Li Ka-shing has invested heavily in LED nano-lights, Xiaomi has invested in Midea Group, TCL Group has joined hands with Wanda to enter the smart lighting industry, Foxconn also wants to use LED to lead to its own brand, and even the herbal tea family Jiaduobao has been rumored to test LED waters before. As LED develops rapidly, giants in other fields can no longer hold back and have set foot in LED, embarking on a cross-border journey. New cooperation and new ideas derived from it are also emerging one after another.
The giants are pressing hard to cross-industry
The LED industry is like a besieged city. Companies outside the city have been coveting it for a long time and resolutely cross-industry to conquer the city. Enterprises in the city have gone through great troubles and tried their best to hold on to their own land...
Li Ka-shing’s light-up effect
In early March 2014, Li Ka-shing showed the media the nano-LED light bulbs he invested in. Nanoleaf, the "world's most energy-saving" LED bulb made famous by Li Chaoren's branding, was officially launched in Hong Kong on November 21, 2014, with a price of up to US$35. After being exposed again by Li Ka-shing, LED lights immediately triggered a Midas touch effect in the Hong Kong stock market, and the stock prices of many LED lighting concept stocks rose. The industrial star effect has won media coverage from all walks of life, and has also attracted more attention to LED lighting in the domestic market.
Just as Li Ka-shing said, "Changing the world is as simple as a lamp." Hong Kong needs to develop innovative industries and must seize them immediately." In fact, the new technology bred in Chaoyang LED soil is the innovation opportunity he is looking forward to. Giants invest in small startups, but they don't really value the profitability of the latter.
Xiaomi "marries" Midea to lay out smart homes
The Yeelight smart bulb launched by Xiaomi in October 2014 is regarded as an important beginning of cross-border LED and smart home layout. Later, during the Double Eleven period, Xiaomi launched a portable LED lamp priced at 19.9 yuan. Then on December 14, Xiaomi Corporation and Midea Group both announced the signing of a strategic cooperation agreement. Xiaomi Technology will purchase 1.29% of Midea's shares for 1.266 billion yuan.
Previously, Xiaomi had a series of layouts in smart home appliances, such as Xiaomi TVs, Xiaomi routers, Xiaomi air purifiers, etc., all of which demonstrated Xiaomi's ambitions in this field. This time Xiaomi joins hands with Midea to deepen its efforts in the smart home industry chain. Looking at Midea Group again, it released its M-Smart smart home strategy in March 2014, announcing that it would transform from a traditional home appliance manufacturer into a smart home creation company. The cooperation between Xiaomi and Midea is actually a kind of alliance. Xiaomi has a strong online marketing system and experience, while Midea is in the physical manufacturing industry, and online marketing is Midea's weakness. Although the cultures of the two are different, their cooperation will form complementary advantages. Lin Yan, deputy general manager of Guangdong Sanxiong Aurora Lighting Co., Ltd., pointed out that cross-border is actually a more advanced integration.
Recently, the media has reported that Xiaomi is fully prepared for a series of ecological chains in the smart home field, which is expected to detonate the Internet of Things ecosystem and drive up the price of the LED lighting sector.
Foxconn uses LED to transform into its own brand route
Foxconn, a giant in the foundry industry, is also making bold moves on the road to cross-border LED. At the end of 2013, Foxconn’s factory in Guizhou was completed and put into production, with one production line for TVs, LED street lights, and electronic whiteboards.
It is reported that Foxconn is building a complete LED industry chain to try to take the independent brand route, from chips to packaging to applications, from LED displays to LED lighting, the layout in the field of LED lighting is very complete and precise. Foxconn intends to transform the LED industry from OEM to independent brand, and from traditional electronics industry to emerging industries.
However, so far, Foxconn’s transformation does not seem to be smooth. It is understood that Foxconn’s current LED business revenue mainly comes from government orders, brand OEM, and the group’s own lighting replacement. Although Foxconn has invested in LED in many places across the country, it is difficult to see products bearing the Foxconn trademark on the market.
TCL joins hands with Wanda to increase smart home cooperation
At the beginning of 2015, home appliance giant TCL Group announced that the company signed a letter of intent for strategic cooperation with Dalian Wanda Group Co., Ltd. The two parties will establish a joint working group to carry out business cooperation in the development, construction, and operation and maintenance of Internet application and service platforms, commercial displays (including TVs), IMAX theaters, lighting, air conditioning, smart home systems and other businesses.
TCL Group will develop, design, and customize the required systems, terminal equipment, application support platforms, etc. based on Wanda Group’s business development needs based on its advantages in smart and Internet application products and technologies. At the same time, there is the possibility of further cooperation between the two parties in big data, cloud services and O2O business in the future, which will help TCL establish the ability to provide intelligent products and Internet operation services from cloud to end.
