Two Shenzhen LED display manufacturers have closed down. Is the industry situation worrying?

The Shenzhen LED display manufacturing industry is not a quiet place, but a battlefield hidden in the smoke of gunfire. Warriors in the industry are constantly fighting with swords. After many chaotic battles, some people have won, but more people have been defeated. Those companies that are still standing certainly deserve respect, but the brave ones who failed are also worth remembering, recalling the glory that once belonged to them and, of course, the Achilles heel that led to their failure.

Market conditions

In late July, two pieces of news quickly spread throughout Shenzhen’s LED display manufacturing-related companies: Zhongxiang Innovation and Light Energy Technology were in arrears with employee wages or would face bankruptcy, surprising everyone. In their impression, Zhongxiang and Guangneng were two prosperous new forces in the industry, with great potential and strength. How could they collapse in such an instant?

With the passage of time, the truth about Zhongxiang’s collapse gradually emerged. This seemingly fast-growing enterprise actually hid huge hidden dangers: rapid business expansion and the break of the capital chain. "The three armies should go ahead with food and grass before they move" This is the experience summed up by our ancestors for thousands of years. However, many companies nowadays often do the opposite and blindly accept orders without sufficient funds, which ultimately leads to poor capital turnover or product quality that is not up to standard in a rushed work situation. This causes the downstream balance to not be received in time, which in turn leads to poor fund operation. This forms a vicious circle, and ultimately the company is overwhelmed and the trees fall down. Zhongxiang seemed to have followed the standard path of corporate bankruptcy. However, not long after, we heard discordant voices from within Zhongxiang - there were management leaders within the company who were lining their own pockets, secretly moving deposits and remittances, recruiting relatives and friends into the company to hold various important positions, eroding the company's resources on a large scale, and fleeing with the money on the eve of the company's demise, causing irreparable losses to Zhongxiang. This was the real last straw for Zhongxiang.

Shenzhen LED display company Guangneng almost followed the same script as Zhongxiang. As early as early June, there was news that Guangneng was in arrears with property rent, but it was not confirmed and received widespread attention at the time. Not long after, news came out that Guangneng was locked by the property management, and employees blocked the door to demand wages. Later, various rumors about Guangneng's bankruptcy also became rampant. Sure enough, according to the latest news, Guangdong Energy has been confirmed to be bankrupt, and the root cause of the collapse is still a broken capital chain. Under the circumstances of insufficient production capacity and insufficient financing channels, he rashly took a large order, aiming to become famous with one business, but he did not have the ability and experience to handle it, and ultimately ended up losing his fortune. As the saying goes, "You can't eat hot tofu in a hurry," it may be appropriate to apply it to light energy.

Two more Shenzhen LED display manufacturing companies have closed down, which seems shocking. So does this indicate that the LED display industry is going downhill? Is the LED display manufacturing industry declining?

The answer is no.

Zhongxiang and Guangneng are not unique cases. They were not the case before and will not be the case in the future. After the successful bid for the Olympic Games in 2001, many people took a fancy to the potential of LED screen displays and invested a lot of money to develop LED screen displays. In the end, LED screen displays lived up to expectations and became famous at the 2008 Beijing Olympics. Subsequently, the LED display industry gradually improved and ushered in several prosperous years. However, due to the low entry threshold of the LED screen display industry, which led to the blind influx of a large number of companies, triggering price wars, and a series of reasons such as technological innovation, the Shenzhen LED display manufacturing industry quickly entered a period of pain, and a large number of companies began to lose their footing and operations. If there is a problem in any aspect such as management, financing, technology, product quality, etc., the ant nest will soon burst and the company will be destroyed.

Although Shenzhen’s LED display manufacturing industry has been sluggish in recent years, and the collapse of a large number of companies has cast a shadow on the industry, it does not prevent Shenzhen’s LED display industry from achieving impressive results at home and abroad. The overall decline has not lowered the quality of LED displays, nor has it reduced its sales. Instead, it has led to the birth, growth and development of those elite companies. They rely on their own efforts and strict control of product quality, step by step, and finally stand out and become the best in the industry.

Experience summary

Through the summary and analysis of Zhongxiang Solar and the companies that have closed down in recent years, it is not difficult to find that the collapse of companies is often not directly related to the company itself. What really constrains the company is the break of the capital chain, followed by the disharmonious personnel within the company. Now Shenzhen's LED screen display industry is facing oversupply, but there are still companies that want to expand blindly, resulting in a price war in the market that is escalating and diluting profits. In addition, the current demand for LED display products is insufficient, so the LED screen display industry is almost saturated. Life is not easy for companies in the industry, especially small and medium-sized enterprises, which are even more stretched.

So, what specific matters do Shenzhen LED display manufacturing companies need to pay attention to if they want to grow healthily?

①Control funds and stay invincible

The capital chain is an invisible sword of Damocles for any enterprise. Of course, this includes the LED screen display industry, which is always warning everyone in the enterprise to be prepared. For the leadership of LED screen display companies, it is necessary to build a good financing channel. Good financing channels and liquidity can effectively combat the risks faced by enterprises, which of course reduces the probability and frequency of enterprise failure.

②Play steadily, step by step

After having a good capital chain, the company's practical development based on its own conditions, capabilities, and technology is also a link that must be paid attention to. No matter how good the capital chain is, it cannot stop the desire for expansion. The freezing of three feet did not happen in a day, and the success of a company's prosperity will not be achieved in a day. Looking at the leading companies in the industry today, all of them have accumulated over ten years, grown slowly, and worked hard to develop their internal skills, and they have become as proud as they are today.

③ Call on the government to take good measures to save the market

Nowadays, the LED display manufacturing industry in Shenzhen is surging, and many companies have been unable to do anything in the face of difficulties. Many bosses have chosen to "keep their warehouses in the dark" and "take the thirty-sixth strategy first", which is undoubtedly making the LED display manufacturing industry worse. Under such circumstances, the state and government did not introduce corresponding policies according to local conditions. Over time, this pattern of corporate difficulties → wage arrears → bosses running away → company closure → employees suffering hardship gradually took shape. If the government can formulate policies to provide certain assistance in the early stage when companies are facing difficulties, standardize corporate bankruptcy regulations, and prevent companies from arrears of wages and bosses running away, then the LED screen display industry will become better and better.

Reflection

Shenzhen LED display screens are constantly being updated, with brighter colors, better contrast, better performance and quality, etc., etc., etc., etc., etc., etc., which are all putting forward stringent requirements on enterprises. For this, there are many enterprises that have failed. We don’t want to see the decline of enterprises, but this is the survival of the fittest, the product of natural selection. Inferior products that are just fake will exit the market along with inferior companies, and only excellent products will survive. This kind of cruel competition will make LED displays better and better, and the future will become brighter and brighter.

This seemingly muddy and rugged road is actually the broad road for the LED screen display industry.