On June 3, CCTV Finance "Transaction Time" afternoon (13:30-15:30) reported the news of the early dissolution of Philips lighting manufacturing.
As a well-known lighting brand, Philips, on May 31, Philips Lighting Manufacturing (Shenzhen) Co., Ltd. issued an announcement of early dissolution. The content shows that the company has experienced many difficulties such as continued economic decline, rising costs and deteriorating business in recent years. Although the measures were taken, it has still not been resolved. The company officially ceased operations since May 31, 2016, and no further production will be carried out.
According to the data, Philips, the world's largest manufacturer of lighting equipment, had revenues of 7.5 billion euros and operating profit of 331 million euros in 2015, accounting for more than half of the global LED lighting market. On May 27th, Philips Lighting, which was spun off from Philips, was listed on the Amsterdam Stock Exchange in the Netherlands.
1. Why did Philips shut down this factory?
CCTV reporter came to Philips Lighting Manufacturing (Shenzhen) Co., Ltd. located in Bao'an District, Shenzhen. From the door of the company, in addition to the security personnel, basically no other employees were seen. The passing pedestrians told reporters that they used to be employees of the company. .
"When the work meeting was held, the information displayed on the TV screen lost 200 million yuan in five years. In 2015, it lost 16 million in 2015." "At the time of the meeting, the CEO said that the cost was too high, so In terms of lighting, there is a big competition, so I will close the factory here.†This is the real quotation of some employees interviewed by CCTV.
Of course, the most direct reason is: This factory does not make money, after shutting down its own production plant, it is expected that Philips' future home lighting will mainly adopt OEM production methods.
The LED industry currently has so much capacity to transfer production to OEM factories, and the cost will be much lower. For Philips, it should be a normal and sensible decision.
2. Why is this factory not making money?
“Philips used to work in China basically. With the increase in housing prices, the wages of workers are also high. The price of Shenzhen is rising. It is also stressful for them. They will ask for higher wages. This is complementary. Dr. Zhang Xiaofei, Chairman of the High-Technology Research Institute, said in an interview with Transaction Time.
And in mainland China, in addition to Shenzhen has a production base, is there any other place? "In Guiyang, it is still in production, and its scale is bigger than Shenzhen." Dr. Zhang Xiaofei mentioned.
From the perspective of cost, the announcement reveals the fact that the market cost is rising. The cost of setting up a factory in such a place in Shenzhen is naturally not low. For large enterprises such as Philips, the production management and operating costs of the factory are compared with domestic enterprises. It will be even higher.
Secondly, from the market point of view, with the overcapacity of the LED industry in recent years, the market competition has become fierce. In the home lighting market, it is a low-cost competition to see the bayonet, and the decline in profit margin has also become an important factor.
3. How to avoid becoming the next "Philips Lighting Manufacturing"?
At present, LED lighting is rapidly completing the replacement of traditional lighting sources and lamps. According to the statistics of the High-tech Research Institute LED Research Institute (GGII), the global LED lighting market scale was 55.7 billion yuan in 2015, and the market penetration rate reached 36.9%. This means that although the growth rate is slowing down, LEDs still have to replace the traditional lighting market. Very large room for improvement.
“In 2015, the LED industry entered a stage of mature shuffling, and the painful days have just begun, but now it’s overstated in the cold winter,†said Ding Long, CEO of Op Lighting China.
In the face of changes in the next business model, Dr. Zhang Xiaofei also said that at present, many foreign small and medium-sized enterprises are in a state of being sold, which will greatly benefit Chinese brands entering the global market in the next few years, for example, nowadays Philips, Osram, etc. The giants may "surrender" to Chinese brands, and perhaps also a transformation, which also provides opportunities for domestic companies to open up new markets.
“In 2016, the M&A integration between the LED lighting industry will be particularly obvious. The cooperation between large international brands and domestic manufacturers will also have a very large impact on small and medium-sized enterprises. At the same time, the amount of M&A in 2016 will be relatively high. By 2018, domestic and international mergers and acquisitions will basically end. After 2018, 'there is no war, the dark battle will continue'." Dr. Zhang Xiaofei mentioned.
Dr. Wang Sen, the general manager of Guoxing Optoelectronics, is paying more attention to how to pay close attention to technology, strengthen internal strength, continuously improve the management level and competitiveness of enterprises, and steadily improve the status of the industry. Every company needs to do when it is difficult and challenging. It is also a requirement for benign and sustainable development of the industry.
Conclusion: The entire LED industry is facing upward pressure, and low-end manufacturing is indeed profitable. In the past two years, there will be more cases of eliminating low-end and inefficient production capacity. This is a normal market phenomenon, and for the entire LED industry. This is also a necessary process to optimize the industrial structure and survive the fittest. In the face of the dissolution of the Philips lighting manufacturing, we also do not want to be more versatile, we need to be more rational to the lighting market and LED industry.
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