Behind the high growth, "does the chaos" LED industry is self-help or rescue?

The unfortunate LED is that the photovoltaics are still red for a while, and they are not in the upper position, they are already in deep trouble. Structural overcapacity, like a serial killer, puts down the photovoltaics and trips over the LEDs. Who will save the LED? Is it self-help, or is he saved? Looking for the mayor, or looking for a market?

The country's first LED industry plan was abandoned

Shenzhen City abolished the "Notice on Printing and Distributing the Shenzhen LED Industry Development Plan (2009-2015)", which triggered the industry's concern that LED will follow the PV.

As for why the abolition, Shenzhen LED industry insiders introduced, the Shenzhen Development and Reform Commission explained that "the "Planning" proposed some of the policies, especially the financial and industrial support policies, have been involved in other levels of policy development. There is no need to use this "plan".

However, just in March of 4 years ago, when the Shenzhen Municipal Government issued the "Planning", it also vowed to call it the action plan for the scientific development of the LED industry in Shenzhen. "Through the implementation of this plan, Shenzhen will build an important LED industry R&D and production base nationwide and even globally." Moreover, it is also the first LED industry plan in the country, and other related plans formulated by many other cities are based on it.

What is more noteworthy is that Shenzhen has always played the role of the leader of the LED industry in China. Take the data of the “Planning” as an example. At that time, the distribution of domestic LED enterprises was 44.3% in Shenzhen, which was nearly twice that of the second-ranked Guangdong Province, 24.7%. If the two add up, the whole Guangdong region The number of enterprises has taken up more than half of the country. Therefore, the LED industry situation in Shenzhen has basically represented the development of the industry in China. Therefore, this time, Shenzhen’s sudden paper-breaking of LEDs naturally attracted speculation that the industry has already entered a difficult situation.

Zhongke Goode Lighting is a LED enterprise born and raised in Shenzhen. The company's general manager Luo Qi said in an interview that the news that "Planning" was abolished has not been known, but the industry has already felt the difficulties of the industry. The focus of attention is mainly on the cost of production, the cost does not come, and the overcapacity is inevitable. In this case, it is not surprising that policy changes have occurred. For most people, in the face of Shenzhen’s abolition of the “Planning”, they are worried that the government has lost confidence in this market. For an LED industry that is still in the development stage and the market is still immature and needs support, As a result, it may fall into the situation of “four sides of the song”. Like photovoltaic companies, it will enter a period of painful sorting, and some uncompetitive enterprises will fall down. According to Zhang Xiaofei, CEO of Gaogong LED, there may be 1/5 LED lighting companies in China in 2013.

The “more mess” behind high growth

One side is called the sunrise industry, and the other side is being cast aside by the government. What happened to the LED industry?

In a random interview, the reporter found that for many people, LED is still a very strange word, a high-tech item that still stays in the laboratory. China's LED industry started in the 1970s, accompanied by rapid economic growth and leaps and bounds. According to industry insiders, since 2003, China's LED industry has shown a rapid, sustained and stable development trend. “Last year, LED maintained a growth rate of around 20%, and the industrial scale was about RMB 190 billion. Currently, the LED lighting industry covers upstream and downstream industrial chains including epitaxy, chips, packaging, and application products.” Other data show that in 2012, LED Applications in the lighting sector have maintained a 40% growth rate, with lighting applications accounting for 28% of LED applications.

However, it is undeniable that behind these glamorous data, it is the embarrassing side of the development of China's LED industry. Although the development speed is fast, the actual application rate is not high. Until now, the market share of LED lighting in China is less than 10%, and these products are mainly low-end products. At a time when the global economy is down, the sales market is shrinking, and companies naturally face a severe test.

According to the statistics of the High-tech LED Industry Research Institute, in 2012, there were more than 80 LED lighting companies in Shenzhen, and nearly 10% of lighting enterprises in Foshan closed down. The LED lighting enterprises in Dongguan and Zhongshan also fell into a cold wave. "In 2013, China's upstream production of LED epitaxial chips will be more competitive. It is not ruled out that some enterprises cannot support it." Chen Yansheng said.

