The price competition in the LED display industry has intensified since 2017. Due to the further improvement of industry concentration and the impact of the rise of subdivision, conventional products face a crisis of oversupply. Market share is the battle of the war. In the battle of the invisible sword, most LED display companies survive under huge operating pressure, while customers enjoy the favorable price. Even the low-price wind has spilled over into project engineering. The phenomenon of “low price winning bid” happens frequently, which is the result of vicious competition.
Can’t deny that product prices fall to a certain extent to expand the market and expand the potential customer group to have certain help, also can promote the industry concentration, reversed transmission manufacturers, enterprises on a path to innovation. But it is hard to ignore the damage that price competition can do to the industry as a whole.
Profit is too low to operate difficult, the appearance of cutting corners
At the end of last year, the upstream LED chip, PCB and other raw materials started the “price hike” tour. Recently, the raw material price news came again, by the first half of the year, under the fierce competition, in the downstream of the LED display enterprise has instead of the customer, even instead of dealers, become prices eventually suffer. And, in order to speed up the industry shuffle, LED screen large enterprises “add a fire”, take the lead in the first price, so far see no price increase. There is no doubt that the overall price of LED displays will be difficult to respond to in the future, even if individual manufacturers raise prices alone.
Under high pressure, there are people who work hard and take risks. In the case of higher costs and lower prices, the profits of LED display companies are bound to be thinner, as usual. And, after a few years of falling prices, the profit margins of LED displays have shrunk substantially. This profit will come down again, I am afraid that for some manufacturers, exit is already very difficult, if you can’t turn to the production and operation of high value-added products, you can only reduce the cost. There are certainly two ways to cut costs – intensive production and cutting corners.
The Chinese have always believed in “good quality and cheap”, but the so-called “cheap” is relative cost. Where does the “beauty” of goods come from when market prices are so low that it can lead to a loss? But it is not clear whether the low prices offered by customers can still be guaranteed by the fact that vicious price competition is to blame for the continued success of manufacturers.
R&d costs are high and products are hard to sell
Long-term earnings, enterprise maintain normal operation is not easy, besides the common “zombie” situation, once the capital flow difficulties, it is not hard to imagine the cost of research, production, pin three links, the first is the most likely is a research and development spending cuts. As is known to all, the product research and development, in addition to the technical team, the technical reserve, also need to prepare the corresponding equipment. And most importantly, a lot of money is needed, and when it comes to mass production is hard to predict. It is natural to slow the pace of research and development under budget constraints.
In addition, some manufacturers want to actively promote product innovation and upgrade to improve product performance and quality, and increase product competitiveness. But at the same time, the cost of development and material upgrading of quality improvement will be assessed on the product. , of course, high performance and good quality products are generally more likely to win customers, but in the current market price is generally low, innovative products price unavoidably at a disadvantage compared with similar products, and customers to the higher price of products is also prone to doubt and distrust, so that the price is on the high side products is difficult to be accepted easily. In such a “thankless” situation, manufacturers are frustrated and the pace of industry development will slow down.
And when this wave of low prices has passed, the industry or will form a situation dominated by several large companies, with the rest of the world struggling to shake their position. Under competitive pressure, these enterprises tend to be more conservative and lack the driving force for innovative development. In the long run, innovation and upgrading of LED displays are not conducive to the innovation.
The emergence of “buyer’s market” creates enormous pressure on manufacturers
In the case of conventional LED display products, the use of short time can not find out whether the product quality is inferior or whether it is more prone to failure. Therefore, the customers are naturally enjoying the benefit of the manufacturers. In the long run, the perception of the reasonable price of the LED display is biased. Part there is no denying the fact that lower prices, make originally have no plan to purchase LED display, or choose cheaper display client, will reduce purchase cost to purchase LED display, which to a certain extent, contributed to expand the market, the more potential customers widely.
But the price debate will end. When further enhance industry concentration, occupy the market dominant position of the enterprise will get industry pricing power, will raise prices to make up for the loss of low price strategy, and this kind of situation or will last into the next trade pattern changes. At that time, for customers, not only can not get the low price dividend, may even be forced to accept the high price products, in the long term, the low price competition is not the ideal for customers.
However, after getting used to the generally low price of the market, will the potential customers of LED display be narrowed down? Be “spoiled” customers at a lower price, it is difficult to accept prices recovered product prices, coupled with the LED display screen in the field of indoor display is not a substitute, after price increase, because already to the LED display market scales back, even has the tendency to other display device.
Although the price competition is most industry through the process of industry concentration, and such competition will prompt industry concentration increase, forming a strong strength of enterprises, and eliminate most of the weak. But at present, the LED display industry is Mired in the vortex of vicious and low price competition, and the industry cannot escape from a series of “sequelae” such as the decrease of innovation enthusiasm and the decline of market activity.
It is hoped that LED display enterprises can overcome difficulties and push the whole industry to open new paths in the dilemma.