At present, my country's LED lighting market is in the initial stage of rapid development. The market concentration is very limited. There has not been a group of leading brands with dominant market power and strong integration capabilities across the country. Tens of thousands of LED lighting companies with different grades, regions, and positionings are fighting. As the industry gradually moves from decentralization to concentration, some cross-border giants and powerful manufacturers use their financial and technological advantages to make aggressive acquisitions to achieve capacity expansion, product line extension or channel expansion. The facts tell us: LED is a game of technology and capital.
Let’s talk about technology first. The LED industry chain includes substrate, epitaxy, chip, packaging, application and other links from top to bottom. Compared with traditional lighting, its technical threshold is high and involves many fields such as microelectronics, optics, and thermal science. Especially in the upstream chip and epitaxial wafer fields, most of the cutting-edge core technologies are concentrated, accounting for about 70% of the output value of the entire industry chain, and forming LED patent barriers. At present, the global LED market is controlled by the top five manufacturers in the industry, namely Japan's Nichia Chemical, Toyoda Gosei, the United States Cree, Europe's Philips and Osram. In order to maintain their competitive advantage and maintain their market share, the five major manufacturers have applied for a number of patents, covering almost the entire industrial chain including raw materials, equipment, packaging, and applications. They conduct R&D and production through patent authorization and cross-licensing, which not only hinders the emergence of new entrants, but also increases the production costs of enterprises to some extent. At the same time, LED technology updates are accelerating, and companies can lead the market through technological innovation and differentiated innovation. For example, many manufacturers use incandescent lamp glass covers, bases and other accessories plus LED filaments to launch bulbs that are exactly the same as incandescent lamps. However, the cost of double-sided wrapping packaging is very high, and the heat dissipation problem cannot be effectively solved. Philips developed the single-sided sawtooth typeEncapsulated and patented, the chip usage is reduced by half, the heat dissipation effect is greatly improved, and the light efficiency is not greatly affected. Another example is Mulinsen, which made technological innovations in chip packaging materials and applied for invention and utility model technology patents, replacing gold wires with copper wires and replacing pure copper brackets with iron brackets to achieve the most cost-effective advantage. As a result, the life of the chip is reduced from 100,000 hours to 30,000 hours, but there is no obvious impact on the life of the LED entire lamp system. Due to the influence of power supplies, drivers and other accessories, most mainstream LED lighting products currently on the market have a service life of 30,000 hours. Even a chip with a service life of 100,000 hours cannot change the overall lamp life.
Let’s look at capital again. In the shopping mall, "big fish eat small fish, and small fish eat shrimps", and the greatest power of capital is to make the strong stronger and the weak to become the weakest, either to be merged or to fend for themselves. Especially in the period of industry consolidation, capital operation plays a decisive role. It is precisely because of the successful use of capital means that many industry giants have obtained sufficient capital to expand rapidly during the opportunity period, thus establishing their current position. NVC Lighting is a typical example of the successful use of capital power in the lighting industry.
In the current LED market, capital operations also show the following characteristics: First, they do not follow the rules, and many industry leaders with strong financial strength make a certain type of product quickly occupy market share through large-scale upfront investments with strategic losses; second, they eliminate competitors and strengthen themselves through acquisitions and mergers; third, they use capital leverage to release good news to the stock market through acquisitions and other actions, thereby increasing the stock price. For example, on the day that Changfang Lighting announced its acquisition of Kang Mingsheng, its stock price rose by 9.76% (10% is the daily limit). In the past two years, Everlight Lighting has spent huge sums of money to rush into the mainland market and has recorded losses on its books. However, this move has effectively raised the overall share price of Everlight Group (the share price has increased from NT$38.1 per share on December 28, 2012 to NT$78.7 per share on July 4, 2014). The benefits of listed companies are not just profits from sales performance.
And this is the brilliance of these listed companies. The capital market's continuous requirements for corporate growth force companies to invest more energy in capital operations. Just imagine, if we just rely on one order after another, in what year and month can we achieve rapid growth in sales and profits, or even double them year after year? Therefore, we say that from product and technology competition to market share and brand competition, LED has now gradually entered the stage of capital competition. If you lack technology, you can solve the problem by "buying"; if you lack channels, you can solve the problem by "buying"; if you lack a brand, you can still solve the problem by "buying".
Therefore, through capital means such as mergers and acquisitions, companies can often quickly complete strategic layouts, achieve goals such as strengthening market positions, entering new fields, improving product structures, etc., and achieve market scale and influence that traditional operations have not been able to achieve for decades.
However, capital is also a double-edged sword. If you use it well, you can conquer cities and territories, but if you use it poorly, it will hurt itself. This requires enterprises to practice three internal skills when conducting capital operations: first, do a good job in their own brands and models. After all, profitability is the cornerstone of corporate operations, development and capital operations; second, capital needs to serve The development strategy of an enterprise, especially now that it is in a critical period of determining the LED brand pattern, will have a significant impact on the development of the enterprise. Therefore, the enterprise needs to make a comprehensive layout from a strategic perspective and have the ability to comprehensively consider traditional operations and capital means to formulate strategies; the third is management and control capabilities consistent with the scale.
ANNA