[Yearly Meeting] Mingcheng Technology: The Dilemma and Way Out for LED Small and Medium-Sized Enterprises

[Text / high-tech LED Gan Qin] As the most downstream of the industrial chain, lighting companies are in the position closest to the consumer terminal, many opportunities are very low barriers to entry, the industry commonly used "military chaos" to describe the state of lighting enterprises, and the performance of small and medium enterprises Even worse.

Since the beginning of this year, LED lighting companies have felt the rapid development of the industry. Another important feeling is that the market is constantly moving away from them. Large-scale lighting companies can rely on their own brand effects to be invincible, and how small and medium-sized enterprises occupy a certain market size is worth pondering.

Chen Bin, chairman of Mingcheng Technology, said at the 2015 High- tech LED Annual Meeting that at present, SMEs are facing double challenges from external difficulties and internal factors, and the status quo is increasingly difficult. Among them, in terms of external factors, SMEs are facing price wars, product wars, and channel wars. The internal cause is characterized by poor controllability of manufacturing costs.

In view of the poor controllability of manufacturing costs in internal factors, Chen Bin believes that there are several main reasons:

1. The order quantity is unstable;

2. Labor shortage and high labor costs;

3. The supporting cost is too high.

For example, Chen Bin assumes that a factory has 100 fixed workers, each with an average monthly wage of 4,000 yuan, a monthly worker wage of 400,000, and a year of 4.8 million. In addition to factory rent, equipment maintenance, utilities, etc., the annual cost is seven or eight million. “In the case where the current order is unstable and the cost cannot be precisely controlled, how to digest this non-small amount of expenses is a problem.”

In addition, Chen Bin said, “Now most of the finished lighting manufacturers are in the hands of others, they are only doing product development and product assembly. These accessories such as hardware processing, LED, power supply, etc. are the largest cost of the entire lamp. The part directly leads to increased costs and reduced profit margins, and the cost cannot be precisely controlled."

In Chen Bin's view, the external environment is a foregone conclusion. It is difficult to highlight the encirclement by itself, or even an impossible task. For the internal cause, if the SMEs can't do large-scale in a short period of time, they can consider doing the "subtraction" method to go into battle.

Chen Bin said that the subtraction method is to entrust the manufacturing that cannot form a scale to the same company through the "capacity integration" method, and to form the manufacturing scale through horizontal integration. By doing subtraction, the following advantages are finally formed:

1. Effectively improve work efficiency while controlling costs;

2. Saving fixed expenses brought about by manufacturing, focusing on product development and market development;

3, will not backlog too much inventory, risk loss is small;

4. Optimize the organizational structure and facilitate management.

“The central enterprises must make changes, otherwise they will be gradually eliminated.” Chen Bin said that Mingcheng Technology has formed a manufacturing scale through capacity integration, and based on this, formed a LED lighting related supporting industrial chain, such as: Electronics, molds, hardware, metal processing, packaging, etc. will gradually improve the realization of the entire industry configuration, and ultimately achieve "wool out on the pig."

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