Faced with price wars, LED display companies are still cross-border?

In the first half of 2013, for LED display companies, it can be said that it is a sorrow and a half: on the one hand, the full-color LED display is getting more and more accepted in the big-screen market, and it can be seen in a slightly bustling market. On the other hand, the profit of LED display is opposite to that of the market, showing a downward trend. What is the contradiction between the two sides of the ice and fire that reflects the format of the LED display? How can industry professionals break through this development dilemma and step out of a new path of development?

Market continues to grow

According to Huang Shuiqiao, chairman of the LED Industry Technology Innovation Alliance of Fujian Province and general manager of Jingcai Optoelectronics Co., Ltd., in the past two years, the market sales of LED displays have increased by 10% to 20% annually. This number is likely to increase as people's recognition of LED big screen publicity increases.

According to some data, in 2012, China's commercial display market (including single-screen display and flat panel splicing products, referred to as MNT) generally maintained a relatively fast development speed. In 2012, the sales volume of China's commercial display market was 182,000 units, an increase of about 20% year-on-year, and sales reached 3.32 billion yuan. Education, medical care, intelligent transportation, urban security, video conferencing, etc. have become the most important markets for commercial display.

Price war "thinning" profit

However, while the LED display quickly captures the market, a “sorrow” that cannot be ignored has surfaced. "Today, the profit of LED display is about 10%. It is good. Sometimes in order to compete for a project, about 5% of the gross profit manufacturers are willing to do it." A representative of a display company sighed to reporters.

It is understood that in the past two years, the profit of the mid-end display project has remained at 10% to 15%. Channel dealers can maintain 8% to 10%, and some 5% of profits are not. There have been market research institutes that have done statistics: there are more than 40 companies with a display screen of more than 100 million yuan, and not many companies with a net profit of 10%.

“The blind investment in the early stage has brought great influence to the industry. Because it does not pay attention to quality and quality, it reduces the cost blindly, which leads to the chaos of the entire industry market.” Huang Shuiqiao said. According to its introduction, the three years from 2006 to 2008 were the highest peak of LED display profit, and the profit was up to 30%~50%. It is also during this period that many manufacturers have joined the ranks of the LED display production army. At present, China's LED display production capacity is basically in excess, and price war is inevitable.

"Because of the fierce competition, the customer's price is also very strong. Some even require that the display be free for him first, and then the advertising revenue is divided into the payment." Some people complain that the market is getting harder and harder to look at the street. LED advertising has a lot of big screens, but in fact many of them are built in the form of "advertising screen change". That is to say, LED screen manufacturers cooperate with advertising media companies, and LED manufacturers first invest in building screens, and then use advertising revenue to pay for goods or to divide advertising. This kind of screen-setting method seems to be profitable, but in reality most of the cost risks fall to the LED screen manufacturers.

"At present, this kind of 'advertising screen change' business model can really make a lot of money. If the LED electronic screen fails to bring profits to the advertising media company, or the quality of the LED display screen, the LED display company will not be guaranteed to lose money. "The industry is frank.

Transformation: cross-border or stick to it?

Faced with the dilemma of the LED display market, LED display manufacturers are also beginning to consider transformation. Some manufacturers have set their sights on the LED lighting industry, which is currently "bright" in the future. Manufacturers such as Quanzhou's Ted Optoelectronics and Cailiang Optoelectronics, which are mainly LED displays, are more or less involved in the field of LED lighting. .

However, some operators have expressed some concerns about this transformation. "Display LED transformation requires a lot of capital and technology research and development as a support. Not all enterprise transformation lighting can be successful. Blind transformation will only bring to enterprises. More risk.” Huang Shuiqiao said that for small and medium-sized enterprises with financing difficulties, the short channel of lighting channels may be the elbow. “The marketing model of the display industry is mainly based on engineering, while LED lighting needs to re-expand distributors or distributor channels.” Many display companies are busy transforming LED lighting business, but in fact their sales channels are not planned. Even the approximate channel direction is ambiguous.

"In fact, LED display is still very marketable." Huang Shuiqiao broke the current low profit margin of domestic LED display: the current low profit of LED display is for conventional display. It is understood that many companies have only invested hundreds of thousands or millions of yuan to start production of display screens, but due to technical limitations, most companies can only do some conventional products, this part of the market is naturally fierce.

With the expansion of subdivision applications, especially the beauty of the dance, the demand for LED displays has increased in recent years, and higher requirements have been placed on its display effect and installation structure. It is understood that the current display is developing in two directions, one is to be bigger and the other is to be precise.

For example, the large display screen of more than 1000 square meters, there are only a handful of manufacturers that can achieve this level in China. The high-definition display is the trend of the current market. High-end dance design like the Spring Festival Evening stage, if it is away from the high-definition LED display, can not produce such amazing results. The price of mid- to high-end displays like this is naturally high, and the profit margin is much higher than that of ordinary displays.

(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)

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