Three reasons tell you why led companies will go bankrupt?
Reason 1: Survival of the fittest by overcapacity
At present, the LED market is saturated, and the LED industry is eager for quick success, overcapacity, and vicious competition. Various companies are mixed, and everyone is insisting that even if they lose money, they must produce. However, under such market conditions, the LED industry has once again become a sweet pastry in the eyes of capital. Xishan Coal & Electricity, Furi Electronics, BYD, etc. have entered LED. Companies in the LED industry have bucked the trend and expanded their production, and unrelated companies have entered the LED industry, which will inevitably lead to further intensification of overcapacity and further deterioration of market competition. Excessive investment makes the LED industry oversupply, and many companies are in the middle and lower reaches of lower technical barriers. In the future, LED companies will face the cruel survival of the fittest. Only a few companies will gradually grow, and more companies will face the fate of being eliminated.
From this perspective, blindly following the trend and expanding production capacity will not only fail to make the enterprise bigger, but on the contrary, it will become smaller and smaller until it is ruthlessly eliminated. Therefore, it cannot be done because of the big ones.
In addition, most of the small and medium-sized enterprises in the industry are making downstream LED lighting products, and there are many small workshops and factories. Due to the relatively low capital and technical requirements for terminal enterprises and the low entry barriers, competition in this field is extremely fierce. In the future, market share will be increasingly concentrated in companies with brands, channels, and innovations. The industry will face a reshuffle, and a large number of small and medium-sized enterprises may withdraw from the competition.
Reason two: It is too difficult to raise funds with meager profits
Excess capacity has triggered a vicious price war between companies, which has caused the product prices of downstream companies in the LED industry to continue to decline, and profits are naturally diluted. At present, the gross profit margin of the LED industry is only around 20%, while the net profit is less than 5%.
In addition to the compression of profit margins, financing issues have always been a "big mountain" that SMEs are difficult to overcome.
The problem of "serial debt" is widespread in the led industry. Many companies cooperate with suppliers and rely on credit to ensure the turnover of corporate funds. According to the prevailing rules in the industry, many people choose to credit upstream raw material suppliers while allowing downstream customers to owe money to maintain long-term corporate orders. In this chain of arrears, once the company's sales market is unstable or profit margins decline, and the product quality cannot meet customer requirements, this chain of arrears will break.
Reason three: "bad goods" flood the market
The recently closed "Xiong Ji" mainly makes low-end products in Guzhen, and this kind of product is called "bad goods" in the industry, and it is characterized by cheap price and no guarantee of quality.
You can buy a bulb lamp in Zhongshan for more than 3 yuan, and in some places this type of LED lamp may cost tens or even hundreds of yuan. To lower prices on the one hand, and to make money on the other, some companies have made a lot of effort in product quality. What you do is not qualified at all, and you cannot sell it, but in the fierce competition, you don't do what others do.
