Ten Conjectures of China’s LED Industry Development Trend in 2013
1. The competition between Chinese domestic and foreign strong enterprises intensifies.
With the increasing emphasis on the promotion of LED, there will be more foreign LED corporate giants entering the domestic market in 2013. It is said in the Guangzhou International Lighting Exhibition, brand exhibitions significantly increased, enterprises with booth area of over 584 square meters reach six where there was only company achieving the booth area in the last year. But today, brand international giants have emerged, Philips, Osram, GE, and other world’s top 500 enterprises in the field of lighting and LED gathered here. Showcasing brand image with this international platform, Philips is a model. But KINGSUN, Elec-Tech International, SunSun Lighting and other enterprises in the exhibition also shows the rise of Chinese domestic national brand.
In recent years, with the the sustained and rapid development of China’s national economy, the rapid rising of LED lighting, the international competitiveness of China’s lighting enterprises have continued to increase, gradually shortening the gap with international brands; parts of enterprises are listed the world’s leading enterprises, further make China’s LED industry occupy a place in the arena of international lighting industry. Guangzhou International Lighting Exhibition created a good system and social environment for China’s domestic companies enhancing international competitiveness; in the future development, China’s lighting and LED enterprises should learn faster and more effectively than the leading multinational companies to achieve outpacing goal.
The founder of Guangzhou International Lighting Exhibition Dr. Pan Wenbo said the international significance of Guangzhou International Lighting Exhibition is mainly exhibited: first, to help China’s domestic lighting enterprises fully demonstrate its international position, creating an excellent platform for them, and providing international exchange as well as bring benefits to the enterprise development, business model and management through interaction; second, to enable more international enterprises to participate, bringing the world’s most advanced technologies and products as well as brand concept to China.
2The Production Volume of Epitaxial Chip Increases, Price War Starts
The pick up of order in the first half of 2012 brings confidence to LED epitaxial wafer fab in Chinese mainland, leading to the hanging equipment purchase order being re-put on the agenda, the not-installed devices also being put into operation. As of the end of October in 2012, the quantity of MOCVD machines in Chinese mainland was 823 units. On the production capacity side, the total capacity of the LED wafer production line has reached 40.22 million per year if calculating the 2-inch epitaxial wafers. Capacity utilization remained the average of 65% due to that part of the equipments have not completed assembly, talent still lacks, market demand is weak and other factors.
Despite the oversupply of wafer caused by the LED epitaxial wafer projects introduced in various places, due to the bright future size, there are still manufacturers continuing to invest the LED epitaxial wafer project in Chinese mainland in 2012, including large-scale Guangzhou Jinxin (planning to introduce 60 units MOVCD), Chi Mei Lighting Technology Corp (planning to introduce 20 MOCVD production lines and supporting chip production equipment) and the LED epitaxial chip project of Foshan National Star (planning to introduce 50 units MOCVD).
So it is expected the manufacturers in Chinese mainland in 2013 will release more LED chips in the market, adding that the chips from manufacturers in Chinese mainland are mostly concentrated in the mid and low-level, so for mainland firms specializing in price war, they will certainly lift a new round of blood war. Most major chip maker in Chinese mainland all have got financial subsidies from local government, so even they suffer business loss, government subsidies also can whitewash earnings. But due to entering the market late, so in order to grab rival’s market, manufacturers usually adopt lower price strategy. Taking San’an, the largest chip plant in Chinese mainland as an example, it proposed the slogan of “Outpacing Epistar, be the first in Asia”, directing aiming at Epistar; in addition, it not only poached Epstar’s staff, but also moved their products to downstream packaging manufacturers with 20 to 30% cheaper price. Facing market downturn, the low-cost strategy is indeed effective, Ruifeng power, Hongli Optoelectronic t, Nation Star and other mainstream LED packaging manufacturers all have begun using the chip of San’an Optoelectronics. Furthermore, San’an also squeezes out product-single Chinese mainland manufacturer-Changelight, by largely enhancing the red wafer production capacity and cutting price, leading to Changelight who have relative good achievement by relying on product differentiation suffering serious business slip in recent years.
3. “e-commerce” has become the key words for currently some radical and hot industries.
A supportive opinion believe, “the development of e-commerce mode of lighting lies not in the prospect, but is the necessary result of development of the information society; when e-commerce emerged, no one pays attention to it. But e-commerce change out lives and overturn tradition,” Xu Fengyun, the former vice president of NVC Lighting Company also said: “In order to study the marketing model of e-commerce, I had a careful browsing of various major platforms, only to find amid the entire home building materials brands, only lighting brand perform bad in e-commerce.
In addition, not only inside LED industry, the outside sources also show diverse recognition and controversy about e-commerce; for instance, Wanda Group recently has announced its entry into the e-commerce; but at the same time, Wang Jianlin in Wanda Group also noted e-commerce can not completely replace retail market, and bet 100 million with the e-commerce representative Ma Yun from Ali Baba ( after 10 years, if e-commerce can accounts for 50% of market shares in Chinese retail market, I give me a 100 million yuan; if not, he gives me, said Wang Jianlin), which makes the development outlook of e-commerce attract more attention.
At present, the common e-commerce mode of the LED industry is to come into Jingdong or Lynx or other comprehensive e-commerce platforms (such as Tsinghua Tongfang, etc.), or entering the professional e-commerce platforms such as LED lamp; an opinion accepted by more people is: with the improvement of e-commerce platform in Chinese mainland, the dramatically surge of the quantity of users, as well as the combination between the online and offline in 2013, the integrated mode between e-commerce and store will be the better way for LED arriving at the civilian market.
E-commerce, whether it becomes one of the main marketing means or the auxiliary marketing method, is worthy of exploration. But at the same time, the industry should consider: e-commerce is indeed good, but not all enterprises and products are suitable for e-commerce. There is a view, if relying on e-commerce platform, the price of product must be very competitive, so those mid and high-end brands and products should be more careful and pay attention to e-commerce model.