"Broken goods" flooded the market low-end LED factory fell in the low price of bad end

On July 3, Gaogong LED Network reported that “100 million LED factory manager owes 30 million to close the low-end market or squats”. At present, more than 60 parts suppliers have been in arrears with the Xiongji factory, totaling more than 30 million yuan, and the suppliers with the most arrears are more than 3 million yuan, and there are more than 3 such "big households".

The reporter found in a Zhongshan investigation that a large factory of this scale had closed down without warning, which made many lighting business owners in the ancient town feel incredible. And everything seems to be unexpected, but in a reasonable way, a number of suppliers told reporters that Xiongji factory is known for producing low-end LED lamps, and on the basis of quality, desperately lowering the price, and finally letting themselves enter a dead end. .

At the same time, the status quo of Xiongji Factory may be a microcosm of low-quality and low-cost enterprises in the LED industry.

On June 10, Gaogong LED held the “10th High-tech LED Industry Summit Forum” in Guangzhou. In the forum, some experts said that the LED industry is now mixed, and the market will still face reshuffle in the next few years. More than 50% of SMEs will withdraw from the competition.

Xiongji factory annual sales scale of over 100 million

Zhongshan Guzhen is located at the intersection of Zhongshan, Jiangmen and Foshan, adjacent to Hong Kong and Macao. It is famous for its lighting and decoration at home and abroad.

According to the official website of the Guzhen Town Government, since the development in 1982, the local lighting industry cluster with the old town as the center and covering the surrounding three towns and 11 towns with an annual output value of over 100 billion yuan has become a professional market for several major lighting products in the world. First, it is the largest professional lighting production base and wholesale market in China. The town has 12,700 industrial and commercial enterprises with lighting and accessories. In 2012, the total output value of the lighting industry reached 15.81 billion yuan, accounting for more than 60% of the national market share.

Xiongji Factory is one of the few companies with more than 100 million yuan in sales. In the past two years, as the LED tide spread across the country, the factory has also switched from traditional lamps to LED lamps.

On July 1, the supplier Luo Ziming also sent more than 20,000 yuan of goods to Xiongji Factory. On the morning of July 2, the Xiongji factory called again and asked Luo Ziming to send some more (goods). Who knows that on the afternoon of July 2, there was news that the boss was running.

A news report from the Zhongshan Guzhen Propaganda Office to the reporter said: At 16:00 on July 2, the Guzhen Comprehensive Management Office received a report. Xie, a operator of a lighting factory in Zhongshan Guzhen, suspected of escaping, suspected of contract fraud and refused to pay labor. Remuneration, causing suppliers and workers to gather at the plant.

On July 4, the reporter saw outside the Xiongji factory that the police were loading a box of inventory products and then carrying them away. A number of workers are still outside the door, waiting for government departments to deal with wages.

Luo Ziming did not notice any difference before the boss of the Xiongji factory ran, but according to the workers, on June 27th, everyone had no specific things to do, and many people played mobile phones in the workshop. Zhang Weiqi mainly supplies LED lamp heads to Xiongji Factory. "It’s all hard-earned money. When he runs this, I will do it in a year.” He provided the reporter with a list of suppliers of Xiongji factory. On this list, Xiongji Factory owed more than 40 supplies. Tens of thousands of dollars in merchants.

“Our suppliers have simply calculated that the total amount owed is estimated to be more than 50 million yuan.” Zhang Weiqi said that he is not the worst of these suppliers, and several people have been in arrears of more than 4 million yuan.

From July 4th to 7th, the reporter repeatedly called Xie Yingxiong, the boss of Xiongji Factory, but his mobile phone has been turned off.

The price "no minimum, only lower"

Xiongji Factory mainly produces low-end products in Guzhen. In the industry, this product is called “bad goods”. The distinguishing feature of "bad goods" is that the price is very cheap, but the quality of the product is not guaranteed at all.

Luo Ziming is the LED lampshade supplier of Xiongji Factory. He told reporters that Xiongji asked him to purchase, and they all chose the lowest-end products. In this way, Xiongji can ship at a very low price, thus quickly occupying market share.

According to the supplier, the price of the lamps started by Xiongji is still somewhat rational. Take the 3W LED bulb as an example. The price is about 5 yuan. This price has some meager profits, but later, it was written by Xiongji. The price is only 3.8 yuan. The suppliers together, this price can not make up for the cost.

Zhang Weiqi said that the Xiongji factory chose such a road, but also helpless. After decades of development in the ancient town, the industrial support has been quite mature, and almost any spare parts and materials can be purchased in this town. "Only you can't think of it, there is nothing you can't buy," he said.

This industry-wide package makes the threshold for entering the industry very low. Rent a factory, buy a few soldering irons, buy the necessary accessories from the town, go home and simply assemble. In the ancient town, reporters can see such workshop-style enterprises everywhere, some have a signboard, and some have no logo. The official website of Guzhen also shows that the number of individual industrial and commercial licenses registered in the town has exceeded 10,000, and more than 60% of the households have become owners of large and small businesses.

