Shenzhen Zhidingxin Electronics’ “bankruptcy” reflects on the LED industry

Recently, just as people were happily preparing to send off the Year of the Horse and welcome the New Year, news spread: Shenzhen Zhidingxin Electronics Co., Ltd. failed to survive the Year of the Sheep and went bankrupt. As for the reasons for the collapse, there are different opinions. A few days after the incident happened, some workers could still be seen lingering at the door of the Zhidingxin factory, probably hoping for a miracle to turn things around.

The Year of the Horse is called by some a troubled year for the LED industry. In addition to the exciting Nobel Prize, what is more memorable is the repeated "boss running away incidents" and the subsequent establishment of "black files":

Shenzhen Juliang Radio and Television owes more than 200 million yuan in payment to suppliers, and boss Liu Juyong's family has lost contact. Sichuan Yuanli Optoelectronics, Dongguan Yongxing Electronics, Zhongshan Phoenix Legend, Zhongshan Xilin Lighting, etc. These once-unparalleled LED companies in the industry have now collapsed. The boss of Dongguan Aosirui ran away, and according to statistics, the debt exceeds 110 million... Shenzhen Zhidingxin has become the one who has "stumbled" closest to the Year of the Sheep.

So, what happened to the LED industry? Is it true that, as everyone has said, there are huge hidden worries in this industry, will the upcoming Year of the Sheep be even more difficult?

The author compiled another set of data. Some activists said that 2014 was a hot year for the LED industry. Three winners won this year’s Nobel Prize in Physics for inventing a blue light-emitting diode (LED) that helped people obtain white light sources in a more energy-saving way. At the same time, Xiaomi, Alibaba, Li Ka-shing, etc. have crossed over into the LED industry and launched eye-catching LED products. According to relevant data, in the first half of 2014 alone, my country's LED exports continued to maintain a high growth momentum, with an export value of US$4.35 billion, of which approximately US$440 million was exported to BRICS countries, a year-on-year increase of 350%.

Another piece of news in the industry has been spreading rapidly through the Internet, WeChat and other channels recently. Shenzhen Lianchengfa Technology Co., Ltd. will hold a New Year reception and tenth anniversary gratitude party on January 28. Zhengguang invites industry elites and heroes to participate in the wonderful feast that will be held at the Dunhill International Hotel. It is reported that the appreciation party not only gathered a large number of elites in the industry, but also invited several very important veterans in the LED industry. Among them are Mr. Wang Dianfu, the honorary president of the Semiconductor Lighting Industry Development Promotion Association and the founder of the LED industry, and Mr. Chen Jin, the founder of the China Optics and Optoelectronics Association.

On the one hand, there is a bustling welcome party, and dozens of banquets are held in international five-star hotels to give thanks; on the other hand, the company owes money, the factory closes, and the boss loses contact. The contrast is sharp! So what is happening to the LED industry? Is it a serious hidden danger or is it the different vision and thinking of the company leader that determines the fate of the company? In 2015, can the LED industry still give the market confidence?

LED industry experts say that the development prospects of my country's LED industry in 2015 are still good. Most of the problems are caused by those companies that do not know the depth and rush into the industry to seek gold. Old companies like Fengguang Legend, because their own foundation is not strong enough, try to become bigger and stronger in the short term. They invest heavily in channels and invite celebrity endorsements, which breaks the capital chain.

In fact, excessive investment and insufficient product quality are common problems of some LED companies. For example, Guzhen Xiongji, once a billion-dollar manufacturer, continued to encounter customer returns because a large number of its products were of poor quality. In addition, the intensifying price war in the industry has also allowed many big brands to take the opportunity to purge the market, euphemistically known as "clearing the market." This is undoubtedly a nightmare for some companies that mainly produce low-end products. For example, Yongxing Electronics, which mainly produces LED packaging brackets and is positioned in the low-end market, is a typical small and medium-sized representative enterprise in the transformation of downstream lighting. When it went bankrupt this year, its total debt was as high as 30 to 40 million yuan.

It can be seen that, in addition to external factors such as market and policy, which determine the fate of an enterprise, whether the leader of the enterprise is far-sighted, foresighted about the future, management is in place, and whether the enterprise is operated properly are the most important factors in the success or failure of the enterprise!