Japan or Germany on the grounds of cost saving, but they could not stand the financial difficulties and went bankrupt one after another. In the end, only ACE Industry became the only industry left in the country.
Winning with similar price and quality gaps
Last year, ACE surpassed Chinese products in the domestic market and took the lead with a market share of 70%. It is expected that the market share will rise to about 80% this year. The secret is simple. The price gap is narrowed and the quality is leading. The current supply price (wholesale price) of ACE lighters is 95 won, which is about 10 won more expensive than Chinese products (about 80 won).
The price gap with Chinese products once exceeded 20 won, but it has been greatly reduced due to the strengthening of the RMB.
People in the lighter industry believe that ACE’s price competitiveness comes from the strength of Lee Ki-cheol (75), who is an engineer. A company official said, “Other companies have introduced expensive automation equipment from abroad and failed to adjust the unit price. (ACE Industry) We manufacture all the machinery from manufacturing to assembly, and we have the original technology, and even automation is connected to support it.”
In terms of quality, Chinese products simply cannot keep up. The light source made of 23 parts must adjust the gas ratio according to the season. The ratio of Chinese propane gas is different when it is cold and hot, and the Ace is fixed at 9%.
The industry commented that although it is better than Chinese products in ignition, the risk of explosion is lower. A company official said, “There is a secret to the independently developed technology.”
The lighter industry shows the way out for small and medium-sized enterprises
Recently, Chinese lighter manufacturers, which have been suffering from rising labor costs, have placed orders for machinery and equipment production with ACE Industries. But ACE Industries refused. A company official said, “If we export machines to China, there is a risk of importing only one machine and copying the original technology. We also refused to visit the factory.”
ACE Industry’s publicity has also contributed to the stabilization of domestic disposable lighter prices. Kim Dong-wook, executive director of Shinwoo Corporation, said, “The wholesale price of ACE is kept below 100 won, so Chinese product importers cannot raise the wholesale price at will.” Kim Se-jong, director of the Research and Coordination Office of the Small and Medium Enterprises Research Institute, said, “The ACE industry is a good reflection of the direction of life for small and medium-sized enterprises.” In other words, they succeeded by digging a well, developing technology there, and training employees, thereby securing competitiveness. Director Kim emphasized, “Many small and medium-sized enterprises seek diversification if they grow a little, and shrink if the economy is bad. It is important to be faithful to one’s job first.”
