The price of raw materials rose and the low-end LED lights were “locked throat”?

Will low-end LED lighting companies, which have always been price-sensitive, be caught in the throat by rising raw material prices?

LED upstream raw materials: chips, brackets, packaging materials...

A few days ago, LED upstream chip companies Guoxing, Hongli, Simai, Zhaochi, Jingke, Xuyu, etc. have issued price increase letters. Among them, the spokesperson of the National Star said, "This time we can't hold back! At present, the supply chain price of the entire LED package, such as chips, brackets and packaging materials, continues to rise, although we have established strategic partnerships with various suppliers. However, the price has reached the highest level of the year, and the costs of independent research and development, equipment maintenance, and manual manufacturing are also rising."

It is reported that the price of Guoxing Baiguang LED's full-line products is raised by 5-20%; Hongli Zhihui and Simai respectively increase the price of products by 5%-15%, and Zhaochi Energy-saving Lighting decides to start from December 1st. W lamp beads and some 0.5W lamp bead products increase the sales price, of which 0.2W increases the price by 10%, 0.5W depending on the cost increase.

At the moment, the whole industry is welcoming a wave of price increases. For many small and medium-sized low-end LED lighting companies, it is easy to fall into the situation of “price hungry, no price increase and death”, and thus “eliminated” in “cost war”. Can product price increase be paid by consumers? Can it be accepted by the market? Can low-end LED lighting products withstand the test?

Low-end LED lighting companies are caught in their throats

The rising of the “willfulness” of LED raw materials will inevitably bring about an increase in costs. For high-end LED companies with high profit margins, this increase is not enough to have a direct impact on product prices, but for low-end LEDs with price as the lifeline. In terms of lighting companies, it is not so easy.

Zhang Hong, director of Zhongshan Lianhao Lighting Co., Ltd., believes that “accelerating the elimination of low-end manufacturing, in the early stages of all walks of life, knowing what is not knowledgeable, rich and moneyless, blindly invest in the LED lighting industry, resulting in a supply greater than Seeking the status quo of the industry, everyone is struggling to support. Originally, it is counting on the annual meeting. Who knows that the order is more, but the prices of these industries have not been okay, and there is a single, even weak. The three or two gross margins are now eaten up by rising material costs."

Obviously, there are only a handful of people who can "rise up". For a company that lacks technological innovation, quality management, and blind copying, it will form a time bomb, and sooner or later it will be finished.

For most low-end LED lighting companies, in the face of surging raw materials, price increases are not an easy choice. Low-end LED lights have been fiercely competitive in the market, such as Zhongshan Guzhen, Yiwu and other local low-end LED lighting brands, as well as a large number of low-end LED lighting brands in Sichuan and Fujian, and more local LED lighting factories. Low-end products, and the price of these products are highly overlapping, which means that even if the price increases by 1 cent, it can be replaced by other products for price-sensitive consumers.

Therefore, the surge in the price of raw materials in this round has undoubtedly stifled the throat of most low-end LED lamps: not rising, not rising, even if you want to increase prices, the magnitude is also a tangled problem: more, consumers Going to the competing products went up; the increase was less, and the cost could not be increased.

The watershed of low-end LED lights is coming.

In recent years, the transformation and upgrading of small and medium-sized lighting enterprises has been a hot issue in the industry, and rising raw material prices may be the watershed for the transformation and upgrading of low-end LED lighting enterprises.

In the cost increase of a round, some national and some regional strong lighting enterprises can use the scale advantage to insist on not raising the price for a period of time, or use the market base to carry out small price increases to resolve the cost pressure, but for For those enterprises that lack market competitiveness and rely solely on price competition, it is easy to fall into the situation of “price hungry, no price increase and death”, and thus “eliminated” in “cost war”.

At the same time, with the brand lighting companies such as NVC Lighting, Foshan Lighting, Op Lighting, Sunlight Lighting and so on, the lighting companies that carry the brand genes and rely on the Group's strong capital advantages will become the main force in the downstream lighting market. Including the enterprises, including the refined and systematic downstream lighting operation mode, under the macro background of consumption upgrading, the company is continuously promoting the overall value enhancement of the downstream lighting market, driving the transformation and upgrading of the lighting industry, and extensive operation. SMEs are bound to be eliminated in the transformation and upgrading, and the brand concentration in the downstream lighting sector will gradually increase.

In this sense, the rise in raw material costs is a watershed in the downstream LED lighting industry. The LED lighting industry is entering a new reshuffle period. Only after the price increase, the products can continue to be accepted by consumers. The products continue to be sold, and the lighting enterprises can survive in this round of price hikes.

The market is fair and we have to wait for the answer.