LED lighting companies how to explore the path to survival

LED lighting is still far from popularization, and the entire Chinese traditional lighting companies have started to intrude into this market and turn back into low-quality and low-price disorderly competition. If "photovoltaic" is a bubble, then LED has not yet seen the bubble, it has already shown its old state.

Fortunately, almost no one doubts that LED will eventually enter every corner of the earth. This market is so terrible that it can feed the current lighting companies. But this will take time. Perhaps the Chinese market will enter the LED era faster. The more respected European countries and the United States are equally worth looking forward to.

More importantly, how can LED companies achieve self-purification in this process? LED lighting entry barrier is low, but lack of personality, SMEs how to find their own way of survival?

On April 25, Wu Yulin returned to Frankfurt from Frankfurt. He spent 2 weeks in this famous German industrial city. In addition to attending the world's largest lighting exhibition, he also visited many old customers.

At the exhibition, Wu Yulin saw a phenomenon: 95% of global LED lighting fixtures are purchased from Chinese companies. This made him happy that the scale and professionalism of China's LED lighting industry made it almost impossible for orders to shift from textiles to Southeast Asia, and there was no such concern for at least a few years.

However, the European economic recession is even more a headache. In the exhibition, Wu Yulin’s company Kaxiou Lighting's orders are all from old customers and cannot be ordered by new customers. Other manufacturers have such phenomena, reflecting the weakening of customer demand and barely maintaining the original orders. In May and June, Foshan LED lighting exports fell to the bottom, and then slowly recovered.

For Casio, which is 95% dependent on exports, strengthening domestic market expansion is an inevitable choice. However, in the situation where the public project market has become a “minority game”, how does the commercial photo and home market develop? In any case, there is no doubt that the domestic market has become increasingly fierce with the increasing participation of export-led domestic companies such as Casio.

Enterprises are flocking to the market and leading to price declines. “To go to Hong Kong at the beginning of the year, a 3W LED bulb will cost 20 yuan to make the whole venue boiling, but now the lowest price of the 3W bulb has reached single digits.” Chen Wenji, LED Lighting Division, Foshan Lighting Say.

Wu Yulin has a deep understanding of this point. He told reporters that at the beginning of the year, the LED chip's unit price per watt was about three, and it has now fallen to a five.

Over the past few years, the investment in the LED upstream chip field has been huge. The price has dropped to 30% in 2010. The performance index has doubled from the previous year in 2010, and the average price in the packaging field has dropped by 40% compared with 2010, and the performance is also improving. , but it is relatively slow. "The price of terminal application products is also declining. The original 300 yuan product is consistent with the basic performance of the current 200 yuan LED product."

Enterprises have swarmed into the LED industry, which is a reason for the rapid decline in prices. Wu Yulin said that 80%-95% of lighting companies in Foshan are now making LED transformations, and even Snowfield, a large company specializing in special lighting, has begun to get involved.

As the price falls too fast, buyers are scarcely able to place orders because the prices change too quickly and the chips will be cheaper at any time.

This makes the business very embarrassing. Wu Yulin said that Casio won't dare to hold the inventory, and customers will order it, and they will only purchase packaged chips. In the 45-day delivery period, the losses from price fluctuations can be sustained.

Some companies suffer huge losses as a result. “This year the association conducted research and went to two companies that we thought were doing very well. It turned out that they actually lost a lot of money.” Wu Yulin is also chairman of the Foshan Lighting Association. He told reporters that the two companies are because The stock is too large and the value of the goods depreciates too quickly.

However, the poor performance of the market is not the reason for the complete price. Demand is the fundamental issue. "In May and June, Foshan LED lighting exports fell to the bottom, then slowly recovered." Wu Yulin said.

“A lot of customers are worried about the economic trend in Europe. In addition to German customers basically maintaining purchasing power, customers in other European countries have been greatly affected.” Wu Yulin told reporters that 80% of Casio’s orders were sent to Germany.

In China, the regulation of real estate has also implicated LED lighting, but more problems are that the speed of commercial lighting and home market development is not ideal.

Public project market is "a few people's games"

Many people will ask: In the past two years, the government has been so supportive of LEDs that many public projects have been launched. Why do companies still call for insufficient orders?

