LED companies competition rules

Recently, Sanan Optoelectronics released its 2013 annual report, which has a large inventory of raw materials, semi-finished products and finished products. At the end of 2013, the total inventory of Sanan was as high as RMB 1,158,430,694.43. The company expects the price to fall by RMB 10,023,528.14, and the book value of the inventory amounted to RMB 1,148,407,166.29.

Coincidentally, in the 2013 annual report, Huacan Optoelectronics showed that the book value of inventory at the end of the year was also as high as 166,188,236.06 yuan, and a corresponding provision of a fall in price of 7,158,756.48 yuan.

On the one hand, it is the layout of expedited production capacity. On the one hand, it is a high water level inventory, and a large amount of inventory is commonplace in the LED industry. And in the rapidly changing industry, how can LED companies make good use of their inventory to compete in the market?

The difference between the times Luo Heng, general manager of Zhejiang Hengman Optoelectronics Marketing, believes that the current LED lighting and raw material prices change too much, the company's inventory should not be prepared too much. The second is that the specifications and models of the LED have not yet been finalized, and the risks of the company's inventory will increase.

In the era of traditional lighting, the company’s inventory standards are often 1.5 times normal monthly sales. The product technology line is relatively stable, and the product life cycle is relatively long. Enterprises must really implement large-scale sales coverage and sales promotion, and need to match ample inventory. Responsive to the needs of channels and users, you can do it in a timely manner.

In the era of semiconductor lighting, the speed of iterative technology of LED lighting is faster than that of traditional lighting. In the process of light source replacement, the rate of change in the penetration rate of LED products is also accelerating, and the application requirements of products fluctuate. In this case, If companies prepare for excessive inventory, once the company's turnover rate is not enough, companies will face product iteration risk.

The risk is high on the one hand because the performance of the product is improving, but the price is decreasing, and the inventory goods lose their original market competitiveness. For companies to maintain this competitiveness, they must quickly dispose of their inventory products, which means that companies have to bear the risk of losses. Companies with relatively small funds and pockets may be trapped.

Second, companies may have little risk of not doing inventory, but they may have conflicts with the customer's cycle. If companies do not respond to customers' orders or lack of response in a timely manner without making inventory, customers will choose not to cooperate and companies will face the risk of losing their orders.

At the same time, most domestic LED manufacturers rely on foreign trade companies to export their products to foreign markets. Many companies are market-oriented companies. In addition, the competition among domestic LED companies is very fierce, companies are often guided by customers, the industry is in a period of rapid development, and companies must be cautious in preparing inventory.

However, in the face of fierce market competition, if companies do not have stocks at all, their time-consuming competitive costs will be lost.

Liu Xiao, general manager of Intel International, said that the price of LED lamps has been declining some time ago. It will not be too fierce for companies to stock up on the price of inventory products. According to their own conditions, companies still need to prepare some necessary inventory. At the same time, the prospects of the LED industry are all very optimistic. If we are too optimistic about this, and even invest too much, it will lead to the industry is facing the risk of over-development, companies must treat the inventory with caution.

Wu Zheng, general manager of Yiguang Lighting Management (Shanghai) Co., Ltd. stated that "in the era of traditional lighting, inventory is a weapon for corporate competition. In the age of LED lighting, excessive inventory is the grave of enterprises. This year's competition in the LED industry, inventory is actually the company's A key point, or a fate gate. If the management of bad inventory, the company's competition will certainly have a fatal problem. Manage inventory, the company will be able to win, at least to live."

“In view of the current market environment, it is impossible for a company to have zero inventory or no inventory, because it is still necessary to have a moderate inventory due to market pressure. Now the LED market is too impulsive and rational, the industry has excess capacity and product homogenization. The existence of problems has caused vicious competition in the market, and companies must rationalize their inventory."