Low-end capacity spoiler LED industry looming channel war

Backlighting and illumination are the two leading directions for LED applications today, with consistent growth expectations. In response to the widely controversial view that "LED will become the second photovoltaic industry", the reporter went to Dongguan, Foshan, Zhuhai and Zhongshan, the most developed LED industry in China, to investigate.

Relevant listed companies, experts and scholars in the industry told reporters that China's national lighting market is huge, and the LED industry's growth prospects are expected. However, the LED industry has a lower barrier to entry, and a large number of low-end production capacity gathers downstream, relying on low prices to occupy the low-end civilian market. Although listed companies have begun to force channel construction and step up the market share, they still face the problem of low market share. Based on the industry nature and market positioning of LED and PV industry, most of the industry experts and companies interviewed by the reporter do not agree with the statement that “LED will become the second PV industry”.

LED sings the protagonist

"As long as there is land, it is a lamp." Master Zhang’s statement in the ancient town of Zhongshan may be exaggerated. Master Zhang has been operating private taxis in the ancient town for more than 10 years. He has a clear history of the development of the lighting industry in the ancient town of China.

The official data of Guzhen shows that the town has a total area of ​​47.8 square kilometers and a resident population of 150,000. The town has 12,700 lighting and accessories business enterprises and 7,497 lighting merchants. Last year, the lighting industry totaled 15.81 billion yuan, accounting for the national market. More than 60% of the total, exports totaled 500 million US dollars, and the scope of product exports includes more than 130 countries and regions.

The reporter found in the Ruifeng Lighting City investigation that the rise of the LED lighting industry has driven a large number of low-end production capacity. The salesperson introduced the price of the products using Osram chips slightly higher, while many small manufacturers use low-end chips, and the price is even higher. It has advantages and is more competitive in the low-end market. Even in Ruifeng Lighting City, the product standards of different sales outlets are uneven. Behind many sales stores, in fact, it is a local LED production factory.

The reporters also came into contact with LED component buyers from all over the world. Some of them were purchasing large quantities for the company, while others were "a few lights for the brothers." From the base, power supply, switch, and cable to the enclosure, the components you need are all in the lighting city.

“Now some small factories hire several people, and when they buy components, they can produce LED products. For example, a 3 watt LED bulb, if you purchase all components at wholesale price, the cost is about 7 yuan, and the market can sell at least. More than 15 yuan." Ms. Tang of Ruifeng Lighting City Qingyue Lighting Sales Store introduced that the various components of LED products have been standardized. As long as these components are purchased, they can be assembled by themselves, and the profits of producers are very considerable.

During the interview in Guzhen, the reporter also noticed that “all the people are lights” has been the support of local economic development. From incandescent lamps, energy-saving lamps to LED lamps, the increasingly developed lighting industry has continued to prosper the town, and the market for lighting alternative demand Opportunities also earned popularity in the local area. Residents of the ancient town told reporters that due to the effect of the money-making industry, the capital of the ancient town favors the industry and has little enthusiasm for real estate development.

Rapid market heating, indoor lighting demand or outbreak

The ancient town is located in the northwest of Zhongshan City. Although Zhongshan City has always been the leader of the national lighting industry, there is no local LED lighting industry listed company. Many of the LED faucets in the A-share company are surrounded by Zhongshan City, including Hongli Optoelectronics in Guangzhou, Dehao Runda in Zhuhai, Qinshang Broadcasting in Dongguan, Guoxing Optoelectronics in Foshan and Foshan Lighting. Shenzhen City occupies the remaining half of the country, with 9 A-share LED listed companies such as Changfang Lighting, Ruifeng Optoelectronics and Lehman Optoelectronics.

The industry's warming has made these companies' share prices hot. In May, the A-share LED sector rose strongly. Among the 20 LED listed companies in the Shenwan three-level industry, 17 companies had a cumulative increase of more than 20% in the month. Silan Micro, Changfang Lighting, Sanan Optoelectronics, Hongli The cumulative increase of the six companies of Optoelectronics, Dehao Runda and Nanda Optoelectronics all exceeded 40%, ahead of the broader market.