It is not surprising that there are such questions. In May of this year, the Guangdong Provincial Government held the "Guangdong Province Promotion and Application of LED Lighting Product Work Conference" to determine the implementation of the "Guangdong three-year popularization of LED public lighting" work program. According to the requirements of the provincial government, in the field of lighting engineering in public roads, public places, government agencies, state-owned enterprises and public finance, or state-owned capital investment projects, new lighting projects will use LED products. The original non-LED lighting products were used at the end of 2014. Before the completion of the transformation. Among them, the Pearl River Delta region is striving to be the first to complete before the end of next year.

According to the policy, the total investment of LED lighting in public places throughout the province reached 2 billion yuan, and the total investment of the 2 million LED street lamp reconstruction project reached 4.89 billion yuan. After the transformation, the annual savings in electricity and lamp replacement costs could reach 1.5 billion yuan. Guangdong Province plans to extract 0.3 cents/kWh from the 1.4%/kWh provincial surcharge for the construction of the city's urban construction surcharge.

The 5 billion yuan market is only a share of the public projects provided by Guangdong Province, and there are many similar projects in the country.

However, public projects are not the games of the majority. Previously, Guangdong Province launched the LED street lamp product evaluation benchmarking system, which audited the application companies in batches. Only companies that entered the benchmarking system were eligible to submit bids to government public projects.

Therefore, Foshan only supported several LED street lamp manufacturing enterprises in batches to test and incorporate the “Guangdong Provincial Green Lighting Demonstration City Recommended Procurement Catalog” in batches, which means that most companies simply do not have the opportunity to enjoy government “welfare”.

Cross-industry alliances cut into business and home markets For most businesses, commercial lighting and home lighting are the deciding factors of fate.

Wu Yulin also focused on this market. Although domestic orders accounted for only 5%, he still made a lot of attempts around the engineering market.

“In Foshan, the LED transformation demonstration projects of Shengping Shopping Mall, Baihua Square, Oriental Plaza, Xinghua Shopping Mall, the municipal government, and Zumiao Temple were all won by me. Although they are all small experimental areas, they are very important for the exploration of the engineering market. Meaning," said Wu Yulin.

Gaogong LED survey said that in 2011 China's LED indoor lighting output value reached 18.6 billion yuan, an increase of 38%. It predicts that China's LED indoor lighting output value will reach 30.6 billion yuan in 2012, an increase of 64% year-on-year; in 2015 it will reach 99.3 billion yuan, and the compound growth rate of indoor lighting output value in the next four years will exceed 50%, reaching 52%.

But this market competition will be very fierce because there are too many participants. Wu Yulin admits that Kathy Europe is not a big company. To achieve the goal of 100 million yuan in sales within two years, Casio must avoid some competitors and use more resources.

He drafted several development plans. In the retail market, Casio is preparing Tmall Mall flagship store, taking e-commerce and avoiding traditional channel competition. In terms of products, Wu Yulin has been planning “intimate lighting” for a long time and will be the main product for replacing downlights in the future. In terms of core competence, Caseyou hopes to drive product value through design.

It is understood that as early as in 2009, Caseyou put forward the design concept of "intimate lighting". The design concept of "Illumination Lighting" is based on different colors of light affecting people's psychology, and more emphasis on the design of lighting fixtures can be adjusted according to different users' different psychological and emotional needs.

Wu Yulin is the president of the Foshan Lighting and Lighting Association, so he likes joining member companies and makes some cake bigger. In March this year, the Chancheng District Economy Promotion Bureau signed an agreement with Foshan Jiabo City to incorporate it into the “Zhanjia Wanjiayi Green Lighting Demonstration Project”. Subsequently, the public lighting project with a value of 100 million yuan was won by 10 local LED companies. The 10 companies were led by Casio.

“Let's work together” allowed Wu Yulin to taste the sweetness. Then the Luminaires Association did a lot of things, such as publishing the Union Packaging logo and the Union Downlight standard.

He disclosed that at present it has also formed a Tsinghua University Alumni Association in Foshan, and will build a "Pan-Furniture Alliance" based on this, and make cross-industry alliance procurement.

Design Breakthrough Apocalypse The LED lighting market has just begun to “baby start” and immediately plunged into homogenous bad competition. How to get out of this dilemma? The "design breakout" of Foshan Kaixiu lighting may become an effective path.

In July of this year, the Spanish design company Inglas has signed a cooperation agreement with Casio, and both parties will cooperate in the LED lighting field. In the field of Foshan LED, this open cooperation with design companies in Europe and the United States is rare.

