Walter Optoelectronics: Survival samples for small and medium LED packaging companies

Walter Guanghua Special Optoelectronics: Survival samples of small and medium-sized packaging companies

Since the beginning of this year, the LED packaging market has continued to slump and the chill has become stronger.

According to the current public data, the revenue and gross profit margin performance of several listed listed companies in China are not optimistic, and the gross profit margin of products has been declining for several consecutive quarters. For many small and medium-sized LED packaging companies in China, it has entered the fierce competition stage of price competition.

According to a report released by the former High-tech LED Industry Research Institute (GLII), in the first half of this year, the price of display devices has fallen to a low level in the three major packaging application markets, and the products have basically no profit at all; the price of backlight devices has dropped by 15 %, but due to the relatively closed market, packaging companies that have entered the supply chain of large factories can still guarantee a certain level of profitability; while the price of lighting devices has dropped by 10%-20%.

“The market space of the packaging industry is there. The key is how to grasp the direction of the product.” Cao Caiming, the general manager of Shenzhen Huate Optoelectronics Technology Co., Ltd. (hereinafter referred to as “Huate Optoelectronics”), the LED entrepreneur who passed the year I have been engaged in minerals in my early years. In 2006, Cao Caiming began to get involved in LED display manufacturing. In 2010, the company moved to Shenzhen to transform LED light source and commercial and home lighting.

In Cao Caiming's view, LED packaging products are updated very quickly, directly testing the market sensitivity of enterprises. With an accurate grasp of the direction of the packaging market, Walter Optoelectronics handed in a satisfactory transcript in the first half of this year. According to Cao Caiming's estimate, the company's sales this year can reach at least 120 million yuan, an increase of 140% over the same period last year.

The product positioning and marketing strategy of Walter Optoelectronics also gave everyone a little confidence in the survival opportunities of many small and medium-sized packaging companies in China.

Quickly respond to changes in demand

In the past two years, with the rapid expansion of several domestic leading enterprises in packaging, and many packaging companies have successively sought capital market financing expansion, the concentration of domestic LED packaging industry, the scale of individual enterprises and the degree of automation have been greatly improved.

According to data from the High-Tech LED Industry Research Institute (GLII), at present, only 20% of the entire LED industry's profits are in the packaging chain, but this segment has concentrated nearly 1,000 large and small enterprises. In recent years, especially for some general-purpose packaged devices, price competition has become more intense.

Recent investigations by the reporter found that small and medium-sized LED packaging companies are affected by factors such as labor costs, rising raw material prices, and product price fluctuations. The performance growth has slowed down, and some operating difficulties have already occurred.

At the same time, as the LED package in the middle of the industry chain, the speed of product replacement is very fast. Due to the ever-changing design of downstream lighting products, the individualized demand for LED packaging devices has also brought market opportunities to some small and medium-sized enterprises.

Cao Caiming said that in 2010, 3528 lamp beads began to be applied to LED fluorescent tubes. By 2011, 3528 had flooded the market and prices have fallen rapidly. At the end of 2011, the 2835 lamp bead of flip-chip structure was the first LED fluorescent tube product, and in the second half of this year, 2835 has already become popular in the market.

In Cao Caiming's view, Walter Optoelectronics' strategy in the past two years has captured the rapid changes in the demand for products in the lamp market and the continuous innovation of the package structure.

In the first two years, 3528 lamp beads were mainly used in light bars, and a small amount was applied to fluorescent tubes. In 2011, Walter Optoelectronics saw that most companies were focusing on the light bar market and decisively positioned 3528 lamp beads in the mid-power fluorescent lamp module market.

After targeting the target market, the next step is how to rapidly expand production capacity and seize market share. In August 2011, Walter Optoelectronics increased its capital by 20 million yuan and successfully acquired Dongguan Qinwangda Optoelectronics Technology Co., Ltd. At the same time, the company has expanded the number of imported automatic production lines from 3 in 2010 to 10.

Due to the relatively stable module customers, Walter Optoelectronics achieved sales of 50 million yuan in 2011. In the company's packaging product shipments, 3528 lamp beads are the main products, accounting for 40% of the total shipments; low-power 5050 SMD products accounted for 20% of the total shipments; medium power 5730 lamp beads accounted for the total shipments 10% of the amount.

