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An analysis on LED Display Industry in China

收藏本信息编号:4313 发布时间:2012-09-10 截止日期: 地区:

As one of the emerging industries, LED industry has become a highlight that gives an impetus to economy. Moving towards maturity, LED industry in China is faced with opposite environments of the industry pattern. On the one hand, large amount of capitals, technology, as well as human resources are rushing towards the industry; on the other hand, a lot of LED enterprises are faced with unprecedented transformation risks. Reshuffling seems to be inevitable for the industry. As the earliest and the most matured industry in the LED industry, the LED display industry seems to be aware of the market pressure earlier.


Reshuffling is evident in the fierce competitions of LED display industry
LED display industry has been developing fast over the past decade in China. During Beijing Olympic Games, National Day parade, Asian Olympic Games and College Students' Athletics Meet, LED displays have presented a gorgeous feast for the eyes of audiences. According to related data, by 2010, China has become the base for LED display manufacturing around the world, and LED displays exported from China accounts for about 80% of the global market share.
Why did bad news of frequent bankruptcy keep coming from the once brilliant LED display industry in the last two or three years? It is reported that, from the second half of 2011, affected by the tightening European and American markets, LED display manufacturing industry centering on export in Pearl River Delta was hit by “bankruptcy tides”. People in the circle even boldly speculated that there would be 30% of small and medium-sized enterprises going bankruptcy, and the industrial reshuffling be aggravated.
There are complicated factors contributing to the bankruptcy of LED display enterprises: difficulties in loans and financing, severe competition, as well as the decay of foreign markets, which kept hitting LED display manufacturers. Besides, low requirements for market access, good and bad enterprises being mixed together in the market, and price wars also accelerated the reshuffling of LED display industry.
A famous LED research institute expresses that with more enterprises successfully becoming listed companies, Chinese LED industry will face severer tests.


Profit margins bottom, and LED display prices are all the way down
Chinese LED display industry has reached maturity. During the peak of its development, large amount of profit margins were made, and low requirements for market access resulted in the rushing of human resources, materials and capitals into the industry. Severe competition within the industry soon followed. Besides, domestic LED display enterprises do not have the ability to control core technology and thus homogenization of products homogenization of products is a common feature.
President Lin Mingfeng of Unilumin Sci-tech told the reporter that KAKA series Unilumin displays once won good praises from the market, but soon were plagiarized by enterprises of the industry.  Mutual plagiarism is a public secret in the industry. It is a "hidden rule". Therefore, many enterprises seize the market by the policy of "price wars". It is reported that, around the year 2008, the profit margin of LED display was about 40%. But in most of Chinese LED display enterprises targeted at the low-level market in the recent two years. Quantity is the point, but quality was neglected. People in the trade said that at present 90% of the display enterprises are involved in price wars, and the profit rate of the industry is as low as 5. In order to increase sale volume, these enterprises expand their scale. Therefore, the production capacity expands dramatically, and surplus products are produced, which in turn holds down the prices.
“LED display industry reached its golden time about three or four years ago. However, because of the rushing-in enterprises, as well as rounds of price wars, the LED display industry now has bottomed.” according to Pan Wenbo, the founder of Guangzhou International lighting exhibition and President of Guangya Academy of Lighting Research.


Display enterprises fight from one place to another in the lighting market to seek new development opportunities
A comprehensive survey of LED display market in China shows that the market is saturated and experiencing a period of low technology, cut-throat competition, razor-thin profit margins with the slowdown in demand. Many a LED enterprise turns their attention to lighting industry. It is shown by data that by the end of 2011, the proportion of output value of displays to LED application value has reduced to19%. The ratio of LED lighting is increasing, and its output value has exceeded that of LED displays.
In 2011, China officially introduced policies to eliminate the use of filament lamps. It is provided that from October 2012, the sales and import of filament lamps for daily lighting should be outlawed. Meanwhile, the state will introduce policies to support the development of LED industry to give an impetus to the development of lighting market.
Shenzhen Unilumin Sci-tech starts the business from displays. Taking aim at a great potential for LED lighting development, the company came up with a policy of "walking on two legs" to increase efforts on market expansion.  Shenzhen Absen Optoelectronic Co., Ltd, one of the giants in display industry, launches a comprehensive product line toward the market in mainland China and other countries in 2012.
It is true that, driven by social development and policies, LED lighting market will be fully opened. However, there are still sharp differences between LED displays and other lighting products, technology and the market. People concerned call attention to blind transformation which will lead to market risks against the development of LED displays.

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