Ramon Graell Pons, head of INGLASS, said that the European debt crisis is a huge challenge for many companies. "The reduction in industry revenue, design companies rely too much on European companies, and now everyone needs an international perspective." He revealed that many Spanish design companies want to come to China to develop and cooperate with local Chinese companies to enter the Chinese market.

Before this, it was very difficult for Chinese companies to enter the “eye” of the European design system. At the Frankfurt International Lighting and Construction Technology and Equipment Exhibition held in April this year, the most deserted areas in the first few days of the exhibition are often Chinese companies, but in the last few days, the Chinese exhibition area will suddenly become bustling again – European LED companies, design After the company has reached an order, it will purchase from Chinese companies.

"Including all types of branded businesses, Chinese manufacturers only earn about 5% of poor profits, and more than 95% of profits earned by others." Wu Yulin said.

Wu Yulin believes that Foshan LED companies need to seize the opportunities of European and American companies seeking global cooperation after the economic crisis. This is the way for foreign companies to access. German lighting companies are regarded as a model of quality and technology, but their products are often designed from Italy and Spain. The latter two countries have the best design talents in Europe.

LED lighting business market can not open, on the one hand is the EMC contract energy management and other business models temporarily unable to open the situation, on the other hand is the product itself is not attractive.

"Products are too homogenous, Foshan companies are still in accordance with the traditional lighting ideas to develop LED products." A LED industry media said.

Ramon believes that LED can not only meet the lighting needs or environmental protection needs, but also should improve the quality of life of users. "From the design point of view, a product first considers the technical aspects and then uses the experience. In fact, we are more concerned about the user's experience and potential needs." Ramon said that environmental protection and energy saving are just the tip of the iceberg for LEDs. There is still a huge potential demand for development.

Ramon believes that the Chinese lighting market is slowly beginning to accept the elements of internationalization, and the requirements for industrial design are getting higher and higher. Therefore, this cooperation with Foshan enterprises will be a good start.

95% of traditional lighting companies to LED transformation "The next three years, there will be a lot of LED companies can not go on." Wu Yulin that.

LED has always been regarded as an emerging strategic industry, but this young industry is growing so heavy that many people did not anticipate. Many companies believe that LED lighting has not yet been popularized and that the entire market has been flooded with low-cost, low-quality products. The reshuffling and reshaping of the industry will be inevitable.

Industry falls into low-level competition Recently, a blogger on Weibo broke the news that Sylva (Foshan) Lighting Co., Ltd. (hereinafter referred to as Sylvain) had closed down and employees had gone their separate ways. For a time, it attracted the attention and verification of many industry professionals. Although it was eventually confirmed that the factory needed to relocate due to the construction of subways, this kind of collapse was still happening in the country. Among them, the halt of production by Haobo Optoelectronics has pushed the development of China's LED industry to the forefront.

At present, more than 80% of the traditional lighting companies in Foshan have transformed their production of LED lighting. According to public information, at present, there are 8,000 LED companies in China, of which more than 5,000 are in the downstream of the industrial chain and do not have the relevant core technologies. The gross profit rate is very low. In the street lamp market close to the support of the government demonstration project, the indoor commercial and home lighting market has just started, a large number of companies poured into the LED lighting, forming a bubble.

Chen Wenji, chief operating officer of Foshan Lighting's LED Business Unit, said that in the past, Foshan Lighting had made a T8 production project, and a production line would cost 18 million yuan, plus various supporting facilities. The entire project would have to invest hundreds of millions. But doing LED now is not the same thing, a small workshop can produce.

As the price of LED chips continues to fall, the price war has become a game for small businesses. The price of LED lights of the same power on the market is varied, ranging from 5 yuan, 10 yuan, 20 yuan, and 100 yuan. The entire market is disorganized.

Wu Yulin believes that the price can very clearly determine the quality of the product. If the 3C certification standard is strictly followed, the low-price LED can never be off. But it is these products get together at the low end, long-term melee down the price, making the quality of LED products have been questioned, and no profit can be made.

Many companies are facing the risk of failure. By the end of 2011, there were more than 80 LED lighting companies in Shenzhen. Foshan, which is located in the same city as Shenzhen in Guangdong province, also closed nearly 10% of its businesses in 2011.

The industry shuffling depends on the three-year data show that in the field of LED display, companies must maintain more than 20% gross profit in order to earn profit. In 2011, the net profit of the industry averaged about 5%, but this year's gross profit was only about 15%, and profits have shown negative growth.