In fact, TCL’s own advantage lies in its rich product range, but if you want to find a stable strategic partner as a strong market end, real estate manufacturers with the same demands are the inevitable choice. In other words, a huge market has been formed between Wanda and TCL, which is the smart home trend that has just opened with huge room for imagination.
Liang Zhenpeng, a home appliance industry analyst, said that after the home appliance industry enters the era of intelligence and the Internet, the industry scope has cross-penetrated with other industries and has become infinitely large, and can be extended to the Internet, big data, cloud computing, Internet of Things, smart homes, smart communities and other fields. Therefore, enterprises must develop an extensional growth model and rely on external resources to unite and integrate development.
Has LED become a "cross-border" smoke bomb for enterprises?
Since its development and utilization, the LED circle has never lacked cross-border disruptors, and there are not a few "laymans" who have directly entered LED lighting.
“The recent Nobel Prize and the energy-saving concept have made LED ‘look’ very prosperous, with a good situation and many opportunities, and many companies are flocking to it.” Dr. Shi Xiu, the father of Taiwan’s LED industry and chairman of Lishengxin (Luoyang) Electronic Technology Co., Ltd., said about the cross-border boom in the LED industry, “Capital is not a problem. The key is that the information on investment channels is not smooth, resulting in investment difficulties, which also makes it easy for investors to blindly follow.”
“Cross-border mergers and acquisitions of enterprises are also the needs of capital. Through cross-industry mergers and acquisitions, rapid development can be achieved and benefits will be brought to the capital market. This is the strategic need of large enterprises, especially listed companies.” Shi Xiu added. Many people in the industry also believe that LED has become a smoke bomb for enterprises to "cross-border", but the fact is not mature.
However, LED is still "popular". The LED industry under the aura of "sunrise industry" has always been a popular choice for the transformation of traditional industries. Especially as the LED lighting market gradually picks up, more and more "laymen" have begun to launch more fierce offensives. Judging from the current situation, well-funded companies have started to develop LED businesses halfway, and many of them have failed and few have succeeded.
Zhang Jun, general manager of Guangdong Ochis Technology Co., Ltd., pointed out that manufacturing companies have integrated cross-border investments and aggressively entered related industries to gain new profit margins; dealers have extended product sales lines to capture more profits. They are undoubtedly seeking new opportunities and new markets in cross-border operations, hoping to break through existing development bottlenecks.
Some companies that are gradually losing their competitiveness are experiencing the painful torment between "breakup and establishment" and are more eager to take over LED lighting, an industry with high gross profit and huge market space, to make up for the helpless financial statements. More importantly, they can open up the upstream, midstream and downstream LED industry chains across borders to accumulate strength for rebirth. Perhaps this is why cross-border companies have made many bold moves to seize the LED lighting industry.
Will it trigger industrial ecological changes?
The eyeball effect brought about by the willful "intervention" of giants from all walks of life has made LED steal the show. These cross-border behaviors may seem "not doing business properly" and even make people scratch their heads. However, the changes in the competitive landscape caused by cross-border players have made "insiders" faintly uneasy. Just like a saying circulating on the Internet, "China Mobile said that after so many years of doing it, it was discovered this year that Tencent is our competitor!" What impact will giant cross-border LED have on LED companies or industries?
Competition will become more complete and lighting shares may be eroded
The crossover of giants will undoubtedly lead to more and more competition. Large companies will begin to "seek change", small businesses will start to find gaps in their survival as their space becomes narrower, and the entire industry will begin to think about mutual cooperation and win-win results.
Judging from the current industrial competition landscape, there are currently three types of “cross-border” enterprises. The first category is to adapt to the current development, change the traditional lighting era model, and transform from traditional lighting to LED. Based on the existing channels and technologies in the industry, the cross-border transformation of such enterprises is conducive to the sustainable development of the enterprise and can promote the upgrading of the lighting industry.
The second type of companies "crosses over" into LED from unrelated industries. These companies are often "not short of money". Compared with other LED companies, they can bring more capital to the industry, and at the same time have strong R&D capabilities and high technological levels. However, after all, "every industry is like a mountain", some of the "rookies" in the cross-border LED industry have succeeded, and some have failed. More and more companies cross-border LED have also brought some "sequelae". There are now more than a dozen domestic LED listed companies, but there are very few real money-making companies, and many companies have turned into losing money and making money.
