The wave of layoffs and bankruptcies is coming. When will bankruptcies and layoffs end?

In July 2015, two corporate bankruptcies were exposed in the LED industry. Zhongxiang Innovation and Light Energy Technology both failed due to a break in the capital chain. Everyone is familiar with bankruptcies in the LED industry, but the news of bankruptcies that have been revealed in the past few years has been flooding in, which is enough to sound the alarm for people in the LED industry.

Since 2015, global economic growth has slowed down and market volatility has intensified. In such an environment, a new wave of layoffs has set off around the world. This wave of layoffs has had a certain impact on all walks of life. Of course, the LED display industry has not been immune.

In the second half of 2015, Taiwan's LED chip industry quietly set off a wave of "small-scale" layoffs. In September, Epistar, a major Taiwanese LED chip manufacturer, laid off 65 employees, and then planned to lay off 76 employees at its Zhuke plant in three batches. In addition, Canyuan Optoelectronics, a subsidiary of Epistar Group, will lay off a total of 39 employees at its Longtan and Pingzhen plants.

Of course, this is just a microcosm of this round of "small-scale" layoffs in the entire LED industry. According to analysis by research institutions, the oversupply rate in the LED chip industry was as high as 22% in 2015, and the supply and demand imbalance has seriously impacted the LED chip industry. Faced with such a severe industrial situation, layoffs seem to be the most direct way for chip companies to reduce costs and improve efficiency.

On one side there are bankruptcies and on the other side there are layoffs. You sing and I come on stage, one wave after another. The LED industry seems to have entered a cold winter period. How to survive this period and survive has become a top priority for many companies. As one industry insider said, "Survival is the first priority at all times. Talking about development without survival is nonsense."

The root cause is of course the overall downturn in the industry, the sluggish market, and overcapacity. The direct reason is probably caused by the fragility of corporate capital chains. In the capital era with such fierce market competition, corporate capital chains are too fragile and cannot withstand the "storm" of the industry.

Therefore, enterprises need to take appropriate measures and increase efforts to consolidate the enterprise's capital chain, as follows:

Develop multiple financing channels to avoid too single source of funds

Practical Implement the cash-is-king capital strategy to ensure sufficient corporate liquidity, close funding gaps in a timely manner, and maintain the bottom line of cash reserves

To the greatest extent possible, avoid the problem of capital shortages caused by industry triangular debt, and avoid the occurrence of a fire at the city gate that would affect the fish in the pond.

For companies, layoffs may be an option to reduce costs and survive the cold winter. Every company has its own considerations, and we are positive about healthy layoffs. However, if not handled properly, it may bring about many other negative problems. Therefore, when companies choose to lay off employees, they should also consider issues such as employee reemployment and social unrest, rather than just focusing on the company's interests.

In addition to layoffs, are there other ways we can get out of the current predicament? Relevant people in the industry have also given some suggestions: first, strive to innovate, make good products, increase product added value, and enhance the core competitiveness of products in the market; second, avoid homogeneity and explore differentiated and specialized routes; third, strengthen and improve the management level of the enterprise by cultivating and introducing talents; fourth, enrich marketing models and broaden sales channels.

It’s spring when it’s over. I don’t know when this wave of bankruptcies and mergers and acquisitions will subside. It may be three years, it may be five years, or it may take longer. For enterprises, the most important thing is to work hard on their internal skills, so as not to be at a loss when the "tide" recedes and be left behind by the industry. When the clouds open and the moon shines brightly, everyone can encourage each other.

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