Why is it wrong to say that LED displays are locked in a low-price competition

Time:2019-01-07 Views:105

Why it is not advisable to say that LED display screen is caught in the low-price competition. Since the beginning of 2018, the price competition in LED display screen industry has become increasingly fierce. With the further improvement of industry concentration and the impact of the rise of segmented fields, conventional products are facing the crisis of oversupply and competition for market share keeps emerging.In this battle, most led screen enterprises under great pressure to survive, and customers enjoy the resulting preferential prices.Even, the wind of low price also affected the project project, "low price won the bid" phenomenon often occurs, is not the result of vicious competition.

It cannot be denied that, to a certain extent, the decrease of product price is helpful to the market expansion and the expansion of potential customer groups, as well as the promotion of industry concentration, forcing manufacturers and enterprises onto the path of innovation.But what cannot ignore is, the harm that price competition brings to whole industry, also will be wiped hard.

Profits are too low to operate, cut corners and so on

At the end of last year, the upstream LED chip, PCB board and other raw materials began to "price" journey.Recently, the raw material price rise news came again, from the situation of the first half of the year, in the fierce competition, the downstream led display enterprises have been in place of customers, or even instead of dealers, become the final price bear.And, in order to speed up the industry reshuffle, LED display large enterprises "add a fire", take the lead in price reduction, has not yet seen signs of price increases.There is no doubt that the overall price of LED displays will not recover for some time to come, even if individual manufacturers raise prices alone.

Under high pressure, there are serious operators, but also desperate people.In the case of higher costs, lower prices, as usual production and business model, LED enterprise profits will be thinner.Moreover, after the price drop in previous years, the profit margin of LED display screen has already been greatly reduced. This time, the profit margin will be at the end of the limit for some manufacturers. If they do not shift to the production and operation of high value-added products, they can only reduce the cost.And the method that reduces cost has two kinds undoubtedly -- intensive production, and cut corners.

Chinese people have always believed in the idea of "high quality and low price". However, the so-called "low price" is not only relative to the cost, but also the "beauty" of goods when the market price is low enough that the manufacturer may lose money.But thanks to vicious price competition, manufacturers continue to be caught in the middle, and it is not clear whether customers will be able to keep up with the lower prices.

Input r & d cost is high, embarrassing price difficult to sell goods

It is really difficult for the enterprise to maintain normal operation due to the long-term low profit. Besides, there is a general situation of "triangle debt" in the industry. Once the capital flow is difficult, it is not difficult to imagine that in the three major links of research, production and sales, the first cut is likely to be the research and development expenditure.As we all know, in product research and development, in addition to the formation of a technical team, technical reserve, but also need to prepare the corresponding equipment, and the most important, need to continue to invest a lot of money, and when the research and development results can be put into mass production, but it is difficult to predict.Under the financial strain, it is natural to slow down the pace of research and development.

In addition, some manufacturers want to actively carry out product innovation and upgrading to improve product performance and quality and increase product competitiveness.But at the same time, the cost of research and development, material upgrading and other costs for quality improvement will be Shared on the products., of course, high performance and good quality products are generally more likely to win customers, but in the current market price is generally low, innovative products price unavoidably at a disadvantage compared with similar products, and customers to the higher price of products is also prone to doubt and distrust, so that the price is on the high side products is difficult to be accepted easily.In such a "thankless" situation, manufacturers innovation initiative frustrated, the pace of industry development and progress will become slow.

And when this wave of low prices passes, the industry may be dominated by a few large companies that will be hard for others and newcomers to shake.Under the greatly reduced competitive pressure, these enterprises will tend to be more conservative and lack the motivation for innovative development. In the long run, it is not conducive to the innovation and upgrading of LED displays.

To "price" into a habit, "spoiled" customers who end up

For conventional LED display products, a short period of use cannot find out whether the product quality is inferior, whether it is more prone to failure, so customers take it for granted to enjoy the benefits of the manufacturer, in the long run, it is inevitable to have a misunderstanding of the reasonable price of LED display.Admittedly, the lower price will make some customers who do not intend to purchase LED display or choose a cheaper display turn to buy LED display due to the lower purchase cost, so as to expand the market to a certain extent and expand the potential customer group.

However, the price dispute will eventually come to an end. When the industry concentration is further enhanced, the enterprises occupying the dominant position in the market will obtain the pricing power of the industry, and will certainly increase the price to make up for the loss caused by the low price strategy, and this situation may continue until the next industry pattern changes.At that time, for customers, not only can not get low dividend, and may even be forced to accept high price products, in the long run, low price competition for customers is not the ideal.

However, after getting used to the generally low prices in the market, will it narrow the range of potential customers for LED displays?Customers who are "spoiled" by low prices will inevitably find it difficult to accept the price of products after price recovery. In addition, LED displays are not irreplaceable in indoor display and other fields. After price increase, it is difficult to guarantee that the market balance that has already tilted to LED displays will revert to its original state, and may even be inclined to other display devices.

Although price competition is the process of industry concentration that most industries will experience, such competition will also promote industry concentration, form a group of powerful enterprises, and eliminate most weak enterprises.However, at present, LED display industry is trapped in the vicious low-price competition, and it is difficult to escape, and the industry cannot escape from a series of "sequelae" such as decreased innovation enthusiasm and market activity.