The LED display rental market has always been one of the important market segments for screen companies. With the upgrading of domestic consumption, the attractiveness of this market has skyrocketed, becoming the target of competition for many large LED manufacturers. What is different from the past is that LED display manufacturing companies are no longer limited to expanding their market share by the product itself, but are more integrated with market demand, innovating business models, and accelerating market expansion.
The competition in the LED rental market is fierce
With its strong visual impact and excellent advertising capabilities, LED display screens are widely used in commercial occasions such as exhibitions and performances. However, the high procurement cost of LED displays has discouraged businesses. It is obviously not cost-effective to invest huge sums of money in several temporary commercial promotion activities. In this context, the LED display rental market emerged as the times require. Merchants only need to pay a rental fee to use LED displays in events.
In the past ten years, with the rapid development of my country's culture, entertainment, and sports industries, the LED display rental market has continued to grow and develop, creating a large number of professional rental companies. However, while the LED display rental market is developing in full swing, the country has begun to implement frugal policies, and the budget for large-scale events represented by the Spring Festival Gala has been significantly reduced.
At the same time, the reduction in business has brought a big impact to the LED display rental market. According to the "2015 China Performance Market Annual Report" released by the China Performance Industry Association, the total economic scale of my country's performance market last year was 46.3 billion yuan, a decrease of 9.0% compared with 2012. According to the survey results of Beijing Daolu Performing Arts Industry Research Center, the box office size of China's commercial performance market reached 8.826 billion yuan last year, a year-on-year decrease of 5.7%. Funds for government purchases of performances, corporate sponsorships, and travel agency group purchases are constantly being cut, causing the domestic LED screen rental market to shrink.
Subsequently, the "Red Ocean" of the LED rental market began to appear, market competition became increasingly fierce, and fierce price wars also spread rapidly. In order to seize the rental market, LED display manufacturing companies have implemented wave after wave of price bombing. At this time, the rental price of the same product is no longer stable, and the customer's payment cycle is gradually lengthening. At the same time, the number of LED rental screen manufacturers has further increased, and LED display dealers and agents have also joined the wave of seizing markets in various places. The increasingly transparent LED display product prices have forced a considerable number of rental manufacturers to see sharp declines in profits.
Vicious price wars have intensified disorderly competition in the market and also led to uneven product quality. Chen Zuzuo, general manager of Wuhan Guoli Chuancheng Performance Media Co., Ltd., said: "I am not optimistic about this year's rental market. The domestic rental market has developed to a new stage. Although there are many opportunities, the competition is too fierce."
In the face of fierce competition, Li Minghua, deputy general manager of Marui Optoelectronics, believes: "The profitability of leasing customers has weakened. Coupled with the prevalence of installment payments in the industry, some customers with insufficient funds have not paid their suppliers as planned, resulting in an extension of the payment cycle."
Teng Lei, marketing director of Lianchengfa Technology Co., Ltd., said: "The domestic LED screen rental market is currently in a period of rapid growth. LED rental screens are blooming all over China and are spreading from first-tier cities to second- and third-tier cities."
Innovative business model to expand rental business
For a long time, LED display manufacturing companies have sold their products to leasing companies or cultural companies. However, in recent years, in order to better expand the rental market, many LED display screen manufacturers have innovated business models and continued to extend into the cultural and sports fields. For example, Lianjian Optoelectronics has tilted towards the cultural industry through mergers and acquisitions; Lehman Holdings has extended into the sports media field.
The cross-border cooperation model between LED display companies and hotels has also emerged. For example, Absen has signed display rental cooperation with hundreds of hotels. This model mainly enters four-star and five-star hotels. Screen companies provide products to hotels for free, and return cash costs through screen usage fees (50%). When the hotel reaches a certain level, the revenue from pre-conference advertising will be shared with the hotel (the model is similar to the pre-roll advertising of movies in movie theaters), and it also operates leasing and advertising operations.
