Chongqing suffered 7 years itch LED companies how to survive the crisis

Mainland LED overcapacity questioned still diffuse, in this context, Chongqing LED companies have not been spared. As an emerging industry, Chongqing LED industry in just 7 years to obtain rapid development, the number of enterprises from zero to nearly 100. Due to failure to master the core technology, such as chips, along with the growth of the number of enterprises, is the homogenization of intense competition, high costs, shrinking profit margins. Suffered 7 years itch, Chongqing LED industry how to survive the crisis?

The development of limited value enterprises gathered in the annual increase of 30%

The company was officially entered the field of LED in February 2010, after the business is mainly concentrated in the field of television media. "Said the general manager of tiger Photoelectric Technology Co. Ltd. Fu Ning day before.

Think LED lighting industry is following the Internet after the emerging industries, the market prospect is broad, so enter the field of LED. In fact, sharp tiger has been a latecomer in the field of LED. Chongqing LED lighting research and development and Industry Alliance professor Gao Xiaoxia said that the city's LED industry really started in 2005, just a few years on the development of the current hundreds of enterprises.

Increase in the number of enterprises at the same time began to release capacity. Volt Ning said that at present the company's output value in a year of low-power lighting 20 million yuan (hereinafter referred to as the yuan), and will increase production. The general manager of Chongqing NVC Co., Shi Yongjun said: "NVC more than and 200 new products a year, half are concentrated in the field of LED. "

According to the statistics of the Chongqing LED alliance, Chongqing LED industry has initially formed a scale, the annual output value of more than 2 billion yuan, and an annual growth rate of 30%.

Enterprises lack core technology competition profits generally decline

The situation of most LED companies is not so good.

In 2004, when the high-tech zone plant, LED products were in short supply, but the good scenery lasted less than 3 years. Chongqing rui'ao technology limited company manager Jiang Ping did not disclose the specific data, but he said that the current industry profit has been greatly reduced.

Small business worrying, industry giants are not optimistic about the situation. 2011 Annual Report released by NVC show, lighting electrical products gross margin fell 14.7% to $9 million 660 thousand over the same period last year, its gross margin fell 3.9% to 16.4% compared to the same period last year.

Jiang Ping believes that the main reason is the homogenization of intense competition, Professor Gao Xiaoxia also hold the same view. She believes that the LED industry of raw materials, production, packaging and other industry segments, because the downstream industry technical threshold is low, a large number of enterprises get together to enter, "the Chongqing LED enterprises, more than 80% are concentrated in the packaging and application of downstream industries, not only dilute the industry profits, but also makes the homogenization of competition serious".

"The root cause of the LED's tough business is the lack of core technology. An unnamed LED industry experts say, the entire LED industry chain, the upstream chip basically is in the hands of foreign enterprises, enterprises in the middle and lower reaches of the chip is still dominated by imports, due to the upstream chip purchase price does not have the right to speak, resulting in high cost of downstream enterprises, profit margins continue to be compressed".

Chongqing rui'ao technology limited company manager Jiang Ping believes that the LED industry chain upstream enterprises accounted for 70% of the profits, in the downstream together accounted for only 30% of the profits. Sharp tiger Photoelectric Technology Co., Ltd., general manager of volt Ning believes that: the upstream chip industry costs have become the company's main cost. "

In the low-end products in the market lack of pricing power, homogenization makes the product oversupply, in order to digest excess capacity of the backlog of products, the manufacturers played a price war, industry profits are diluted. On the other hand, the price war has given foreign products greater room for lower prices. Jiang Ping said helplessly.

Overcapacity? Or industrial chain development imbalance?

However, Zhou Rongfu, chairman of the Chongqing Lighting Association, said the views of excess capacity: there is no excess capacity in the case of LED industry, high-end products are still in short supply. "

Professor Gao Xiaoxia of Chongqing LED lighting industry alliance development and said that the existing LED industry's problem is that too much investment in the downstream part of the whole industry chain, the upstream production enterprises, including the chip is too small, between the various segments of the industry chain development is not balanced. Zhou Rongfu believes that, because the LED enterprises are mostly concentrated in the middle and lower reaches of the industrial chain, although the homogenization of competition leads to bargain with each other, but because of raw materials, including chip high cost, LED price is still high.

High prices, has become a major obstacle to the promotion of LED. Gao Xiaoxia said. LED street lamp, for example, although a few years before the price fell again, but still more than 2000 yuan, while the price of indoor LED lighting lamps are also tens of dollars to a hundred dollars, far more than ordinary lamps.

LED industry experts also said that the high cost of enterprises leads to LED product prices, the high price makes the marketing difficulties, and scale out and a direct result of the lack of bargaining power in the international procurement of raw materials.

Recommendation: policy support guide

Many experts and industry insiders believe that policy support is the key to promote the development of LED industry. In fact, the LED company has been in good policy. In November 2011, China announced the incandescent exit plan. Recently, the State Council decided to arrange 36 billion 300 million yuan of financial subsidies to promote energy-saving appliances and other products, the