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The wave of bankruptcies in the LED industry: maintaining quality is the only way out.
Oct 24,2013
Buffett said: Only when the tide goes out do you discover who has been swimming naked. According to statistics, this year the number of LED companies closing down nationwide has exceeded 10%, with more than 100 in packaging; over 300 in lighting, most of which are small enterprises. Only when a crisis strikes does it increasingly test a company's ability to withstand pressure and rationality.
The market environment is bleak, with not only an oversupply of upstream chip packaging but also an oversupply in downstream application industries. Some companies, in order to survive the last month of the year, are willing to lower prices and quality to get through the winter. Using price cuts to increase sales will harm the company's interests and subsequently dampen production enthusiasm.
"Large enterprises are happy, small enterprises are content, but only those caught in the middle have the hardest time," said Longjiang, the general manager of Zhongshan Xingkeda Lighting. He explained that at this stage, large enterprises can sustain themselves through government project orders, while small enterprises are mostly family-run workshops with low labor costs, making them easier to survive. Only those in the middle have the hardest time.
"Stick to product and quality positioning; only by getting through this period can there be a way out," Longjiang stated. He emphasized that blindly pursuing price not only leads to low profits but also causes irreparable damage to the brand from producing substandard products.
The market environment is poor, but there are still outstanding performers. Xie Quanbo from Zhongshan Senben Optoelectronics Co., Ltd. stated that the company has been working overtime this year, and its performance has not only not declined but has also seen significant growth compared to last year. When asked about the reason, he attributed it to years of persistence in their brand and positioning, which reassures customers, leading to continuous orders and growth.
"The market is very chaotic now, so customers need products with guaranteed quality even more. Once you deceive a customer, you lose the chance for a second cooperation," Xie Quanbo stated.
Coincidentally, Shenzhen Honglvlan Optoelectronic Technology Co., Ltd. has also successfully navigated this year's "cold winter" market with excellent products.
Manufacturers occupy the market with the simple and effective strategy of low prices, but the inferior chips, rough craftsmanship, and unstable power supply due to low costs lead to short product lifespans. This approach, while establishing channels in the short term, is akin to killing the goose that lays the golden eggs. Only by maintaining quality can LED companies find a true way out of the cold winter.
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