At the same time, many LED companies showed a significant decline in both revenue and net profit in 2012. For example, Dehao Runda, a well-known LED chip company in the industry, achieved a net profit of 168 million yuan in 2012, down 57% year-on-year. Silan's revenue in 2012 decreased by 12.74% year-on-year, and net profit decreased by 88.07%. In 2012, Guoxing Optoelectronics' revenue decreased by 11.87% year-on-year, and net profit decreased by 66.45%.

For the industry dilemma, industry people have feelings. "The company's orders and sales have developed well in the first half of last year. From the second half of the year, especially after October, to the Spring Festival this year, the development situation is obviously not very good. After the Spring Festival, it has not changed much. So far, The company's order volume has dropped by 40% to 50% compared with the same period of last year. According to him, the company's sales last year was only 20 million to 30 million yuan, but its area of ​​10,000 square meters factory has a capacity of 100 million to 200 million. In contrast, the company's output value is now less than 20% of its capacity.

However, the company is also helpless. Roche said that the company mainly sells foreign trade and sells it to the United States, Europe, South America and other countries. The overseas market accounts for 90% of the total, and relatively few domestic sales. Now that the foreign market is tightening, the domestic market cannot be opened. The company has done all the products in the LED industry chain before, but now some products with no competitive advantages such as lamps and light bars are basically not done. "We are taking the middle and high-end product line, the price is not accepted, it is difficult to sell in the domestic market."

In the eyes of the industry, the current LED industry is highlighting the “structural overcapacity” pattern, “the downstream production, packaging, supporting and other areas have a serious overcapacity, while in the middle and upper reaches of the chip and epitaxy, the performance of low-performance products. Excessive, high-performance products are seriously inadequate and rely heavily on imports. Moreover, the current problems in the LED industry in Shenzhen are also faced by the national LED industry, and even in most areas, the structural excess crisis is more serious."

Not "developed" encounters overcapacity bottleneck

“90% depends on exports, overcapacity”, LED seems to be a replica of the photovoltaic industry, is it really like the photovoltaic industry, will gradually decline?

"No," an industry insider affirmed with certainty that LED has not been brilliant, and is still in the development stage, especially in China. The main reason for the current trouble can be summarized in a "chaotic" word.

The industry believes that the so-called overcapacity is actually too many products that are not up to standard in the market, and there are too many small enterprises that have not reached the scale. When the LED industry emerged, due to the huge temptation of economic and social benefits, the world's major developed countries and regions have formulated development plans, which have led to the continuous increase of R&D and investment in countries and regions, and promoted the rapid development of the LED industry. . The domestic market is naturally not to be outdone. Due to the strong support of the government, “the industry has a low barrier to entry, and many companies have embraced it. Especially in the absence of relevant industry standards, the quality of products is uneven.”

When talking about the reasons for "structural overcapacity", he said, "First of all, in the market, the domestic market is small and domestic demand is sluggish, while the international economy is declining and demand is shrinking. At the same time, 'anti-dumping' in Europe and the United States has a great impact on corporate exports. In addition, in terms of technology, the high-tech field has a high technical threshold, and in the context of the government's strong support for the entire LED industry, after weighing the costs and benefits, a large number of enterprises have gathered in the low-end production field."

According to statistics, as of now, regardless of the size of the company, there are only 4,000-5,000 LED companies in Guangzhou, and the number in Shenzhen is still more than half. However, among these enterprises, few companies with a large output value of over 100 million yuan have been made. There are only a handful. When the Beijing Business Daily reporter asked what the current enterprise needs most, Roche did not hesitate to answer the "funds". The company has not paid any loans until now, and can only hope that the investment company will raise funds. However, it is puzzling that LED is one of the three strategic emerging industries in Guangdong Province. As a major government support, related companies have not received corresponding “welfare”.

“There are many porridges,” the industry has no choice but to say that only 1% of the thousands of companies have received support funds, and other companies simply cannot get the blame. In particular, the production cost of LED is high, and small enterprises rely on self-production and self-sale, and they cannot earn money at all. It is understood that the production cost of LED lamps is 30% higher than that of traditional lighting lamps, and this is becoming the root cause of the decline in corporate profits, the closure of enterprises, and the difficulty of opening up the domestic market.

As for the domestic market of LED lighting, it is difficult to open, and there is another reason, mainly due to local protectionism. According to informed sources, there are basically LED factories all over the country. Many provinces require the purchase of products from local manufacturers. "Even if the quality of our products is good and the technology is advanced, it will not be able to enter."