"Now the upstream and middle stocks are already very large, and the industry reshuffle will start from the middle and upper reaches." Wu Yulin believes that the industry must reshuffle.

According to Zhang Xiaofei, president of the Senior Engineer LED, the LED lighting competition will enter the white-hot stage in the next three years and will determine the industry's top 10 ranking within four years.

However, Xu Liancheng, deputy general manager of Guangdong Zhaoxin Group, did not agree with this view. He believes that most of the market share will still be occupied by traditional lighting brand companies after the market structure is finalized.

Chen Wenji expressed the same view. He introduced that Foshan Lighting has invested 3 LED production lines at the beginning of the year and is now developing rapidly. At present, the market is in the transition period from the replacement period to the popularization period. After popularization, it talks about innovation. The most important thing at present is the competition of channel resources, and the channels are precisely the advantages of traditional enterprises.

"The entire industry will compete on the premise of ensuring quality, which will be a test for the company's production capacity, channels, and procurement." Chen Wenji said.

Industry perspectives Shunde lighting companies in the "supply" status Shunde lighting electrical industry mainly includes lighting fixtures and switch sockets, Shunde regional sales of more than 100 million yuan over 100 companies close to 100, experienced the test of the 2012 economic crisis, orders in various industries decreased Under the circumstance of Shunde, the lighting electrical appliance industry has grown against the trend. This growth is not an occasional one. It is mainly due to the popularity of global LED promotion, especially the accelerated progress of LED promotion in Guangdong Province, which stimulates domestic demand; at the same time, Shunde lighting companies focus on product transformation and upgrading. And structural adjustment, while the construction of its own channels is relatively complete, driven by multiple good news at home and abroad, Shunde lighting companies are in the "supply" status.

The ideas of the owners of Shunde Lighting Appliances are changing. Most of the bosses were too pragmatic in the past. They did not pay attention to product R&D, did not pay attention to brand building and did not pay attention to internal management. Since the founding of the Association, they organized several seminars on product transformation and upgrading, and visited Inspecting and participating in exhibitions and other activities, and at the same time connecting with the Chinese Academy of Sciences, the China Institute of Electrical Appliances, Jiangnan University, the national testing organization, etc., the exchange and sharing mechanism between entrepreneurs is gradually established, in the LED environment instead of the traditional energy-saving lamps and incandescent light The pace of product transformation has been accelerated, product structure has been adjusted, and rewards have been obtained in upgrades and adjustments. For example, the sales of LED lamps for companies such as Benbang Electric, Xingyun Lighting, and Kailes Optoelectronics have gradually increased. In the future market competition, Shunde Lighting plays an important role in lighting in China.

The strength and depth of brand construction in the industry has increased. Since the establishment of the association, each company has not only taken practical actions to improve product quality, but also increased its efforts in brand building and promotion. The strategic cooperation between Kailes Optoelectronics and CBA and “Guangdong Famous Brand” The number of companies applying for the project has gradually increased, and the lighting appliance industry has cooperated highly with CCTV, China Lighting Weekly, and China Lighting News. At the same time, they actively participated in the Guangzhou Exhibition, Hong Kong Exhibition, Frankfurt Show, and the Russian Exhibition. The strength and depth of brand building and publicity were gradually increased, and the most gratifying aspect of Shunde Lighting was its own brand, which precipitated itself in the market. future. With the Leliu Street gaining “China Commercial Lighting Industry Base”, Shunde Lighting Appliance Company will open a new page.

Shunde switch will be a brand new card in Shunde area. Shunde household appliances and Shunde furniture will become household names in the world. Shunde switch will become another new business card following Shunde household appliances and Shunde furniture. The leading enterprises in Shunde switch are mainly Jinjin. Power Electronics, Futian Switch, Junlang Songtian, Baishun Switch, Sansei Electric, Matsumoto Switch, etc., Benbang Switch, Xinhua Switch, Casilo, Daming Rafiel, Mager and other companies have already made a difference in the switch industry. According to incomplete statistics, there are at least 20 switch companies in the country and at least 6 in Shunde. It is believed that with the technological innovation and channel construction in the switch industry, Shunde switch will once again polish the Shunde regional brand, and become Shunde’s reputation and reputation. Degree points, adding a more resounding name to Shunde's regional brands.