["High-tech LED lighting market" December issue / reporter Xiong Yuheng] Â
Recently, Changfang Lighting announced its Q3 financial report. The report said that the company's operating income and net profit from January to September were about 404 million yuan and 40.628 million yuan, respectively, an increase of 27.78% and a decrease of 14.88% over the same period last year.
For the reasons of the decline in profits in the first three quarters, the short-term explanation is that in order to consolidate and expand market share, provide customers with cost-effective products and adopt a strategy of actively reducing prices; at the same time, the company implements “long-side office lighting†and “Tongyu Homeâ€. The brand strategy of “three-brand lighting†and “Donghan Commercial Lighting†promoted simultaneously, and the high initial investment was incurred, resulting in a decline in net profit.
In January and June, the LED lighting fixtures of Changfang Lighting were significantly adjusted twice, and some products even fell by more than 100%. Subsequently, a number of companies including Mulinsen, Zhen Mingli, and Dehao Runda participated in the price game.
The multi-party game has caused the price of LED lighting products to fall sharply, and the disadvantage of high LED prices is constantly being reversed. According to research data from the Higher Industrial Research Institute, the average price of LED lighting products will drop by more than 40% this year.
Zhang Xiaofei, CEO of Gaogong LED, believes that “LED lighting will fall to 1.5 times when the price of LED lighting is reduced. From the current price reduction trend of LED lighting products, this process is expected to be completed within 1-2 yearsâ€.
If the price is no longer an obstacle to the promotion of LED lighting, then brand and channel construction will become the focus of enterprise planning. From this point of view, by adjusting the price to seize the market, establish a brand, and attract dealers is the original intention of the price reduction of the rectangular lighting.
Cut the price into a conventional weapon
The high price of the products has led to low consumer acceptance and has become the industry's recognized barrier to the promotion of LED lighting terminals.
Just in May of this year, an LED lighting distributor in Chengdu Jinfu Lighting City told reporters that "the main obstacle to the retailing of LED lighting in the terminal is its high price. At present, the price of LED lighting products that consumers can accept is about About 10 yuan per watt." However, only half a year later, the ex-factory price of LED bulbs of 5 yuan per watt is not uncommon in the industry.
According to the reporter of "Lighting Market", the ex-factory price of Mlinsen 3W bulb is only 10 yuan, and the ex-factory price of Xuelaite 3.8W bulb is only 14 yuan. Even if the dealer increases the price by 100%, the price will not exceed 10 yuan / watt, the price is almost equal to the energy-saving lamps.
"Today, LED lighting has entered the era of meager profit, enterprises want to be independent, relying on high-end development of the terminal market has been extremely difficult." A person in charge of the company told reporters that before everyone talked about ideals, talked about development, disdain to participate in price wars, now forced Survival pressure has to be lowered. The price war is dead, and the price war will die faster. The company, which is targeting high-end LED commercial lighting, has set its LED bulbs at a price of 3 watts, 2 dollars, 5 watts and 3 dollars, and 7 watts and 5 dollars.
The sharp drop in the price of LED lighting products led to a sharp decline in the net profit of the entire LED industry.
According to statistics, among the 42 LED-related listed companies, Q3's profits have fallen or even lost to 24 companies. Among them, Tianlong Optoelectronics lost 32.66 million yuan, Dehao Runda lost 8.88 million yuan, and Tiantong shares lost 30.08 million yuan. Among the companies with a decline in net profit, the net profit of the three companies, Silan Micro, China Microelectronics and Zhouming Technology, all fell by more than 80%.
Light profit fight terminal
Want profit, or market? For LED companies in the price war, it is indeed a dilemma. Although low price is a weapon to seize the market, it means low profit and low profit. If you position high-end, it is difficult to increase sales under high price.
"Our current development strategy is not to pursue high profits, but to seize the market and establish a brand, which is more important for the survival of enterprises." A person in charge of a company said that relying on low prices to seize the market has become very representative in the current LED industry.
With ultra-low prices, sacrificing profits to seize the market, can quickly establish a stable customer base, increase product sales, small profits but quick turnover or first-off profit, are the way to survive and develop. This is also the original intention of the price wars such as Mulinsen and Changfang Lighting.
More importantly, after the products occupy the market on a large scale, consumers will gradually recognize the products and price system of the company. While expanding the channels, the company also lays a good foundation for brand establishment.
“When the channel, brand and customer group are relatively stable, the company will develop its own profit system.†Chen Qikai, general manager of Schmat Lighting, said that in 2008, Leike Lighting squeezed into the LED terminal market at an ultra-low price and quickly established it. Perfect distribution system and strong brand influence. At present, the shipment of Leike LED products is even higher than that of Jiamei and Buddha.
In addition, through the aggressive price strategy, competitors can also be squeezed out of the entire LED lighting terminal market, providing a broader space for the company's own development.
Based on this, there are always many enterprises in each government project bidding. In order to get the project, they will not hesitate to participate in the bidding at a price lower than the cost. Making money is not the second thing. The key is that enterprises can enhance their image by participating in government projects, thus laying a solid foundation for the industry and strengthening their business development capabilities. The whole bidding process, with the loss of money to earn a drink, the low price of the market can be described as the same.