Behind the crazy rise in stock prices, market participants are also optimistic about their fundamentals. In the process of visiting the Guangdong LED listed company, the China Securities Journal reporter saw the LED lighting heat similar to the ancient town.

"The LED market seems crazy! Originally expected to start the market in the second half of this year, no one expected to start in March and April, LED lighting has officially increased." Wang Haolei, chairman of Dehao Runda, told the China Securities Journal.

Wang Donglei introduced that the LED market is heating up rapidly, and LED lighting is now being used in new shopping malls and shopping malls. This year's street lamp tenders in Guangdong Province are also much larger than last year. Since the government was re-elected last year, various cities in Guangdong are implementing new projects this year. He believes that the street lamp market will be greatly improved compared with last year. During the visit, the reporter found that many large LED manufacturers have tight production schedules. “The orders in the hands are not finished, the demand suddenly exceeds expectations, and the entire market capacity cannot keep up. Most of the packaging companies are in full production.” Wang Donglei said .

Qinshang Optoelectronics has been focusing on outdoor lighting. Since the beginning of this year, the explosive volume of indoor commercial lighting has made the company busy. The company has reached cooperation with several major department stores such as Guangbai Department Store, Xi'an Minsheng and Shanghai Yichu Lotus Supermarket, and also supplies a large number of high-end hotels. Guoxing Optoelectronics, which is mainly engaged in the packaging process, is currently in full capacity at the packaging line. The company's deputy general manager, Party Jianzhong, introduced that the company's LED business includes chip, package and application lighting. The company will also expand its packaging production line and increase packaging capacity. In order to double the production capacity.

In the view of Qinshang Optoelectronics management, the maturity of the development conditions in the field of indoor lighting will bring a “sweet period” to the LED industry. Zhu Bingzhong, the company's vice president, calculated the account for the China Securities Journal, assuming that the LED lamp with a 40-watt incandescent lamp can be replaced by 3 watts, with a design life of 40,000 hours and a unit price of 40 yuan. The energy-saving lamp that can replace the 40-watt incandescent lamp has a power of 8 watts and a design life of 6,000 hours. The price is 12 yuan.

In the commercial field, for every kilowatt-hour of electricity, a single LED lamp can save 15 yuan per year compared to energy-saving lamps, and commercial lighting can recover LED product purchase costs in about 2 years. In the civil field, each kilowatt hour is calculated at 0.5 yuan. A single LED lamp can save electricity costs by 4.56 yuan per year compared with energy-saving lamps. Civil lighting can recover LED purchase costs in about 6 years. "The conditions for the application of LED lamps in the commercial field have matured, but in the civilian sector, the problem of excessive price and long payback period is still faced. With the further decline in the price of LED products, the conditions for use in the civilian sector will gradually mature, and the lighting industry will be matured. Will also enter the 'sweet period'." Zhu Bingzhong said.

Low-end capacity spoiler

In the investigation, the reporter learned that for the “100 billion” market space declared by the industry, even the listed companies in the LED industry do not dare to overestimate their control over the civilian market, just like the “LED fever” in the ancient town, making money. The effect stimulates more and more capital to enter this field. With low cost and low price, it is occupying the low-end civilian LED lighting market. When listed companies have not yet quickly adapted to market transformation, the competition in the low-end market has become fierce.

"Before I dare not do LED products, because the technology and market are not mature, now the time is relatively mature, the future LED is definitely a big trend, and now the proportion of energy-saving lamps we distribute is gradually decreasing." A large LED listed company sales agent Huang Shaosong, general manager of Dongguan Huameng Electric Lighting Co., Ltd. told reporters that LED products account for about 20% of the company's lighting products, and sales of more than 1 million yuan in one year will continue to grow in the future.

Huang Shaosong was one of the first pioneers to “smell” the LED lighting market. He has been engaged in lighting distribution for more than 20 years, from the initial incandescent lamp to the later energy-saving lamps, to decisively doing LED lighting products distribution. Huang Shaosong gradually cultivated his own "power range" of LEDs. At present, there are hundreds of customers, some of them still only do energy-saving lamps, but like him, they have begun to transform LED products from energy-saving lamps.

