Zheng Wei: LED foundry companies must plan ahead

[Source: Gaogong LED 's " LED Lighting Channel" magazine January issue / Xionghuan ring]

The financial crisis in Europe and the United States has caused a serious decline in the demand for the international LED market. Therefore, the supply of domestic customers has become a very important business for many OEM/ODM manufacturers. As we all know, the domestic LED civilian market has not formed a scale, the biggest reason is that the price war is heating up. The price difference between LED products and energy-saving lamps of regular manufacturers is obvious, and the small manufacturers of fish-eyes are making waves, and the market is chaotic.

On the other hand, the asymmetry of information has also become the paradox of the development of the LED industry. Some large enterprise users have heard and are interested in LED products, but the purchase may come from products with high prices and poor quality, so the first impression of LED products is likely to end.

As an OEM/ODM-type company, in the face of the current market situation, we should first reduce costs and improve quality; at the same time, we must maintain keen insight into the market and take advantage of flexibility. For example, in Zhejiang Province, some factories, underground garages, etc. have obvious demand for LED fluorescent lamps, so relevant companies should pay attention to this information and wait for opportunities to develop the market.

In order to better meet customer needs, OEM/ODM manufacturers may have many customized projects. Some orders require enterprises to make small power drives or intelligent control systems, so enterprises should have corresponding solutions. Intelligent control will also be a major trend in the development of the lighting industry in the future. If the company can make standardized modules, the subsequent development will be more convenient. However, enterprises should pay attention to the large-scale production of a single product and do a good job of cost control. For the company, the biggest competitor is itself.

In addition, companies must keep a clear head on their own development strategies. Do you want to build your own channel into the terminal market? Or is it only a brand in the OEM/ODM industry? Building a terminal brand is far from a problem that can be solved with money. It involves a series of problems such as terminal store construction and brand advertising. Moreover, many big brands are now facing difficulties in channel expansion and terminal market development, so it is worthwhile to consider whether OEM/ODM companies should be involved.

Conversely, if you can build a well-known OEM brand in the industry, you can also get a lot of OEM / ODM orders, which is actually a different development path. Businesses have to do what they are good at, rather than rushing into the so-called end market to get a star and a half benefits.

Small and medium-sized or foundry enterprises need to fully assess their ability to resist risks, and they should not blindly expand their scale. If the steps are too large, they will easily break the capital chain, and the security of the capital chain is especially critical for the survival and development of enterprises. As far as the current LED market development is concerned, there may be no major breakthrough in civil demand in the first half of 2013. This market itself needs a process of cultivation, so companies must plan their own development pace.

Source of this article: Zheng Wei, Chairman of Hangzhou Solid State Lighting Co., Ltd.

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