In addition, some people in the industry directly pointed out that in fact, the current situation of LED enterprises is “more, chaotic, and worse”. It is also related to the strong support policies in the previous period. Entrepreneurs completely ignore the development of the industry and pay no attention to quality. This has caused a serious crisis of overcapacity, and it has also spawned a strange phenomenon. Enterprises are heavily dependent on the government. Therefore, "the fear of continuing support may cause concern for the second photovoltaic industry, which is the abolition of the Shenzhen government. The root cause of the above plan."

As a representative of high-tech products, technology is the core, but Chinese companies do not have a competitive advantage in this regard. "The core part like the chip can only rely on imports. There are many small companies that don't even have R&D departments. They directly plagiarize and then play 'price wars', making the market that is not standardized more chaotic," said the industry insiders. Moreover, in the current era of protectionism in overseas markets, the certification barriers in the European and American markets have strengthened, and the pressure on the LED industry is no less than that in the photovoltaic industry.

"Excess" low-end enterprises will be eliminated

The abolition of "Planning" should be defined as a sign. Enterprises and governments should reposition their roles in the process of this sudden braking. "The best opportunity for the industry to adjust itself and change and upgrade when it is in trouble." "The industry commented.

The industry believes that to solve the structural overcapacity crisis in the LED industry, it is necessary to start from both the enterprise itself and the government. From the perspective of the company itself, on the one hand, it is necessary to actively expand the domestic market based on overseas markets; on the other hand, it is necessary to strengthen the research and development of core technologies while strengthening mergers and acquisitions in the middle and low-end areas.

In this regard, companies have long been self-aware. The industry said that in order to get rid of foreign barriers, the company is preparing to register a new brand abroad and set up research and development institutions to further expand overseas markets. At the same time, the domestic market will never let go. Recently, he is running around the country, hoping to find a local company to cooperate, sell semi-finished products to them or cooperate in other ways. "LEDs are a necessity to replace traditional lighting. We know the potential of this market." Authorities predict that by 2020, China's LED lighting market share will exceed 50%.

Therefore, some business leaders believe that opening up the domestic market is still a must for domestic enterprises. “Unlike the photovoltaic industry, 90% depends on overseas markets, so the instability of the market is too great, the global economy is not good, and thus The protectionism triggered is likely to cause the destruction of the industry. It can be seen from this point of view that Shenzhen's abolition of the "plan" is a very sensible brake."

In addition, when the European and American markets are becoming saturated, the emerging markets such as ASEAN, which have huge demand and low cost, have become the consensus of many people. In the view of many companies, LED has not been promoted in some countries such as ASEAN and South Asia, and the market potential is large. At the same time, with the continuous development of the domestic LED industry, manufacturing costs are also decreasing. As far as foreign buyers are concerned, compared with the “local manufacturing” of ASEAN such as Vietnam and Laos, Shenzhen enterprises have obvious advantages in LED quality and technology cost.

In addition, the industry also pointed out that in order to enhance the competitiveness of enterprise products, enterprises must highlight the differences while developing products. Although the “Planning” has been cancelled, Guangdong Province has identified the LED industry as one of the three emerging strategic industries. The development of the industry will still have a major positive impact. Next, in the more intense merger and reorganization, the production of high quality, Companies with differentiated products are more competitive.

"From the perspective of the government, what is urgently needed is to change the way of thinking, stop supporting the entire LED industry, and make full use of the market to eliminate enterprises in the low-end production areas," the industry source said.

“National subsidies have no fundamental effect on changing the status quo of the market itself. They can only tickle and may also cause excessive dependence on enterprises.” Therefore, in the critical period of industry transformation, enterprises are improving their competitiveness by strengthening independent research and development. The government should also "can afford to let go."

"Let the company that has been eliminated naturally 'dead', and the 'live' enterprise will become bigger and bigger, and have the ability to compete with foreign companies. At least half of the current market capacity must be eliminated." At the same time, the government also Downstream enterprises should be encouraged to go upstream, and some special funds from the government should encourage enterprises to transform and upgrade to high-end products when their business conditions are relatively good.

(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)

For more information on Shenzhen LED "discontinuation", please see the "Shenzhen LED's Waste Order" Reflexion Report: http://

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