For SMEs, survival is the current priority. Through the low-cost way, even if it is "staying through the industry", it will not be starved to death. As long as you are in this industry, the 500 billion market cakes always have a chance to eat.
Is strategy not strategy
The use of the "pre-emptive" concept of consumption, through the exchange of low prices for the market, should be the means of market competition, not the ultimate goal. The implementation of the low-price strategy puts forward higher requirements on the comprehensive strengths of the company's technology, capital and scale.
Therefore, the companies that provoke the price war banner are all enterprises with good financial strength. SMEs are often only passively involved.
Similar to the rectangular lighting, Mulinsen and other companies, hope to expand channels and build brands through low prices, the competition is the overall competitive strategy from product to after-sales service. How to minimize the cost, seize the market and shape the brand requires a comprehensive layout. However, no matter which part of the strategy has problems, it may bring a heavy blow to the enterprise.
On May 14th, the Changfang used the super-raised funds of 40 million yuan to invest in the LED lighting source bracket project. It is reported that the project can reduce the cost of the bracket material by 15%-20%, thereby expanding the low-cost advantage of the long-term LED lighting products.
However, on July 31, Changfang Lighting, which was listed only for 4 months, recalled its 3W LED candle light on a large scale and destroyed the problem lamps. According to insiders of Changfang Lighting, the reasons for the emergence of these batches of light bulbs are related to the supplier's incoming materials. The incident also raised questions about how to guarantee the quality of the long-term low-cost strategy.
At the same time, companies need to have rapid market response capabilities when adopting a low-cost market-changing strategy. In the face of rapid price declines and the ever-changing industry status, it is critical to maintain technical and cost advantages. In addition, entrepreneurs also need to have a clear sense of market competition, and have a longer-term and smarter development thinking than the "price reduction strategy."
"Currently, enterprises continue to lower the price of products to cater to the needs of consumers, thus occupying the market to establish a brand, which is not worthy of praise and reference." Xu Liancheng, deputy general manager of Zhaoxin Lighting believes that the value of LED brings consumers far more than traditional Lighting should not require prices to be close to or lower than traditional lighting. If you only pay attention to the price, neglect the management of quality, reliability and after-sales service, and do not guide the change of consumer concept, it is very unfavorable for the development of domestic LED.
Zhonghao Optoelectronics Wang Mengyuan also believes that “current LEDs are still in the planned economy, not the era of market economy. Enterprises need to think more about opening the market through differentiated roads instead of stagnating their strategic vision at the price war levelâ€.
Recently, Changfang Lighting announced its Q3 financial report. The report said that the company's operating income and net profit from January to September were about 404 million yuan and 40.628 million yuan, respectively, an increase of 27.78% and a decrease of 14.88% over the same period last year.
For the reasons of the decline in profits in the first three quarters, the short-term explanation is that in order to consolidate and expand market share, provide customers with cost-effective products and adopt a strategy of actively reducing prices; at the same time, the company implements “long-side office lighting†and “Tongyu Homeâ€. The brand strategy of “three-brand lighting†and “Donghan Commercial Lighting†promoted simultaneously, and the high initial investment was incurred, resulting in a decline in net profit.
In January and June, the LED lighting fixtures of Changfang Lighting were significantly adjusted twice, and some products even fell by more than 100%. Subsequently, a number of companies including Mulinsen, Zhen Mingli, and Dehao Runda participated in the price game.
The multi-party game has caused the price of LED lighting products to fall sharply, and the disadvantage of high LED prices is constantly being reversed. According to research data from the Higher Industrial Research Institute, the average price of LED lighting products will drop by more than 40% this year.
Zhang Xiaofei, CEO of Gaogong LED, believes that “LED lighting will fall to 1.5 times when the price of LED lighting is reduced. From the current price reduction trend of LED lighting products, this process is expected to be completed within 1-2 yearsâ€.
If the price is no longer an obstacle to the promotion of LED lighting, then brand and channel construction will become the focus of enterprise planning. From this point of view, by adjusting the price to seize the market, establish a brand, and attract dealers is the original intention of the price reduction of the rectangular lighting.
Cut the price into a conventional weapon
The high price of the products has led to low consumer acceptance and has become the industry's recognized barrier to the promotion of LED lighting terminals.
Just in May of this year, an LED lighting distributor in Chengdu Jinfu Lighting City told reporters that "the main obstacle to the retailing of LED lighting in the terminal is its high price. At present, the price of LED lighting products that consumers can accept is about About 10 yuan per watt." However, only half a year later, the ex-factory price of LED bulbs of 5 yuan per watt is not uncommon in the industry.
According to the reporter of "Lighting Market", the ex-factory price of Mlinsen 3W bulb is only 10 yuan, and the ex-factory price of Xuelaite 3.8W bulb is only 14 yuan. Even if the dealer increases the price by 100%, the price will not exceed 10 yuan / watt, the price is almost equal to the energy-saving lamps.
