The legendary boss of LED company Fengguang lost contact, suspected of breaking the capital chain due to excessive marketing

On October 22nd and 24th, the owners of two LED companies in Zhongshan City, an important lighting town, lost contact. They were Zhongshan Hualiang Lighting (Fengguang Legend) Co., Ltd. (hereinafter referred to as "Fengguang Legend") and Zhongshan Xilin Lighting Co., Ltd. (hereinafter referred to as "Xilin Lighting"). Among them, Phoenix Legend, which had paid a lot of money to invite Phoenix Legend to be an endorsement, was exposed to be owed 70 million yuan.

In fact, this year is called the year of LED explosion. LED product share and corporate profits have improved compared with previous years.

The reporter noticed that some LED companies often hope to take advantage of the market outbreak to promote their brands and channels on a large scale and become bigger and stronger. However, their actions are too big and the input and output are not proportional, eventually leading to a break in the capital chain.

Two LED company owners lost contact in a week

An industry insider told reporters that on October 22, relevant personnel saw more than a dozen suppliers standing at the door of Fengguan Legend Company, and police were on site to maintain order. However, Fengguan Legend chairman Xiao Jin and others have lost contact, and Fengguan Legend only has a rented factory building and some products left.

“The news that Fengguang Legend and Xilin Lighting have run away has been forwarded by many industry insiders on WeChat Moments, Weibo and other platforms, and some dealers have introduced their cooperation with Fengguang Legend.” Reporter Liu Jun, president of Guangya Research Institute, said that according to his understanding, Fengguang Legend’s debts reached 70 million yuan.

Coincidentally, not long after the legendary boss of Fengguang was reported to have run away, another LED company in Zhongshan City named Xilin Lighting also reported that its boss had run away.

The above-mentioned industry insiders said that on October 24, it was revealed that the boss of Xilin Lighting had run away. "Xilin Lighting is relatively small in scale. It belongs to a company in Haizhou, an ancient town in Zhongshan. The news that the boss has run away has been confirmed." The reporter called someone related to Xilin Lighting, but the phone was turned off.

"Phoenix Legend has invited "Phoenix Legend" as a spokesperson and is relatively well-known in the industry, while Xilin Lighting is less well-known." said Wu Yulin, president of the Foshan Lighting Association.

It is understood that in 2003, Xiao Jin, chairman of Fengguang Legend, led the early team to found Fengguang Legend, which mainly produced T4/T5 energy-saving brackets, energy-saving lamps, and ballasts. It has been developing steadily since then.

In 2010, Phoenix Legend transformed into the LED field and achieved good results. In the 2012 market downturn, Phoenix Legend signed a contract with "Phoenix Legend" and invited them to be its image spokesperson to cooperate with its brand in comprehensive promotion and channel construction. It received widespread attention from all walks of life and became the first company to hold a celebrity concert.

Input and output are not directly proportional

In fact, benefiting from the recovery of overseas markets and the improvement of the market environment, industry insiders call this year the year of LED explosion. At a time when the industry is growing, the bosses of LED companies such as Fengguang Legend and Xilin Lighting have run away, leaving the outside world puzzled.

"The pie in the lighting industry is getting bigger and bigger. In the first half of the year, the export volume of LED in China's energy-saving lamps increased by more than 30% year-on-year." Liu Jun said that the entire lighting market is divided into foreign markets (accounting for about 50%) and domestic markets. The domestic market is further divided into dealer wholesale circulation market (20%) and engineering market (80%).

“The entire lighting industry has developed rapidly this year. Three out of every 10 lamps on the market are now LED, and the market potential is still huge.” Liu Jun said.

Because the cake is so tempting, capital is pouring in. "Many people are full of dreams for this industry, but it has also led to oversupply." Ding Jianhua, deputy general manager of China Light Network, said that there are currently more than 10,000 LED lighting companies, and homogeneous competition is fierce.

“Enterprises in the competition period of brand channels cannot stand out all of a sudden. At present, most of the industry has homogeneous products and rely on low-price competition to grab the market.” Ding Jianhua said, “Fengguang Legend achieved its performance with strategic losses. It spent a lot of money on expanding channels such as counties and towns. Jinhe staff went to distribute the goods, but the price was very low and the promotion expenses were high. "

Therefore, Ding Jianhua believes that on the one hand, Fengguang Legend lowered the price and sacrificed gross profit margin to distribute the goods. On the other hand, it hired celebrities to endorse and invested heavily, leading to an unsustainable business path, which eventually led to the break of the capital chain.