At present, Many places local government practices is required to see the operation of the machine in order to give the support of corporate commitment. Many enterprises forced to support start production, resulting in high water level pressure on the stock. In order to alleviate the pressure on the stock, the companies began to cut sale price, so that there is no profit at all, eventually leading to the loss-making; There are some enterprises in order to ease the pressure on the stock, the product credit out, resulting in a huge trade receivables, and increase the risk of corporate finance.

Insiders analysis that the LED capacity surplus is not only because the strength of the market is enough, but also associated with a lot of irrational investment. Government support become the catalyst of this phenomenon. But the operation of the business need comprehensive consideration, such as sales channels, transportation, the supply industrial chain supporting facilities, labor costs, and personnel, etc.

At first, Sales channels, LED enterprises plant in somewhere, they need to consider the marketability of the product. Whether it is the international market or the local Chinese market? If the production base position shall not be ok, it will increase a considerable operating for enterprises.

Second, Transportation. If there is not convenient transportation line, the enterprise products to market cycle will be delay, which is not conducive to sales of the product and it will damage products from different degrees.

Third, Surrounding industrial chain. peripherals do not have a complete industrial chain, or the industry chain is not rich enough, so that it will increase the difficulty and cost of raw materials procurement.

Four, Talent. this is the core of the enterprise. The distribution of talent is regularly to be found. If enterprises where put into production can not find the right people, the core aspects of the production and R & D and sales is bound to bring trouble.

LED insider think that, LED industry is the emerging industries advocated by the government, but businesses should have long term plan in the operation of the project, a long-term view of the development of enterprises, because favorable government policies can not blindly invest in the LED industry. And presently, Capacity relative surplus resulted enormous pressure to the LED lights business, therefore, companies need more government support.

 

Doubt

In 2012, the net profit of some companies rely on government subsidies,which is more serious. The state subsidies occupy a large part of their profits; This can not help but provoke the questioned eyes of everyone. So the sustainability of this mode is also controversial.

The subsidies can be counted as corporate profits., The answer is yes! Listed companies Sanan Optoelectronics third quarter profit is 667 million yuan, including subsidies up to 328 million yuan, accounting for nearly half; On November 13, Sanan carried on the enormous financial to achieve the Taiwan Formosa Epitaxy, which is almost twice equity-it is the first private equity. And soon after followed came the news Sanan CDB borrowings of up to 5.5 billion; Look at BDO Runda, interim net profit is 120 million yuan in 2012, while government subsidies is up to 150 million yuan as much, compared to the three security I am afraid that surpasses it; the profits of the country star power subsidies accounted for approximately 25%.

In this regard, industry insiders questioned that, the national starting point is good, but excessive investment is precisely a big reason caused by industry overcapacity. From another perspective, the LED Lights, as a new LED industry, it is necessary to get support from the government, but whether it should be facing the end consumer subsidies? For Enterprises, enterprises who can obtain subsidies only account for a small part of the type of product. A small number of large enterprises are not always having everything if they have government funding. Government can give you a ride, but ultimately it depends on the enterprise’s own energy and strength.

Tension

In 2012, LED industry development is still facing many challenges. But influenced by the European debt crisis, the U.S. economic downturn and other factors, China LED companies exporting orders dropped sharply.

Lighting companies in particular, the industry began to centralized direction development, some of which have already accumulated enough strength to take advantage of this opportunity to develop a large-scale local lighting industry, and try to come out on top in the new round of competition in the industry, but the small and medium-sized enterprises who lack of core technology strength will face more severe survival problems.