Huang Shaosong also told reporters about the concerns of LED dealers: "There are many brands of LED application products, it is difficult to choose from them. Even if some brands are selected, it is not yet time for the brand effect to play a role, and the brand The price is relatively high, and the market competitiveness is not strong. On the other hand, the distribution of non-brand products has a price advantage in a short period of time, but they are worried that they will be eliminated in the future."

Not only is there a price competition between non-branders and brands, but the competition between brands is also very intense. It is reported that after Samsung released a 60-watt replacement LED bulb with a price of 15 US dollars and Cree launched a 40-watt replacement LED bulb with 10 US dollars, OSRAM also announced that it will launch LED bulbs of less than 10 euros in the European market in June. The same kind of LED bulbs in the domestic second-line lighting brands have fallen below 30 yuan. At the first national investment conference this year, Qinshang Optoelectronics introduced 33 yuan T8 lamps and 12 yuan 5 watt bulbs.

Channel warfare, brand competition, intensive cultivation

In the medium and long term, the LED lighting market is still optimistic. "This year will be the first year of LED indoor lighting," said Quan Jian, president of the Guangdong Lighting Association. The commercial lighting market has shown a significant outbreak this year, and the civilian lighting market may break out in 2015. The data of Hongyuan Securities also shows that LED lighting is facing the trillion-level general lighting market. Only the incandescent lamp replacement market will add more than 12 billion light source requirements every year. Therefore, the LED lighting market has huge penetration space, and its 100 billion yuan. The market is expected to break out.

Although the price competitiveness of branded LED products is still insufficient, in the face of long-term market prospects, industry leading companies have begun to intensively cultivate marketing channels for the civilian market. Li Hongcheng, secretary-general of the Shenzhen LED Industry Association, said that LEDs are civilian consumer goods, and the most important thing is to enter ordinary civilian households. Although in the short term, consumers may be sensitive to the price of the product, in the long run, as the price of the product continues to decline and the operating model that emphasizes long-term returns prevails, the LED lighting consumption attribute still depends on the brand of the lighting company.

In the long-term plan of downstream distributors, the operation of brand LED is currently in an indispensable cultivation stage. "The impact of non-branded LED products on brand owners must exist. Now the sales terminal is still a price factor, because the brand benefits are not significant, others of course choose cheaper products. I am now acting as a brand product and can achieve 1 million sales. In fact, those dealers who do not make brands can also achieve millions. Now choose a long-term development path, follow the growth of the brand to make themselves bigger and stronger." Huang Shaosong said.

According to Quanjian, there are not many manufacturers specializing in LED applications, most of which are midstream package manufacturers. Since there were no channels in the past, in order to quickly bring products to market, they began to quickly establish their own channels from scratch. Another is to promote LED products through external or original sales channels. For example, Dehao Runda acquires NVC Lighting, and Foshan Lighting promotes LED products through its original channels.

The reporter learned that it is based on the long-term consideration of the market space for civilian LED lighting. It is expected that the channel war of LED brand manufacturers including listed companies will be more intense than the competition in the low-end product market.

At present, Guoxing Optoelectronics plans to adopt the sales model of the dealer plus operation center; Qinshang Optoelectronics has held the first investment conference in the country this year, involving more than 500 dealers; Wanrun Technology takes direct sales as the mainstay and distribution as the supplement. Sales method; Dehao Runda promotes products through the acquisition of NVC Lighting, plus small household appliances channels abroad.

Quanjian believes that with the continuous advancement of related technologies, the price of LED products will decline. The nature of its traditional lighting also means that once the technology stabilizes, the sales channels for LED lighting will become very important. LEDs have both the attributes of electronic products and the characteristics of traditional lighting products. The attributes of electronic products will make them follow Moore's Law, and the price drop will eventually be realized.

In this regard, Zhu Bingzhong, vice president of Qinshang Broadcasting and Television, told the China Securities Journal reporter that “the development of its own dealer channel is not to hope that it can make money immediately, but to go to the card position first, lay a good foundation for future development.” LED is different Traditional lighting, the channel of traditional lighting is different from the channels of the electronics industry, and can not be immediately converted into a quality distributor of LED products.


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