At the end of 2011, Walter Optoelectronics began to develop 2835 lamp beads and determined to be the company's main revenue growth point in 2012. It is understood that the 2835 lamp bead is a medium-power patch super bright device, with 0.2W and 0.5W specifications. It is an upgraded product after 3014, with better comprehensive performance and more market competitiveness. At the same time, the 2835 circuit board and the 3528 are the same, easy to replace, brightness and heat dissipation are better than 3528.

"Because the 2835 lamp bead is a medium power package, the technical requirements are relatively high, and the current production enterprises are still relatively few. At the same time, compared with the current mainstream 3528 lamp beads, the light efficiency is higher and the cost is lower." Cao Caiming said that currently The gross profit margin of the company's 2835 lamp beads exceeds 40%.

He revealed that in the first half of this year, the contribution of 2835 lamp beads revenue accounted for more than 50% of the company's total revenue.

Looking for a market outlet

The industry generally believes that when the revenue of an LED packaging company reaches 100 million yuan, there will be a common problem of slowing growth. If the follow-up company wants to continue to grow bigger, it will be more difficult.

According to statistics released by the High-tech LED Industry Research Institute (GLII), as of the first half of 2012, there were less than 100 companies with annual sales of more than 100 million yuan in domestic packaging industry, accounting for only 10% of all packaging companies. .

"In the past two years, packaging companies with a certain scale advantage, represented by Mulinsen and Changfang Lighting, have continuously lowered the price of devices." Cao Caiming said that some companies have introduced lamp beads at a lower price than production costs, and small and medium-sized packages. If companies want to seize market share in the market, they are increasingly unable to do so.

Taking the 2835 lamp bead as an example, with the intensification of the price competition in the traditional 3528 and 5050 lamp bead market, more and more enterprises began to choose to produce 2835 lamp beads. For the first-in-comers such as Walter Optoelectronics, there is no doubt that it will face subsequent brutal price competition. Cao Caiming revealed that the current average price of 2835 lamp beads is 0.28 yuan/piece, and the chip specifications used are mainly 20*20 and 18*24. Last year, the 18W LED tube with 2835 lamp beads could sell for about 140 yuan in Europe, but the price has dropped to about 100 yuan.

“The packaging market is facing homogenization and low-price competition at any time.” In Cao Caiming’s view, if companies want to have a place in the packaging market, they will either be better in product innovation or exceed their competitors in terms of capacity. But for SMEs, neither the financial strength nor the scale of production capacity has an inherent advantage.

According to relevant statistics, the average life expectancy of SMEs in China is only 3.5 years old, and the life cycle of 68% of SMEs is less than 5 years. The competitive pressure of SMEs is evident. The survey shows that SMEs generally feel that the market competition pressure is high. The most prominent reason is that the industry's transition from the seller's market to the buyer's market is too fast, making the “production-oriented” SMEs generally feel uncomfortable.

“If you can quickly introduce new products during the market cultivation period, SMEs will have an opportunity.” Cao Caiming said that Walter Optoelectronics will spend more than 8% of its annual sales as research and development expenses, and conduct rapid R&D and innovation to seize the market according to changes in market demand. First opportunity. “In the early days of market development, we competed for gross profit. When competition intensifies, we lower prices and grab market share.”

“The big companies are actually paying attention to this segment of the product at the beginning, but since 3528, COB and other packaged products are already in the mainstream of the market, it often takes a while for new product development and market introduction.” An industry insider said, “The ship is small. Turning the head is the advantage of SMEs to explore new products and new markets.

Cao Caiming said: "For SMEs, there may be no way to fight prices with big companies and sell sales. But for some market segments, small enterprises have the unique advantages of small enterprises. Walter Optoelectronics is different for special market areas. product."

At the same time, in order to minimize the cost, Walter Optoelectronics also integrated the supply chain, established a complete supply chain system in the upper, middle and lower reaches, and formed strategic partnerships with some suppliers and customers.

"SMEs will take advantage of their own advantages, seize the opportunity, strengthen the soft underbelly, seek new changes, and can break through in a highly competitive market, and strengthen the soft underbelly must transform the enterprise's 'market-led' model." A veteran of SME research said.

