LED industry usher in a watershed

The LED industry has obviously shown signs of recovery this year, but there have been significant signs of icy fire between big companies and small and medium-sized companies. In a number of leading companies in the report to achieve more than 30% of net profit growth at the same time, starting in July of a number of Guangdong Zhongxiao LED companies have bankruptcy. The LED industry believes that the top 100 companies in the LED industry may not add up to 30% market share, so the industry concentration has become a trend, and companies without technology, funds, or brand can only close down or be acquired.

LED industry usher in a watershed

The decline in the price of LED products and the steady improvement in quality have led to a gradual recovery in demand, which has benefited collectively the companies in the upper, middle and lower reaches of the industry. Wang Lianghai, Vice President of Tongfang, once told the reporter in June that he was happy to say that because of the abundant orders, the machines were running at full capacity. At that time, many LED listed company executives also revealed that this phenomenon was not uncommon.

With the release of semi-annual reports of several LED industry chain companies in August, the performance in the second quarter was further confirmed. From the three leading companies that recently reported their results, Sanan Optoelectronics achieved a better growth in its main business; Ruifeng Optoelectronics and Jufei Optoelectronics benefited from backlight and lighting growth, achieving a net profit growth of over 30% in the first half of the year.

However, starting in July, Zhongshan Xiongji Lighting Factory, Zhongshan Shihao Leijing Factory, Shenzhen Everlight Technology, Shenzhen Shifang Optoelectronics and other small and medium-sized LED companies have all suspended production.

For this phenomenon, Peng Chengxue, deputy general manager of Shenzhen Jincheng Electronics, stated that any industry has its own life cycle, and after the market matures, it will enter the oligarchic competition stage and emerge as a watershed.

Increasing industry concentration has become a trend

According to Liu Jun, secretary-general of the Guangdong Provincial Lighting Association, for small and medium-sized LED companies, the government can't get a large order, there is no advantage in quality and price under fierce competition, and there are multiple reasons for improvement in channel construction. Do not withdraw from the grim situation.

Taking government orders as an example, the government will set a general demand, and small businesses will naturally see tears from the government's big orders. In the fierce competition in the industry, some small and medium-sized enterprises win by inferior quality and low cost, and once a certain batch of problems occur, they will be badly affected. "Yoshihiro Nakayama used to sell only three pieces of money before he sold only three pieces. One lamp had a meagre profit, and then he pressed some suppliers' money," said one person in the LED industry.

In terms of channel sales, due to the rapid growth of e-commerce channels, many of the traditional ways of relying on agents and distributors to distribute goods to the next-tier level are no longer as effective as before. E-commerce companies have certain requirements for warehousing, logistics, and Internet operations, and it is difficult for small and medium-sized companies to keep up.

Liu Jun revealed that now many LED manufacturers, channels chaos, many dealers are afraid to rashly agent. In addition, the technology update is fast, almost every quarter the chip upstream light efficiency will increase, prices are declining, dealers are afraid to Yahuo and distribution. Especially in the large-scale situation, the labor costs of large companies are very low, and those SMEs without core competitive advantages cannot naturally resist.

"The top 100 companies in the LED industry may not add up to 30% market share, so the industry concentration has become a trend, no technical advantages, no brand companies can only close down or be acquired." Liu Jun said.

However, Peng Chengxue believes that the failure is the survival of the fittest. After the vicious price competition in the market, the phenomenon that now appears is the return of the normal rational market. The industry still needs funds, technology, and resource thresholds.