Liu Kefeng: Competition Strategy in the New Era of LED

According to relevant research data, by 2015, the penetration rate of LED lighting will reach 60% and reach 80% in 2018. The advancement of technology determines the rapid growth of the LED industry. The replacement of energy-saving lamps with LED lamps is the trend of the industry. With the support of policies and the continuous adjustment of product prices, LED lamps have economic effects as a home appliance application. The future industry penetration rate will be There is a rapid increase.

With various positive incentives, the LED industry has developed rapidly in recent years. The capital inflows from all directions are insane, and internal and external and foreign companies continue to “invade”. On the one hand, LED lighting has a bright future and a vast market space. On the other hand, the lighting industry is fiercely competitive, and business risks and pressures are increasing dramatically. In this context, the company's competitive strategy is particularly important.

LED lighting enters "critical period of development"

In the past two years, the global lighting market began to show a "whitening" effect. At the same time, due to the upgrading of upstream chip technology and the rapid decline in prices, the gap between LED lighting and traditional lighting products has gradually narrowed, and the decline in the price of downstream LED lighting products has become indisputable. Implementation. At present, the price of LED lighting products is declining at a rate of about 15%-20% per year, gradually approaching the price of traditional energy-saving lamps.

On the whole, after years of development, the domestic LED industry has made great progress in technology, scale, and products, but it also faces many problems, such as excess LED capacity, large number of companies, and uneven product performance. The price war has intensified. Driven by the indoor lighting, the LED industry has already gone out of the previous stage of “darkness” and it will soon begin to shine. It is the darkness before dawn and the cruelest time. The next two years will be the most intense period of competition in the industry. Big fish eat fish and fast fish eat slow fish. It will be the normal state of the industry and many companies will be eliminated. See who can persist.

In the state of blowout in the lighting industry, the LED lighting industry has become more and more fierce, and the competition among enterprises has become increasingly fierce. This has brought great challenges to the survival and development of enterprises. Of course, challenges and opportunities will always coexist. The current LED industry structure has not yet formed, giant companies have not yet emerged, LED companies only need to identify their own unique core competitive advantage, from point to surface to achieve rapid and sustained development, have the opportunity to rank among the forefront of the industry, to eat the lighting market cake.

The overall competitive advantage determines the structure of the enterprise At present, the competitive landscape of the LED lighting industry has changed, the operating costs of the channel have increased substantially, and the existence of many patented products has had very little income, which has plagued many practitioners. The market environment of the lighting industry has changed, and competition has developed into overall competition. Enterprises can only meet the development needs if they only exert power from certain ports such as marketing, products, and services.

Lighting companies must clearly understand their own core values ​​and existing resources. According to the actual situation, they must fully develop their capabilities through marketing, product R&D, marketing, back-office supply, and other ports, supplemented by an effective channel model to achieve business Continuous development. In addition, companies must clearly understand that a large and comprehensive channel model can often not protect the development of enterprises, but will speed up the bankruptcy of enterprises. At present, many LED companies blindly invest large amounts of money in ad bombing and human-sweeping street tactics in cases where products, back-end supply chains, etc. are not yet fully prepared, and this kind of cartwheel inversion will be the same as the “domino effect”. Conducive to the development of the enterprise may even lead to the disappearance of enterprises in the tide of industry consolidation.

In the fierce competition in the industry, how can LED companies win the elimination war? After planning and moving. LED lighting companies must make strategic plans based on their own resources and development goals. We must fully recognize the characteristics of scale warfare, counterattack warfare, lateral warfare, and guerrilla warfare, select tactics that suit their own businesses, and allocate corresponding resources. For example, the scale war is suitable for giant companies such as Philips, and the blocking war is suitable for first and second-tier companies. In the future, with the further intensification of competition and the further refinement of the division of labor, many companies in the LED lighting industry will become suppliers and supporting providers of brand enterprises. This is an unavoidable major proposition for the development of the industry.

"Capital Age" M&A is an Inevitable Trend Many signs have shown that the LED lighting era must undergo a tremendous transformation before it completely replaces the traditional lighting era. The arrival of a new era of LED lighting, to a certain extent, means that the industry has entered the "capital era."

Capital mergers and acquisitions is a tool used by listed companies to achieve their strategic goals. M & A is an inevitable outcome of the industry's development. Enterprises with strong capabilities, in order to meet the strategic development needs and strengthen their core values, will acquire other companies with certain advantageous resources through mergers and acquisitions in order to achieve the goal of expanding the market and achieving strategic development. Of course, more mergers and acquisitions are for the sake of time cost.

M & A for listed companies is to meet the strategic needs of the development of enterprises, such as the purchase of profit-oriented companies, or through mergers and acquisitions of companies with good sales channels to achieve rapid development, there are also mergers and acquisitions of product-based companies to supplement corporate short boards. In order to meet development strategy or tactical needs, the capital side looks for the corresponding companies to conduct mergers and acquisitions rather than mergers and acquisitions for mergers and acquisitions.

Capital mergers and acquisitions do not happen overnight, but they require certain conditions of maturity. The LED lighting company's capital mergers and acquisitions need to meet the following mature conditions before proceeding: First, whether the merger and acquisition company has a standardized management model; Second, whether the merger and acquisition companies have to meet the strategic needs of the merger and acquisition of the core values; The current size of the acquired company and its future vision; Fourth, whether the acquired company's own positioning is in conformity with the tactical needs of the acquiring party. This is a concern for listed companies when they make acquisitions.

How does a merger achieve 1+1>2 goals?

The fierce competition in the LED lighting industry will inevitably allow companies with financial strength to save time and cost through mergers and acquisitions, so as to rapidly increase their overall strength and thus snatch bigger cakes. With the further increase of market penetration of LED lighting industry, more capital mergers and acquisitions will take place.

M&A is only the first step. How to optimize resources after M&A to achieve the benefits of 1+1>2 is the most difficult. How to solve this difficulty requires that the acquisition and the acquired company reach a consensus through full communication, form a unified goal, and work together for it. With the further development of the industry, the future does not rule out mergers and acquisitions in order to strengthen the strength of their products through the purchase of products, enhance their corporate image through the purchase of brands, and achieve financial data through the purchase of profitable companies. Regardless of the company's needs for mergers and acquisitions, the key lies in how to achieve optimal allocation or integration of resources through mergers and acquisitions, maximize the value of mergers and acquisitions, and achieve the long-term development of the strategic objectives.

For the acquisition of a listed company, it needs to consider not only the time cost, but also the multi-dimensional consideration of the acquired company. Capital M&A is a double-edged sword. In the current LED lighting market, there is no shortage of good M&A targets. The key lies in the fact that listed companies need to have an in-depth understanding of the industry, companies, and personnel before choosing the right company. We have done our homework in the previous period to find the target of mergers and acquisitions that satisfy our own strategic development.