Fight for the downstream estuary

In fact, discussions on the way out for packaging companies have not stopped in recent years. How to digest production capacity and increase the added value of products has become the biggest problem facing packaging companies. Doing an application means robbing the customer of the business; not applying it means that the market dominance is in the hands of the customer.

In particular, the LED lighting application market has an average annual growth rate of 30%, which has enabled many packaging companies to make choices between “doing and not doing”. According to the latest statistics from the High-tech LED Industry Research Institute (GLII), more than 80% of packaging companies have been extending to downstream lighting applications this year.

Walter Optoelectronics is no exception. Cao Caiming revealed that the company had already tested water in the LED lighting market last year. Especially since this year, the rapid decline in the price of domestic LED lighting application products has allowed Cao Caiming to see an increasingly mature market opportunity. “LED lighting has been identified as one of the main growth points for the company's future business.”

In terms of channel development strategy, Walter Optoelectronics has not chosen the engineering channels favored by large enterprises. Cao Caiming said that the engineering market is often the bag of big companies and the weakness of small and medium-sized enterprises like Huate Lighting.

Based on this, Walter Lighting has established a marketing system based on the development of agents. At present, the company has developed more than 200 engineering and traders across the country. Cao Caiming said: "For these agents, as long as you can give him a cost-effective product, give the greatest service cooperation and preferential prices, the order quantity is not less than the project."

At present, Walter Optoelectronics' LED lighting products have successfully entered the energy-saving and emission reduction projects of FIYTA, Vanke, and Jimeng jewelry. In the first half of 2012, LED lighting revenue contribution has accounted for 35% of the company's total revenue. At the same time, the company has established its own lighting flagship store in Shanghai, Chongqing, Suzhou and other cities.

According to Cao Caiming's plan, Walter Optoelectronics will continue to improve its agent system this year. At the same time, the company plans to increase capital by 50 million yuan next year, setting the LED lighting business as the main capital investment and revenue focus to achieve the sales target of 300 million yuan. “The company has determined the LED lighting business target for the next three years. By 2015, it will achieve a revenue scale of more than 500 million yuan, and will become a first-line brand of domestic LED lighting.” Electricity: Survival samples of small and medium-sized packaging companies

Tang Guirong

Since the beginning of this year, the LED packaging market has continued to slump and the chill has become stronger.

According to the current public data, the revenue and gross profit margin performance of several listed listed companies in China are not optimistic, and the gross profit margin of products has been declining for several consecutive quarters. For many small and medium-sized LED packaging companies in China, it has entered the fierce competition stage of price competition.

According to a report released by the former High-tech LED Industry Research Institute (GLII), in the first half of this year, the price of display devices has fallen to a low level in the three major packaging application markets, and the products have basically no profit at all; the price of backlight devices has dropped by 15 %, but due to the relatively closed market, packaging companies that have entered the supply chain of large factories can still guarantee a certain level of profitability; while the price of lighting devices has dropped by 10%-20%.

“The market space of the packaging industry is there. The key is how to grasp the direction of the product.” Cao Caiming, the general manager of Shenzhen Huate Optoelectronics Technology Co., Ltd. (hereinafter referred to as “Huate Optoelectronics”), the LED entrepreneur who passed the year I have been engaged in minerals in my early years. In 2006, Cao Caiming began to get involved in LED display manufacturing. In 2010, the company moved to Shenzhen to transform LED light source and commercial and home lighting.

In Cao Caiming's view, LED packaging products are updated very quickly, directly testing the market sensitivity of enterprises. With an accurate grasp of the direction of the packaging market, Walter Optoelectronics handed in a satisfactory transcript in the first half of this year. According to Cao Caiming's estimate, the company's sales this year can reach at least 120 million yuan, an increase of 140% over the same period last year.

The product positioning and marketing strategy of Walter Optoelectronics also gave everyone a little confidence in the survival opportunities of many small and medium-sized packaging companies in China.

Quickly respond to changes in demand

In the past two years, with the rapid expansion of several domestic leading enterprises in packaging, and many packaging companies have successively sought capital market financing expansion, the concentration of domestic LED packaging industry, the scale of individual enterprises and the degree of automation have been greatly improved.

