How does the LED industry resolve overcapacity?
In recent years, the field of LED lighting can be described as colorful and all-encompassing: on the one hand, LED lighting has received great policy and market support, and the pace of green energy renewal is accelerating. The influx of enterprises has led to oversupply, and all ends of the industry chain are showing a scene of "high investment and low gross profit". Many manufacturers are facing losses or even eliminated, and the situation is grim.
It is understood that in 2011, LED commercial lighting grew rapidly and was widely adopted by factories, while LED home lighting began to rise in 2012. In the past ten years, a large amount of capital poured into the LED lighting industry, and the compound annual growth rate of the entire market reached 20%-30% %. In recent years, the market growth has been relatively slow. In 2015, the market growth rate was about 2%. In the face of insufficient capacity in the LED lighting market, many manufacturers are still increasing their production scale, which directly leads to overcapacity. In order to reduce the inventory level of enterprises, most enterprises have adopted low-price sales methods, or even "suicide" sales models. This in turn leads the entire market to an unhealthy development model.
At the end of 2015, the Central Economic Work Conference made key arrangements for the supply-side structural reform. Among the five reform tasks of reducing overcapacity, destocking, deleveraging, reducing costs, and making up for shortcomings, the central government prioritized "cutting overcapacity". Local governments have also responded to the central government's reform strategy of "cutting overcapacity". At the local two sessions held recently, "cutting overcapacity" has become the focus of attention. All localities have made "cutting overcapacity" the focus of this year's work, and put forward corresponding measures, and the battle to resolve excess capacity has begun.
According to the performance reports of some listed companies in 2015, it can be described as mixed. The good news is that some companies' profits have risen sharply, and the company's development is in good shape. For example, Sanan Optoelectronics' profit has increased by 5 times; the worry is that some companies' performance has declined in a large area, resulting in huge losses, and the prospects are worrying.
Under the same market background, the two results are in stark contrast. Passive price war is one of the main reasons for the decline in performance, but the key is not understanding the market. Whether it is active to survive or passively resolve, the key lies in whether the entire industry chain can actively face the problem of overcapacity in the LED industry.
So how can we resolve the problem of overcapacity in the industry? The author has organized the following ideas:
First, speed up structural adjustment and transformation of development mode. Adjust the industrial and product structure, actively develop production capacity that meets market demand, and change from scale expansion to focusing on quality and efficiency, so as to improve the overall development level of the industry.
General lighting has become the fiercest "Red Sea", but other areas of the LED industry have yet to be developed and improved. The productivity of smart lighting, visible light communication, LED plant lighting, automotive lighting and other sub-sectors is relatively scattered; the "high-margin" niche market technology needs to be broken through, and the terminal market also needs to be opened. The LED industry should speed up structural adjustment, diversify, and digest excess capacity. At the same time, family workshop-style production units that "only care about production, regardless of quality" should be strictly investigated, and the crackdown should be resolute.
Second, give full play to the guiding and restraining roles of planning, policies and standards, strictly enforce access conditions, strengthen industry access management, improve industry monitoring systems and early warning systems for overcapacity, and strengthen and improve industry management.
Due to the low barriers to entry in the LED industry, in the past few years, a large influx of capital has led to oversupply and a sharp decline in gross profit margins at all ends of the industry chain. Many manufacturers are facing losses or even elimination. According to incomplete statistics, 4,000 LED companies disappeared from the market in 2015. In 2016, the relationship between supply and demand in the LED industry will ease, and overcapacity will become more and more obvious. Rectifying the industry competition mechanism and improving industry standards will affect the life and death of most LED companies in the future. At the same time, we should learn from the practices of developed countries, establish a compensation mechanism for the withdrawal of backward production capacity and its implementation rules as soon as possible, and establish an incentive mechanism to eliminate backward production capacity.
Later, the merger and reorganization of the industrial chain will be promoted, and the process of eliminating "inferior" enterprises will be accelerated.
"Inferior" enterprises occupy a large amount of social resources, but cannot create corresponding social value. Accelerating the merger and reorganization of such enterprises can effectively release the social resources occupied by them, and at the same time, it can maximize the social value of superior enterprises: let The advanced technology, productivity and management level of advantageous enterprises promote the orderly development of the entire LED industry. At the same time, effective mergers and acquisitions can also balance the supply and demand relationship of the market from the source, so that the market can truly lead the direction of industrial development.
In the face of the industry reality that the problem of overcapacity has gradually become prominent, the development of LED enterprises must make corresponding adjustments according to the actual situation. Market competition is cruel, and LED companies need to make adequate preparations to resolve excess capacity. While constantly improving themselves, they can finally get out of the shackles of excess capacity with the help of external favorable conditions.
