LED market "flood" restricts the development of the industry

Driven by the lure of the government subsidy policy, the number of LED companies in the same market suddenly increased sharply, and the production capacity would be excessively surplus. This will inevitably cause market turmoil and create a vicious circle of competition for the market, which is also not conducive to the development of the LED lighting industry.

Recently, although the Chinese market is in good condition, the problem of excess capacity still exists. At present, the low threshold of LED lighting industry, coupled with the government's high subsidy and preferential taxation policies, has led to the entry of a large number of companies, resulting in serious overcapacity of low-end products. LED excess capacity is mainly due to too many companies. There are as many as 7,000 LED companies registered in China, plus some small workshops that are not registered and some 3-5 small work groups hiding behind the registered companies. There are numerous companies engaged in the LED lighting industry.

The existence of numerous small and medium-sized enterprises and small workshops has caused serious overcapacity in low-end products, leading to vicious price competition. It is understood that LED lighting products in a short period of two years, the product prices have experienced a roller coaster, the market price has been reduced from the original 180 yuan to 20-30 yuan. At the same time, there are still a lot of low-priced, low-quality products with prices ranging from 10-15 yuan.

Analysis of the reasons that hinder the progress of the LED lighting industry:

How often does the product quality issue have a market share?

LED lighting quality problems, technical content issues, research and development and patent issues are the first priority for small businesses. The homogeneity of the products, but the quality is not enough, they had to compete at a low price, and a large number of low-cost shipments caused a serious return. At the same time, companies could not guarantee after-sales service. This is the commonality of Chinese LED small businesses. Two years ago, the days of LED small businesses were not sad at the moment. The high price of LED lamps on the market made it possible for small businesses to have a huge living space. Many small businesses developed into medium-sized companies. The lighting market is not standardized, and the period for this problem is quite long. The atmosphere of the lighting market is not very good. As a result of inferior packaging, consumers' impression of LED lamps is greatly reduced. The low price war has continued for several years in the lighting market. In recent years, with the help of relevant government departments, the media, and public opinion, many companies have settled in, and at the same time, many small and medium enterprises have withdrawn from this stage.

After entering the traditional off-season of the lighting industry, small businesses are even more difficult. The quality of the product itself has a lot of hidden dangers. In the first half of the year, the follow-up growth in sales volume is to face more and more returns, and customers no longer renew their orders. This is mainly caused by quality problems. This is not the case for medium-sized companies, let alone small businesses.

LED SMEs account for a larger market

The investment in technology research and development is not enough. Most of them are based on other people's formulas and have no proprietary intellectual property rights. The performance of products is also far behind that of foreign companies.

It is understood that energy conservation is an important issue for China in the current context of rising global energy shortages. In the field of lighting, the application of LED light-emitting products is attracting people's attention. LED is a new type of green light source. Products must be the trend of future development. In the 21st century, we will enter the era of new lighting sources represented by LEDs.

Although China is already the world's largest producer of LED lighting, it has so far led the industry in pricing and patent rights in China, which has severely constrained the development of China's LED lighting industry. At present, China's LED lighting industry is still large but not strong. The above points eventually led to China's LED lighting has been in the low-end market, the domestic high-end LED lighting market has been occupied by foreign LED lighting brands, domestic enterprises can not match.

At the same time as low-price competition, due to the relatively low barriers to entry in the LED lighting industry, the industry has been in a state of overcapacity. At the same time, the end of the market, such as home appliances, has shrunk dramatically, leading to the operation of domestic LED companies and experiencing unprecedented difficulties.

Loss of standard LED industry entered the "Warring States era"

“The biggest obstacle to the development of the LED industry is the lack of standards. Due to the lack of domestic LED lighting industry standards, this huge market of hundreds of billions of yuan is still plagued by competition, which has become a barrier to the further development of the industry. The standard is not uniform, The industry has brought fierce competition, the more low-end prices can become more popular, some foreign customers are willing to choose low-priced LED lighting products and ignore the product itself, coupled with the lack of a unified certification standards in the country, products are mixed, and price competition is becoming increasingly fierce , The domestic LED lighting industry entered the "Warring States era" is inevitable.

Is price war a key or a weapon?

In order to occupy more market share, many LED lighting companies are still entangled in the brutal price war, due to rising raw material prices in 2011, product prices fell, leading to the decline in the profits of LED lighting companies, not only the domestic LED lighting companies, some foreign The LED lighting brand also joined the price war, in order to occupy the market, LED manufacturers do not hesitate to fight the price war "enclosure movement" to seize market share, followed by a decline in profits. The profit of manufacturers in the price war has dropped significantly, which makes it difficult for enterprises to use profits to develop in the future development. However, not participating in the price war, LED manufacturers are also afraid of losing their favorable position in the market, and will be adversely affected in the future.

To profit or to market, this has become a dilemma choice for LED manufacturers, high prices can bring high profits but it is difficult to increase sales, low prices can seize the market but it is difficult to guarantee profits. For LED manufacturers involved in price wars, profits and the market seem to have become a pair of unmatched fish and bears.

However, is the fact that this is true? Seizing the market can only be achieved through sacrificing profits. If there is no profit, what is the significance of blindly seizing the market for the survival and development of a company? In fact, the price war has become a core technology and no product features. The company's simple means of competing for the market. At present, more and more companies have realized that the price war is simple and crude, and they have a clearer definition of the market's understanding and positioning, so that they can escape the quagmire of price wars and achieve a double harvest of profits and markets.

In order to ease their own pressure and deliver on low-price contracts, many lighting companies have appeared shoddy actions on products, and the quality of products cannot be guaranteed, which has caused many consumers to suffer. In 2013, the price of China's LED lighting industry always went up and down, which brought certain troubles and unspoken rules to the LED lighting companies and consumers.

The price of LEDs is getting lower and lower, and the quality is getting worse and worse. The LED companies themselves have not recognized their value. He believes that only companies and consumers recognize the value of LED, naturally accept the price, can not rely on low prices to win the market.

However, there are many ways to deal with the unspoken rules of the industry. LED companies should formulate their development strategies in light of their own actual conditions. Low-cost strategies put higher requirements on the overall strength of the company's technology, capital, and scale, and blindly follow the trend. They may suffer losses, so the price war is not the only way for LED companies.

The exchange of low prices for the market should be the means of market competition, not the ultimate goal. LED companies must not only improve their production technology, increase production efficiency to reduce costs and gain profits, but also increase technological content, increase product value, and shift product competition from the price battlefield in order to achieve more comprehensive and longer-term development. The fierce competition occupies an advantageous position; the company's core strategy must be to return to shaping the brand value, firmly grasp the bottom line of quality, in the long-term competition, seek management and quality improvement, and let the products in the domestic and international markets Take a place on it. With a lower selling price to seize the market, the industry has thus fallen into a chaotic and competitive situation, which threatens the survival of the company.