According to data from the High-Tech LED Industry Research Institute (GLII), at present, only 20% of the entire LED industry's profits are in the packaging chain, but this segment has concentrated nearly 1,000 large and small enterprises. In recent years, especially for some general-purpose packaged devices, price competition has become more intense.

Recent investigations by the reporter found that small and medium-sized LED packaging companies are affected by factors such as labor costs, rising raw material prices, and product price fluctuations. The performance growth has slowed down, and some operating difficulties have already occurred.

At the same time, as the LED package in the middle of the industry chain, the speed of product replacement is very fast. Due to the ever-changing design of downstream lighting products, the individualized demand for LED packaging devices has also brought market opportunities to some small and medium-sized enterprises.

Cao Caiming said that in 2010, 3528 lamp beads began to be applied to LED fluorescent tubes. By 2011, 3528 had flooded the market and prices have fallen rapidly. At the end of 2011, the 2835 lamp bead of flip-chip structure was the first LED fluorescent tube product, and in the second half of this year, 2835 has already become popular in the market.

In Cao Caiming's view, Walter Optoelectronics' strategy in the past two years has captured the rapid changes in the demand for products in the lamp market and the continuous innovation of the package structure.

In the first two years, 3528 lamp beads were mainly used in light bars, and a small amount was applied to fluorescent tubes. In 2011, Walter Optoelectronics saw that most companies were focusing on the light bar market and decisively positioned 3528 lamp beads in the mid-power fluorescent lamp module market.

After targeting the target market, the next step is how to rapidly expand production capacity and seize market share. In August 2011, Walter Optoelectronics increased its capital by 20 million yuan and successfully acquired Dongguan Qinwangda Optoelectronics Technology Co., Ltd. At the same time, the company has expanded the number of imported automatic production lines from 3 in 2010 to 10.

Due to the relatively stable module customers, Walter Optoelectronics achieved sales of 50 million yuan in 2011. In the company's packaging product shipments, 3528 lamp beads are the main products, accounting for 40% of the total shipments; low-power 5050 SMD products accounted for 20% of the total shipments; medium power 5730 lamp beads accounted for the total shipments 10% of the amount.

At the end of 2011, Walter Optoelectronics began to develop 2835 lamp beads and determined to be the company's main revenue growth point in 2012. It is understood that the 2835 lamp bead is a medium-power patch super bright device, with 0.2W and 0.5W specifications. It is an upgraded product after 3014, with better comprehensive performance and more market competitiveness. At the same time, the 2835 circuit board and the 3528 are the same, easy to replace, brightness and heat dissipation are better than 3528.

"Because the 2835 lamp bead is a medium power package, the technical requirements are relatively high, and the current production enterprises are still relatively few. At the same time, compared with the current mainstream 3528 lamp beads, the light efficiency is higher and the cost is lower." Cao Caiming said that currently The gross profit margin of the company's 2835 lamp beads exceeds 40%.

He revealed that in the first half of this year, the contribution of 2835 lamp beads revenue accounted for more than 50% of the company's total revenue.

Looking for a market outlet

The industry generally believes that when the revenue of an LED packaging company reaches 100 million yuan, there will be a common problem of slowing growth. If the follow-up company wants to continue to grow bigger, it will be more difficult.

According to statistics released by the High-tech LED Industry Research Institute (GLII), as of the first half of 2012, there were less than 100 companies with annual sales of more than 100 million yuan in domestic packaging industry, accounting for only 10% of all packaging companies. .

"In the past two years, packaging companies with a certain scale advantage, represented by Mulinsen and Changfang Lighting, have continuously lowered the price of devices." Cao Caiming said that some companies have introduced lamp beads at a lower price than production costs, and small and medium-sized packages. If companies want to seize market share in the market, they are increasingly unable to do so.

Taking the 2835 lamp bead as an example, with the intensification of the price competition in the traditional 3528 and 5050 lamp bead market, more and more enterprises began to choose to produce 2835 lamp beads. For the first-in-comers such as Walter Optoelectronics, there is no doubt that it will face subsequent brutal price competition. Cao Caiming revealed that the current average price of 2835 lamp beads is 0.28 yuan/piece, and the chip specifications used are mainly 20*20 and 18*24. Last year, the 18W LED tube with 2835 lamp beads could sell for about 140 yuan in Europe, but the price has dropped to about 100 yuan.