Dr. Shi Xiu, the father of Taiwan's LED industry, believes that many companies that are new to the industry have already had a taste of the industry. These so-called cross-border companies are already hurting and misleading the entire market. At present, many companies in the industry have fallen into a vicious cycle of "price war - reduced profits - weakened costs - insufficient quality - blocked sales - price war".
The third category is large enterprises with successful operations, large scale, strong funds, and wide market channels. Influenced by the needs of corporate strategic planning, they "cross-border" from the perspective of business model and Internet thinking. This kind of cross-border is driven by the current market situation. It is not limited to diversification, but also a kind of "integration" of resources.
Lin Yan, deputy general manager of Sanxiong Jiguang, said that monopoly industries in the traditional economy cannot adapt to the new market and are slowly being replaced. Cross-border competition has intensified. It is precisely with competition that companies will innovate and the industry will progress.
Liu Kefeng, Group Vice President of Shenzhen Jiawei Photovoltaic Lighting Co., Ltd., believes that on the one hand, cross-border competition will intensify competition in the LED lighting industry, and on the other hand, it will prompt more "industry" companies and people to think about the development direction and future competition pattern of the industry, so as to seize the opportunity to take countermeasures.
Pintu.com CEO Liu Wanlan also said that in the current society, competition within and outside the industry coexists. If the entire industry ignores this key point and ignores the in-depth cultivation of users, then the next step may be a shrinking of the entire industry's share. The current lighting market is still "fighting among each other", but the pace of cross-border innovation is pressing forward step by step.
The boundaries of the smart home industry are gradually blurring by joining forces
Xiaomi's entry into LED lighting, from a deeper perspective, is not just a share of the LED lighting market, but also the improvement of its own smart home strategic behavior in recognition of the broad prospects of LED. Changes in thinking and business models have made the "borders" of LEDs more blurred. It is undeniable that the cross-border integration of these giant companies will promote a qualitative leap in the lighting industry.
Professor Xiao Hongqing, professor of the Department of Electrical Engineering at the National Taiwan University of Science and Technology, said that cross-border innovation makes the future LED industry full of imagination. Cross-border innovation and integration between enterprises will allow electronic control, communication Internet, sensing technology, lighting engineering planning and design, architectural landscape, and interior decoration design to integrate and absorb each other.
Cao Jianlin, Vice Minister of the Ministry of Science and Technology, said that this year's Nobel Prize has greatly inspired the LED industry, and it has also triggered a series of thoughts, such as the new era and new needs of the development of human society. For science and technology workers, cross-border is the key point. Under the situation of accelerating academic crossover, extension of industrial frontiers, and emergence of emerging businesses, openness, integration and innovation are the characteristics and driving forces of industrial development in the era of large-scale cross-border science and technology. In the future, LED will continue to develop towards intelligence, precision and cross-border applications.
Thinking beyond lighting to derive new applications and new models
Crossover seems to have become a trend and can bring different kinds of innovation. Li Jinqu, deputy general manager of Dongguan Weilnis, said that for example, in the mobile phone industry, as an indispensable carrier in the mobile Internet era, if there is a cross-border cooperation plan, it is necessary to have an in-depth understanding of the other party's development direction and market consumption demand, so that targeted and gradual integration can be carried out in terms of products, channel resources, consumer groups, cooperation models, etc.
Quan Jian, president of the Guangdong Provincial Lighting Electrical Appliances Association, mentioned that enterprise integration and innovation have enabled LED companies to no longer just do vertical layout from the perspective of lighting, but to start thinking beyond lighting and thinking about cross-border applications, making it an inevitable trend with broad prospects.
“But the companies currently engaged in smart lighting are only stuck at the technical level, that is, how to realize remote control and dimming of LED lights. This is precisely the easiest and already solved problem.” Wang Haibo, vice chairman of the China Lighting Electrical Appliances Association and director of the Electric Light Source Materials Research Institute of Nanjing University of Technology, pointed out that the key to smart lighting lies in the field of photobiology, such as refined lighting adjustments according to people’s exact needs. However, this aspect of work is extremely difficult, so it is almost blank so far. The giants entering from across the industry do not understand the field of smart lighting. If they do not have a specific entry plan, the prospects may be worrying.
Liang Litian, director of the Industrial Research Office of Epistar Optoelectronics Marketing Center, believes that the entry of cross-border giants is giving lighting more added value in different ways. For upstream companies, this promotes a comprehensive increase in industry turnover, not just an intensification of price wars. But for companies that do smart terminal lighting, if they don't have the fast resource transportation speed of these electronics and home appliance companies, they will be greatly affected.
Enhancing the competitiveness of the internal forging industry
While cross-border competition brings competition, the "border" of LED has also become broader. Just as LED has brought a light source revolution to lighting, cross-border has provided more imagination for lighting. What enterprises need to do is to welcome this change and innovation with a positive attitude.
