LED industry is facing a wave of bankruptcies + TPP double attack. Enterprises must adopt new development thinking

LED Industry News: Recently, Guangdong Electronic Information Industry Group Co., Ltd., a wholly-owned subsidiary of Guangdong Guangsheng Asset Management Co., Ltd., took over Osram’s 13.47% stake in Foshan Lighting for 2.621 billion yuan and will become the largest shareholder of Foshan Lighting. Guangsheng Company is a provincial state-owned enterprise and the actual controller of Foshan Nationstar Optoelectronics. This news immediately grabbed the "headlines" of major financial and industry media and aroused widespread concern in the industry.

From this news, some people saw the government’s emphasis on the LED lighting sector; some saw the integration of the entire industry chain; some saw the international giant Osram’s plans for business sales or transfers; some saw the significance of the “Light King” Foshan Lighting in reshaping the national brand after the capital restructuring and changes. However, looking at the development trends of the domestic LED industry this year, this is actually just one of the many capital mergers and acquisitions (or acquisitions) in the LED lighting industry this year.

According to incomplete statistics, there have been more than 30 integration and acquisition cases in the LED industry this year, with integration and acquisition funds exceeding 28 billion, covering all aspects of the LED industry chain. The forms of mergers and acquisitions are also diversified, and mergers and acquisitions cases occur frequently and are still happening today. Correspondingly, major capital consortiums continue to pour into the LED industry, and many enterprise groups in other industries have also crossed over to get involved in the LED lighting industry and participate in the competition for the LED market. Guangsheng Company's acquisition of Foshan Lighting and Nationstar Optoelectronics is seen as a manifestation of the LED industry's accelerated integration of the entire industry, and it is also stimulating the reshuffle of the industry.

LED industry collapse wave + TPP double attack

By paying attention to this year's "LED M&A wave" phenomenon, the outside world often produces an "illusion": that is, the current situation of the LED industry is very good, prosperous, and prosperous development, triggering a "carnival" of capital, major LED companies catching up with great development opportunities, and even reflecting the vitality of the domestic economic industry. In fact, in an environment where the global economic recovery is slow, the domestic macroeconomic climate is relatively cold, the domestic economy is down, and investment and consumer demand are weak, the LED industry affected by this is also facing the problem of weak market demand and overcapacity. Compared with the past, the overall market situation is relatively deserted. Manufacturers and dealers in the LED lighting industry are facing huge difficulties and pressure.

It is undeniable that the LED industry, as a major strategic emerging industry in China, has great market prospects in the promotion of energy-saving lighting and the upgrading of lighting technology. However, on the other hand, because it is highly favored and too many companies participate in the competition, the competition in the industry is chaotic and fierce, and the market profits are constantly diluted, gradually moving towards an era of meager profits.

According to statistical data, in the first half of 2015, the cumulative number of loss-making enterprises in the national LED lighting industry was 579, with a loss rate of 22.18%. This is 8.6 percentage points higher than the loss rate of the national light industry industry. The loss expanded by 2.57 percentage points compared with the same period last year. This shows to a certain extent that the LED lighting industry environment this year is not optimistic. Affected by factors such as weak market demand, many companies are facing pressure to maintain performance growth.

Under such circumstances, with the rise of LED mergers and acquisitions, the entire industry is accelerating industrial integration and the survival of the fittest among enterprises with the help of capital power. Large enterprises have taken advantage of the trend to establish and improve the integration of upstream and downstream industrial chains, continuously improve their competitive strength and advantages in R&D technology, production and manufacturing, market channels, marketing, brand promotion and other aspects, forming LED enterprise groups with super scale and strength. This type of competitive business is like a rapid transition from the Spring and Autumn Period, when hundreds of flowers bloomed, to the Warring States Period, when princes annexed and seven heroes stood side by side. At the same time, more and more small and medium-sized enterprises that lack competitive advantages will be eliminated or face acquisition. In other words, there are currently about 20,000 large and small LED companies in China. With the in-depth integration of the industry, there is no need for so many companies in the market.

Currently, China's economy has entered the "new normal", adjusting its structure, stabilizing growth, and allowing the economy to develop sustainably. The "new normal" of the LED industry is to continuously increase the transformation and upgrading of the industry and accelerate the pace of integration. This is a good thing for powerful large-scale enterprises, or for the entire industry. It can make the industry healthier and benign, and can change many past shortcomings such as "industry non-concentration", "overcapacity", "low technical content", "low innovation ability", "lack of core competitiveness", etc. At the same time, a number of domestic large-scale enterprise groups with international brand influence will be formed from now on, national brand enterprises will be strengthened, and they can participate in international competition at a higher level. For some small and medium-sized enterprises currently, they are facing greater pressure for survival and development, and are forced to transform and seek change, or strive to create new products and technological advantages, or explore new market segments, or seek mergers and acquisitions to find a new way out for transformation. Therefore, LED companies must adopt new development thinking and adapt to this "new normal" of integration and mergers in order to win development in a fiercely competitive and complex environment.

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