“The packaging market is facing homogenization and low-price competition at any time.” In Cao Caiming’s view, if companies want to have a place in the packaging market, they will either be better in product innovation or exceed their competitors in terms of capacity. But for SMEs, neither the financial strength nor the scale of production capacity has an inherent advantage.

According to relevant statistics, the average life expectancy of SMEs in China is only 3.5 years old, and the life cycle of 68% of SMEs is less than 5 years. The competitive pressure of SMEs is evident. The survey shows that SMEs generally feel that the market competition pressure is high. The most prominent reason is that the industry's transition from the seller's market to the buyer's market is too fast, making the “production-oriented” SMEs generally feel uncomfortable.

“If you can quickly introduce new products during the market cultivation period, SMEs will have an opportunity.” Cao Caiming said that Walter Optoelectronics will spend more than 8% of its annual sales as research and development expenses, and conduct rapid R&D and innovation to seize the market according to changes in market demand. First opportunity. “In the early days of market development, we competed for gross profit. When competition intensifies, we lower prices and grab market share.”

“The big companies are actually paying attention to this segment of the product at the beginning, but since 3528, COB and other packaged products are already in the mainstream of the market, it often takes a while for new product development and market introduction.” An industry insider said, “The ship is small. Turning the head is the advantage of SMEs to explore new products and new markets.

Cao Caiming said: "For SMEs, there may be no way to fight prices with big companies and sell sales. But for some market segments, small enterprises have the unique advantages of small enterprises. Walter Optoelectronics is different for special market areas. product."

At the same time, in order to minimize the cost, Walter Optoelectronics also integrated the supply chain, established a complete supply chain system in the upper, middle and lower reaches, and formed strategic partnerships with some suppliers and customers.

"SMEs will take advantage of their own advantages, seize the opportunity, strengthen the soft underbelly, seek new changes, and can break through in a highly competitive market, and strengthen the soft underbelly must transform the enterprise's 'market-led' model." A veteran of SME research said.

Fight for the downstream estuary

In fact, discussions on the way out for packaging companies have not stopped in recent years. How to digest production capacity and increase the added value of products has become the biggest problem facing packaging companies. Doing an application means robbing the customer of the business; not applying it means that the market dominance is in the hands of the customer.

In particular, the LED lighting application market has an average annual growth rate of 30%, which has enabled many packaging companies to make choices between “doing and not doing”. According to the latest statistics from the High-tech LED Industry Research Institute (GLII), more than 80% of packaging companies have been extending to downstream lighting applications this year.

Walter Optoelectronics is no exception. Cao Caiming revealed that the company had already tested water in the LED lighting market last year. Especially since this year, the rapid decline in the price of domestic LED lighting application products has allowed Cao Caiming to see an increasingly mature market opportunity. “LED lighting has been identified as one of the main growth points for the company's future business.”

In terms of channel development strategy, Walter Optoelectronics has not chosen the engineering channels favored by large enterprises. Cao Caiming said that the engineering market is often the bag of big companies and the weakness of small and medium-sized enterprises like Huate Lighting.

Based on this, Walter Lighting has established a marketing system based on the development of agents. At present, the company has developed more than 200 engineering and traders across the country. Cao Caiming said: "For these agents, as long as you can give him a cost-effective product, give the greatest service cooperation and preferential prices, the order quantity is not less than the project."

At present, Walter Optoelectronics' LED lighting products have successfully entered the energy-saving and emission reduction projects of FIYTA, Vanke, and Jimeng jewelry. In the first half of 2012, LED lighting revenue contribution has accounted for 35% of the company's total revenue. At the same time, the company has established its own lighting flagship store in Shanghai, Chongqing, Suzhou and other cities.

According to Cao Caiming's plan, Walter Optoelectronics will continue to improve its agent system this year. At the same time, the company plans to increase capital by 50 million yuan next year, setting the LED lighting business as the main capital investment and revenue focus to achieve the sales target of 300 million yuan. "The company has determined the LED lighting business target for the next three years. By 2015, it will achieve a revenue scale of more than 500 million yuan, and will become a first-line brand of domestic LED lighting."