Accurately seize advantages and respond to competition rationally
Facing the cross-border LED giants, Liang Litian said that for large companies, they have many resources, but this also makes it difficult for them to pivot; for small companies, while finding a suitable market segment for their deep cultivation, they must also find small companies in the corresponding smart field before they can enter the smart home. In my opinion, it is exactly easier to work with smaller companies. The new company has certain expertise in the Internet and smart connections, and can make products based on its market segments. In short, when LED companies face cross-industry, companies of different sizes can have different approaches. The survival of the company is the product of the market competition mechanism.
Liu Qiang, general manager of Zhejiang Kaiyao Lighting Co., Ltd., said: "This is a normal phenomenon for every industry that is in the sunrise period. There are many companies coming in, and many are being eliminated at the same time. This is a natural law. Can cross-border giants take the lead in the LED industry? This is unknown. Liu Qiang said that if the cross-border giants come in and can adapt to the development of this industry and give full play to their own advantages, then they have succeeded, otherwise they will be "acclimatized" and be hunted down. On the other hand, enterprises in the industry can survive by accurately grasping the "local advantages" and continue to develop. Those who fail to keep up will be eliminated. This market is very fair.
"The crossover of giants has made domestic LED enterprises full of crisis. Small enterprises should find their own unique advantages, be small and specialized, and focus on service and technology research. Large enterprises should not take over all product production, but should use their "big" advantages to focus on overall technology leadership and sales network coverage. " Said Shi Xiu, the father of Taiwan's semiconductor industry.
Cross-border does not mean a successful breakthrough, and transformation does not mean a successful upgrade. In the upcoming 2015, the LED industry still needs to be careful of many "black swans". Competition will intensify and profits will fall. Natural selection means survival of the fittest. Enterprises should be more rational and less blind.
Establishing an industry cooperation mechanism to seek common development
Liu Kefeng, Group Vice President of Shenzhen Jiawei Photovoltaic Lighting Co., Ltd., said that many companies have adopted the "group together for warmth" approach, which shows that companies have realized that they are facing development threats. "Teaming up" is an inevitable result of intensified competition and a way for enterprises to seek common development through complementary resources.
"How to deal with cross-border operations is not something that can be decided by an individual or a single company, but is related to the entire industry. Every lighting company should establish industry awareness, find its own core competitiveness, and seek complementarity and establish the most mature cooperation mechanism on this basis, so that it is more meaningful to unite to defend against enemies." Liu Kefeng added.
When establishing an industry cooperation mechanism, it is particularly important to strengthen communication with and outside the industry and understand the market environment and industry competition situation of LED lighting.
Breaking tradition and focusing on brand and channel construction
Summary of the development curve of LED companies in 2014, Wang Haibo said that the crossover of LED by giants in other fields actually shows that the lighting industry is full of vitality and vitality, and is thriving. However, LED companies must pay attention to the construction of brands and channels in competition. Although traditional lighting companies such as Opple, NVC, Sanxiong Aurora, etc. have only begun to get involved in LED in recent years, their sales volume has not decreased due to their early expansion in brands and channels. And some companies that started the LED road in the early stage, even after many years, are still unable to compare with the size of traditional transformation companies.
However, brand and channel building is a process of accumulation. You cannot be "willful" and eager for quick success. This is also the law of traditional business survival.
The development of the lighting industry in 2014 is not optimistic, and exits and mergers and acquisitions are in full swing. If the company itself does not have strong competitiveness, it will not have good "bargaining power" when it is acquired. "When channel construction is at a disadvantage, companies should turn their energy to product research and development. Small businesses, in particular, need to have a clear positioning, focus on subdivided areas and persevere. This is the truth for long-term development of companies." Wang Haibo put forward suggestions for "self-rescue" for LED companies.
The growth process of a market is the same as that of a cicada. It must undergo transformation before it can continue to develop. Cross-border and mergers and acquisitions are ultimately about seeking change. In the early stages of transformation, breaking the inherent thinking patterns and traditional operating models is the first step to a successful transformation. There is nothing wrong with crossing borders. What companies need to do is to integrate their own resources and make multi-faceted efforts in branding, marketing, and channels to achieve leap-forward development.
Summary: Cross-border does not only mean expansion into emerging fields, but also means inherited innovation and the integration of multiple business formats. The crossover of giants not only brings competitive pressure to LED companies, but also brings more possibilities to open up new business models, injecting new impetus and elements into the growth and innovation of LED companies. In the Internet era, whether it is LED companies defending the city or cross-border giants attacking the city, they will experience a disruptive innovation.
ANNA