In this regard, Zhang Huabin, general manager of Absen's China business area, said that domestic display screen leasing companies are at the end of the entire leasing business and have the characteristics of high risk, low return, high investment, and low payment collection, which will make them sink deeper and deeper into the low-end, low-growth, and low-income model. Leasing companies should be light on capital and heavy on services, light on procurement and heavy on design. They should not buy the display screen themselves, but choose high-quality display screen manufacturer resources and platforms, and use the "borrow + lease" form to complete the rental performance business.
At the same time, in March 2016, China Guangcai announced the establishment of a leasing division, relying on its listed financing platform and mature channel advantages to integrate high-quality supply chain resources in the industry. On the one hand, Huaxia Guangcai develops excellent LED surface-mount rental products and deeply explores the LED rental market; on the other hand, it provides financial assistance to customers who do not have large cash investments but are interested in engaging in rental display operations. In order to solve the idle rate, China Guangcai has also built a "Didi Taxi" platform in the LED rental field through "LED display + cultural media".
Lei Jianxue, chairman of Huaxia Guangcai, said that whoever can control the demand of the rental market through products in the future has the hope of becoming the overlord of the rental market. Therefore, Huaxia Guangcai has shifted from the current "passive" production model of a market- and engineering-dominated enterprise to one where products lead market demand. At the same time, through innovative business models, it seeks to break through the long-term development in the field of rental displays.
In addition, some LED companies have expanded their channel layout and established regional flagship stores to quickly respond to the LED display rental market demand. Taking Qiangli Jucai as an example, it has established thousands of image experience centers across the country and is committed to building a 3-kilometer service circle and integrating first-class suppliers in the industry to form a strong supply chain advantage that benefits customers. It not only allows buyers to purchase high-quality and low-priced rental screens, but also solves post-maintenance problems nearby in a timely and effective manner.
Focus on design, service and quality
In addition to innovating in business models, LED display companies continue to increase product design, improve quality, and improve services to further meet the needs of the mid-to-high-end rental market. At this stage, the rapidly developing domestic LED display rental market is also facing a series of challenges: the domestic rental market is in a state of disorderly competition, and price competition has made the homogeneity of products more and more serious.
Compared with conventional display screens, LED rental screens require frequent movement, repeated disassembly and installation, which affects the stability and stability of the product.
The requirements for ease of installation are relatively high, that is, "beautiful appearance, light and portable installation, and stable and reliable quality." In the view of Xiang Jianyong, general manager of Lianjian Optoelectronics Co., Ltd.: "The price competition for traditional rental products is fierce, but if we can design new rental products that are thin, beautiful, and quick to install, we can win more markets."
With the increasing advancement of technology, mainstream LED rental screens have evolved from P6 to today's P4 and P3.9. In the future, the high-end rental market represented by small-pitch products will develop rapidly and will gradually become a new driving force for the growth of LED display companies. As the dot pitch of LED displays continues to shrink, the quality requirements are higher.
Today, the development of the LED display rental market has gradually returned to rationality, paying more and more attention to service and product quality. A lessor said that usually the quality and price of LED displays are the two most important factors. In the past, price competition was almost the mainstream of the market, but in the past two years, high-quality LED displays have gradually received attention. Because rental manufacturers are often faced with key activities, if the quality of the LED display is not up to par and a display failure occurs, the losses will be relatively large. At the least, it will lose the rental fee for an event, and at most, it will lose a long-term customer. Therefore, high-quality LED displays are often more convincing than price.
Xu Fei, general manager of Beijing Mingliang Creative Culture Communication Co., Ltd., said that generally speaking, most equipment leasing companies will choose cost-effective products from well-known LED display manufacturers. Different rental vendors have different definitions of price. Leasing companies dedicated to the high-end market hope that LED display products can be more stable, more convenient to install and use, and have better after-sales services. Low-end rental manufacturers only hope to survive on a small budget, with price first and service and quality unimportant.
Judging from the market feedback from LED lessors, price is not the only way for companies to seize the rental market. During the production process, LED display companies must adhere to their own positioning and form core competitiveness in terms of quality, characteristics, craftsmanship and innovation based on market demand. This is the way to long-term development.
ANNA