When problems arise in an enterprise, it is necessary to “slim down” as early as possible

In the eyes of LED people, 2015 has been a difficult year. Now, 2015 has become a thing of the past. Many people expect that the LED industry situation will improve in 2016 and the severe situation will be alleviated. However, a newly revealed opinion recently poured cold water on the LED industry situation. According to the opinion: 2016 will be the first year that China’s macro-economy continues to hit the bottom, and it will also be the most difficult year in recent years. However, this is not the end of the world for large companies, but for small and medium-sized enterprises, it can be said to be a matter of life and death.

According to data, there were as many as 20,000 LED companies in 2014. In just one year, the number dropped by 20%, with 4,000 companies withdrawing from the market.

The data is shocking, reflecting the chaos of price wars, product homogeneity, and backward production capacity flooding the industry market. Not long ago, news broke out in the industry that companies were going bankrupt due to arrears of wages. The old packaging factory Jiangnan Optoelectronics was on the verge of bankruptcy due to rights protection for arrears of wages. This case is the epitome of the current status of LED companies in the industry, and has once again sounded the alarm for companies. Industry insiders pointed out that once a company encounters a problem, it should immediately "downsize."

What is "weight loss"? Industry insiders explained that the most common one is layoffs, and another is to retain high-quality customers and remove low-quality customers.

Layoffs. When market factors or poor corporate management lead to serious operating difficulties, reduced profitability, and a company facing a crisis of survival and development, in order to reduce operating costs, the company should adopt layoffs to alleviate economic pressure. Layoffs are benign layoffs, targeting employees whose performance is poor and cannot meet the needs of corporate development.

Just in the second half of this year, Taiwan's LED chip industry quietly launched 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. 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.

Secondly, get rid of bad quality customers and get high-quality customers. Customers are the life of a company, and no number of low-quality customers can compare to one good customer; high-quality customers contribute a lot to corporate profits and are customers with great room for growth; low-quality customers, on the contrary, contribute little or even no profit. Of course, whether they are new customers or old customers, they are all customers of the company, but in the process of corporate growth, what is needed is more high-quality customers, and inferior customers need to be eliminated.

Generally, companies that do well are working hard on "slimming down", focusing on the main things they should do, and striving for excellence. In addition to "slimming down", companies also need to "strengthen their bones", that is, improving their core competitiveness and putting more effort into their products.