Analysis of the reasons for LED's collapse

On the one hand to do low prices, on the other hand, but also to make money, so that some enterprises in the quality of products on the hands and feet. The hands and feet of things simply not qualified, can not be sold out, but in the white hot competition, you do not do others. Earlier this year, the Guangdong Provincial Quality Supervision Bureau announced the 51 batches of LED street lamps and light source controller sampling results, of which 20 batches of substandard, substandard product discovery rate of up to 39.2%.

One reason: rotten goods flooded the market had just closed down in the town of old man mainly do low-end products, and this product in the industry is known as rotten goods, characterized by cheap, quality is not guaranteed. Foshan, an industry source said, in Zhongshan, more than 3 will be able to buy a ball bubble lamp, and in some places this type of light may sell dozens or even hundreds of dollars. On the one hand to do low prices, on the other hand, but also to make money, so that some enterprises in the quality of products on the hands and feet. The hands and feet of things simply not qualified, can not be sold out, but in the white hot competition, you do not do others. Earlier this year, the Guangdong Provincial Quality Supervision Bureau announced the 51 batches of LED street lamps and light source controller sampling results, of which 20 batches of substandard, substandard product discovery rate of up to 39.2%. This means that a large number of substandard LED products are flooding the market.

Reason two: meager profit margins are too sad to raise the residual capacity of the vicious price war between enterprises, so that the LED industry downstream product prices continue to decline, profits naturally diluted. At present, the gross margin of the LED industry is only about 20%, while net profit of less than 5%. In addition to the profit space is compressed, the financing problem has been difficult for SMEs to climb the mountain". According to industry sources, the existence of a series of bonds within the LED industry issues. Many enterprises and suppliers, by letter to ensure the turnover of enterprise funds. According to the general rules of the industry, many people choose to travel to suppliers of raw materials on credit, while allowing the downstream customers to maintain long-term orders in arrears. In this cycle of arrears on the chain, once the company's sales market instability or profit margins decline, the product quality can not meet customer requirements, the chain will break the arrears. SME financing is an indisputable fact. Rising external costs to boost demand for funds, in the case of tight money, SMEs access to credit resources are limited, low financing needs satisfaction. Coupled with the lack of effective collateral for SMEs, the difficulty of loans will increase. Even if the loan to money, interest rates and mortgage loan interest rates are too high, but also to allow SMEs to bear.

Three reasons: the current overcapacity in the survival of the fittest LED market has been saturated, It is often seen. LED industry quick success, overcapacity, vicious competition phenomenon, various enterprises all insist on, dragons and fishes jumbled together, even at a loss to production. However, in such market conditions, LED industry has again become the capital in the eyes of the meat and potatoes. Xishan, Furi Electronics and BYD have entered the LED. LED industry contrarian expansion of the industry, as well as irrelevant enterprises to enter the LED industry, which is bound to further exacerbate overcapacity, further deterioration of market competition. Excessive investment makes the LED industry oversupply, many enterprises are in the lower middle and lower technical barriers.

Future market share will be more and more to the brand, there are channels, innovative business focus, the industry will face reshuffle, there may be a large number of small and medium enterprises to withdraw from the competition.