"Today, LED lighting has entered the era of meager profit, enterprises want to be independent, relying on high-end development of the terminal market has been extremely difficult." A person in charge of the company told reporters that before everyone talked about ideals, talked about development, disdain to participate in price wars, now forced Survival pressure has to be lowered. The price war is dead, and the price war will die faster. The company, which is targeting high-end LED commercial lighting, has set its LED bulbs at a price of 3 watts, 2 dollars, 5 watts and 3 dollars, and 7 watts and 5 dollars.
The sharp drop in the price of LED lighting products led to a sharp decline in the net profit of the entire LED industry.
According to statistics, among the 42 LED-related listed companies, Q3's profits have fallen or even lost to 24 companies. Among them, Tianlong Optoelectronics lost 32.66 million yuan, Dehao Runda lost 8.88 million yuan, and Tiantong shares lost 30.08 million yuan. Among the companies with a decline in net profit, the net profit of the three companies, Silan Micro, China Microelectronics and Zhouming Technology, all fell by more than 80%.
Light profit fight terminal
Want profit, or market? For LED companies in the price war, it is indeed a dilemma. Although low price is a weapon to seize the market, it means low profit and low profit. If you position high-end, it is difficult to increase sales under high price.
"Our current development strategy is not to pursue high profits, but to seize the market and establish a brand, which is more important for the survival of enterprises." A person in charge of a company said that relying on low prices to seize the market has become very representative in the current LED industry.
With ultra-low prices, sacrificing profits to seize the market, can quickly establish a stable customer base, increase product sales, small profits but quick turnover or first-off profit, are the way to survive and develop. This is also the original intention of the price wars such as Mulinsen and Changfang Lighting.
More importantly, after the products occupy the market on a large scale, consumers will gradually recognize the products and price system of the company. While expanding the channels, the company also lays a good foundation for brand establishment.
“When the channel, brand and customer group are relatively stable, the company will develop its own profit system.†Chen Qikai, general manager of Schmat Lighting, said that in 2008, Leike Lighting squeezed into the LED terminal market at an ultra-low price and quickly established it. Perfect distribution system and strong brand influence. At present, the shipment of Leike LED products is even higher than that of Jiamei and Buddha.
In addition, through the aggressive price strategy, competitors can also be squeezed out of the entire LED lighting terminal market, providing a broader space for the company's own development.
Based on this, there are always many enterprises in each government project bidding. In order to get the project, they will not hesitate to participate in the bidding at a price lower than the cost. Making money is not the second thing. The key is that enterprises can enhance their image by participating in government projects, thus laying a solid foundation for the industry and strengthening their business development capabilities. The whole bidding process, with the loss of money to earn a drink, the low price of the market can be described as the same.
For SMEs, survival is the current priority. Through the low-cost way, even if it is "staying through the industry", it will not be starved to death. As long as you are in this industry, the 500 billion market cakes always have a chance to eat.
Is strategy not strategy
The use of the "pre-emptive" concept of consumption, through the exchange of low prices for the market, should be the means of market competition, not the ultimate goal. The implementation of the low-price strategy puts forward higher requirements on the comprehensive strengths of the company's technology, capital and scale.
Therefore, the companies that provoke the price war banner are all enterprises with good financial strength. SMEs are often only passively involved.
Similar to the rectangular lighting, Mulinsen and other companies, hope to expand channels and build brands through low prices, the competition is the overall competitive strategy from product to after-sales service. How to minimize the cost, seize the market and shape the brand requires a comprehensive layout. However, no matter which part of the strategy has problems, it may bring a heavy blow to the enterprise.
On May 14th, the Changfang used the super-raised funds of 40 million yuan to invest in the LED lighting source bracket project. It is reported that the project can reduce the cost of the bracket material by 15%-20%, thereby expanding the low-cost advantage of the long-term LED lighting products.
However, on July 31, Changfang Lighting, which was listed only for 4 months, recalled its 3W LED candle light on a large scale and destroyed the problem lamps. According to insiders of Changfang Lighting, the reasons for the emergence of these batches of light bulbs are related to the supplier's incoming materials. The incident also raised questions about how to guarantee the quality of the long-term low-cost strategy.
At the same time, companies need to have rapid market response capabilities when adopting a low-cost market-changing strategy. In the face of rapid price declines and the ever-changing industry status, it is critical to maintain technical and cost advantages. In addition, entrepreneurs also need to have a clear sense of market competition, and have a longer-term and smarter development thinking than the "price reduction strategy."
"Currently, enterprises continue to lower the price of products to cater to the needs of consumers, thus occupying the market to establish a brand, which is not worthy of praise and reference." Xu Liancheng, deputy general manager of Zhaoxin Lighting believes that the value of LED brings consumers far more than traditional Lighting should not require prices to be close to or lower than traditional lighting. If you only pay attention to the price, neglect the management of quality, reliability and after-sales service, and do not guide the change of consumer concept, it is very unfavorable for the development of domestic LED.
Zhonghao Optoelectronics Wang Mengyuan also believes that “current LEDs are still in the planned economy, not the era of market economy. Enterprises need to think more about opening the market through differentiated roads instead of stagnating their strategic vision at the price war levelâ€.
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