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Polarization increasingly obvious led industry from price war to value war
- Jun 15, 2017 -


In the whole town to say "Price tide" today, we should jump out of the price to see prices, if led companies are busy to pay attention to price or price, then who cares about the quality of products? If the product of the enterprise depends solely on the cost of raw materials, where is the value of the product?IP67 Waterproof LED Panel Light

Since 2016, with the manufacturing industry's raw material costs rise, "price increase" has become a hot word in various industries, LED is no exception. Especially since the second half of the circuit board, gold wire and other raw materials, as well as the continuous substantial increase in labor, the cost of rent increases, led packaging and downstream applications ushered in the field has never had the "price tide."

Is it an initiative or an industry force?UL Panels 40W.jpg

In fact, starting from May this year, LED has set off a "rising price tide", but the first round of the price rise from the chip field began, from the start of the first shot of the price of electricity, as of now led industry has launched four rounds of price hikes. The price range includes upstream chips, stents, lamp beads, wafers, packaging materials, aluminum substrates and other raw materials, the middle and downstream of the packaging enterprises, as well as the display and even some of the lighting enterprises, the price range of more than 5%-15%.

However, the first three times the price increase is limited to the chip and display RGB field. Still remember a lot of people in the industry predicted that the price can not spread to the field of lighting, and now, with the end of this wave of unusually fierce price hikes, led industry are involved in the "price hike" in the original micro Bo profit, has been the raw material price rise thoroughly eroded.

Each enterprise issued a price increase bulletin, given the reasons for no exception are due to the rise in raw materials and labor costs. But is the price increase really the last straw?

Deputy General manager Wang Gaoyang on the price increase, said, "for the benign development of enterprises, reasonable profit space is necessary, the raw materials prices, we mainly through two routes to maintain the normal operation of the Enterprise, the first, internal digestion, through continuous upgrading process, technical level, efficiency, to strengthen the output ratio, that is, the use of the same proportion of materials under the premise of more industry-standard product output; second, external help. ”

Throughout the decades led development, such a large range of "price hikes" is undoubtedly the first time. Zhang Luhua, director of semiconductor marketing, said that for the packaging enterprises, this round of price increases are not only caused by the industry, but also a strategy for the enterprise to attack. On the one hand, the price of raw materials has exceeded the scope of manufacturers can bear, enterprises need to increase the means to ensure the quality of products; On the other hand, the industry needs to return to the rational level of competition, and the initiative price is undoubtedly a good start.

"We have received a lot of notice of the price increase in the second half of this year, December is an outbreak point." We have been committed to the supply chain management to reduce costs, to achieve the goal of device prices. But the product is the enterprise survival fundamental, we must guarantee the product good quality. Zhang Luhua said.

However, the analyst reserve Ushu pointed out that this wave of LED price rise is only the enterprise for raw material prices to deal with the price of the company's real profit help is limited, so most led manufacturers are actively thinking about the transition strategy, accelerate the transfer to the base market.

The polarization is becoming more obvious

When it comes to rising costs, big companies are hard to bear, not to mention small businesses. Now, the LED industry has become mature, competition is also from the original price competition to the scale and technology. According to the relevant research institutions data, 2017 chip, packaging device prices in the short term still have a rise in space, but with the product cost-effective further promotion, the rise in space is not big. The global LED industry is expected to grow in size from about 10% in 2016 to less than 5% 2020 years.

The slowdown in market growth will also accelerate the reshuffle of the industry. This year, led industry polarization trend has become increasingly obvious. One side is the market centralization of general lighting and conventional products to big enterprises, the number of small and medium-sized enterprises is decreasing, and the other side is to compete with large enterprises, and start to seize the high margin market of small and medium-sized enterprises more and more.

General manager Lin Guiliang also said that the led upstream and middle reaches of the significant increase in production value, but the market share will be relatively concentrated, some enterprises in the expansion of the time to be cautious.

And in the lighting application, to the sun lighting, Foshan Lighting as the representative of the domestic manufacturers, has not been affected by the market competition, through the automated production line import, supply chain and management cost control, in the revenue and net profit are presented two-way growth trend.

Shenzhen City Siu Chi Energy-saving lighting Co., Ltd. Deputy general manager Zheng that the LED industry is gradually returning to rationality, is now the time to do things. "Whether it is a price increase or price reduction, is caused by the law of market development, this is a stage of any industry must be." "In the face of the uproar of the" rising price tide, Zheng so.

From a technical point of view, no matter how the current price of the single commodity, but the future overall product prices will continue to decline. This is because the future of survival must be large-scale, with the expansion of enterprise scale and technological progress, the cost-effective products must be more and more high, which determines the overall product prices will continue to decline.

From price war to value war

True, LED industry development to today, the industry pattern has been basically formed. In the whole town to say "Price tide" today, we should jump out of the price to see prices, if led companies are busy to pay attention to price or price, then who cares about the quality of products? What is the original intention of the enterprise?

If the product of the enterprise depends solely on the cost of raw materials, where is the value of the product? Companies should put "value" first, from the light source itself to think about how the industry should develop, rather than blindly pay attention to the price. At present, the value of LED products can be reflected in health lighting, plant lighting, visible light communication, as well as intelligent lighting. By doing fine, do strong, do high value-added things, to find their own positioning.

In the development of the industry gradually mature in the present, the simple reliance on price competition in the traditional marketing strategy has become somewhat "powerless", led industry has passed the extensive, explosive growth of the primary stage, the price war is no longer the main mode of business, but transfer to high-end product development, technology upgrades to meet the new needs of consumers for the strategic core. Fortunately, there are many led enterprises have begun to realize the importance of product "value", has shifted from price war to value war, and through the "differentiation strategy" in the market to find their own positioning.

In view of the current market competition situation, Guangdong Semiconductor lighting Industry Joint Innovation Center Director/Shenzhen LED Industry Association president Shirong suggested: Faced with the rising cost of raw materials, enterprises must first of all to ensure their own survival problems, the rise is rising, the product quality in the first place, at the same time to eliminate homogenization of competition, to find the difference between positioning.

"When the technology threshold is crossed, the next task is to look for niche and differentiated markets and make high-value-added products." This is also the next step in the development of industry to think and explore the issue. Shirong said.

The new wave of rising prices also indicates that the LED industry is paying attention to the value of the price. Perhaps, led enterprises are aware that the price increase does not mean that the industry's rebound, also can not bring much real profits to the enterprise. Industry to develop, still need to innovate, from the light source nature, to explore more high value-added functions, to promote long-term sustainable development of the industry.

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