Zhang Weiqi said that the threshold is too low, and there are so many companies to enter, so in order to sell things, everyone can only compete in vicious prices. “There is no minimum, only lower.” In the interview, a lighting business owner felt the same about Zhang Weiqi’s statement.

An industry insider in Foshan said in an interview that more than three yuan in Zhongshan can buy a bulb, and in some places this type of lamp may sell for dozens or even hundreds of yuan.

On the one hand, we must make low prices, and on the other hand, we must make money. In this way, some enterprises have done a good job in product quality. Zhang Weiqi said that taking the lamp head as an example, a quality qualified lamp head costs at least 8 cents, while some manufacturers ship less than 8 points. Shipped at this price, it is likely to cut corners.

According to Zhang Weiqi, the top of the lamp head is made of glass material. This material is resistant to high temperature, but the production equipment is expensive. The set needs several million yuan, and the glass is soldered on the glass. The process is complicated.

Later, some enterprises in the ancient town began to replace the glass with plastic, so that no solder was needed, and the production equipment was only more than 200,000 yuan. The glass material can withstand the high temperature of Wubai Baidu and has good flame retardancy. Plastics are also high temperature resistant and not resistant to high temperatures. At the beginning, we also used high temperature resistant plastics. Later, some companies used non-flame retardant and high temperature resistant materials. The difference between these two kinds of plastics is that the price of high-temperature plastics is between 20,000 and 30,000 yuan per ton, and it is only 8,000 yuan for one ton of high-temperature materials.

Zhang Weiqi said that the thickness of the metal shell of the lamp cap is different except for the material at the top of the lamp cap. In order to save costs, the thickness of the metal shell is reduced as much as possible, and as a result, the hand is pinched and recessed. In his eyes, this kind of thing is simply unqualified and cannot be sold. He said that in fact, many people also know that this practice is not a long-term solution, but in the fierce competition, you do not do others.

Like many enterprises in ancient towns, Xiongji Factory has fallen into this low-price vicious competition. Workers in the factory told reporters that in addition to purchasing low-cost accessories, the factory even saved some processes to further reduce costs. The consequence of this is that the quality of the product is not guaranteed at all. An unconfirmed claim by the reporter is that some of the LED lights in the Xiongji factory will be broken in less than 20 hours.

It is understood that in this way, the sales scale of Xiongji Factory has rapidly risen to the forefront of the ancient town, but its after-sales service has been seriously unable to keep up, the product quality image has been continuously damaged, and finally developed to sell products at a price lower than the cost.

Multi-interested outcome

The above-mentioned insiders told reporters that LED products, as ordinary consumer goods, are entering this market. However, the market is slowly opening up, and the number and capacity of manufacturers are exploding, so that some enterprises will be eliminated.

On the other hand, he believes that the country does not have a unified mandatory standard for LED products, so the same type of lamps are priced from 3 yuan to 300 yuan, which causes confusion in the entire market. Some manufacturers want to quickly occupy the market, desperately reduce the price, the quality is poorly done, and eventually eliminated by the market.

Quan Jian, president of the Guangdong Lighting Association, believes that not only the ancient town, other places, and other industries, the price war is fierce. But overall, things in the ancient town are indeed cheaper, and there are more things that are shoddy, and the price determines the cost. "This kind of practice may have some benefits for the enterprise for the time being, but it will cause great harm to the entire industry and the region where the enterprise is located." Quan Jian said.

In fact, this is the second boss run event that Zhang Weiqi encountered in more than a year. Last time he lost more than 50,000 yuan and has not recovered. "Everyone has no sense of security. The road running event is like a mine. Everyone doesn't know which day will detonate around them." He said that many people, like him, can't do business in a down-to-earth manner.

Industrial economic critic Hong Shibin said that this mode of desperate competition for low prices has already damaged the interests of many parties. Enterprises that sacrificed quality and lowered prices like Xiongji Factory ended up in failure. And a living supplier, to a certain extent, pays for the failed company. If the products with low price and low quality are rampant in the ancient town, the brand image of “Lighting Capital” will also be affected.

At the beginning of this year, the Guangdong Provincial Quality Supervision Bureau announced the results of spot checks on 51 batches of LED street lights and light source controllers, of which 20 batches were unqualified, and the rate of unqualified products was 39.2%. This means that a large number of unqualified LED products are flooding the market.

Dr. Zhang Xiaofei, director of the High-tech LED Research Institute, also said at the Gaogong LED Summit Forum that despite the market demand picking up in the first half of the year, the overall overcapacity of the entire industry has not been fundamentally corrected, from epitaxy, chip, packaging, downstream, and production capacity. There is a surplus. Those enterprises that make a living by low quality and low prices will have smaller and smaller living space in the future, and their market share will be more and more concentrated in enterprises with brands, channels and innovations.

( 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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