The price of raw materials in the LED lighting industry has risen sharply

"The LED industry is divided into upper, middle and lower reaches. Jiangsu enterprises are not strong in the upper reaches of the industry, but they are strong in the middle and lower reaches. In the face of this wave of overall price increases, local enterprises have passively increased prices, and at the same time bear and absorb part of the cost increase pressure. "According to the staff of Jiangsu Lighting Electrical Appliances Association," said, "According to feedback, companies can basically accept price increases, because this is due to the big market. Fortunately, the price increase is not large, within about 10%. And the current price increase is not enough. There is no panic in the market that affects the purchase desire of foreign customers."

Zhongshan City, Guangdong Province is an important town in China's lighting industry, and there is Guzhen, a well-known lighting industry gathering place. The staff of Zhongshan Lighting Industry Association reported that the local lighting products are sold both domestically and exported, and the impact of price increases is not significant. The staff of Zhongshan Lighting Manufacturing Association mentioned that the price of raw materials began to rise in the second half of last year. After the price of raw materials increased, local companies controlled costs on the one hand and raised prices on the other. “According to corporate feedback, new customers will be more acceptable after the price increase. Old customers may not accept it, because old customers used to trade at the original price and got used to it."

A staff member of the Beijing Lighting Association said, “There are basically no lighting appliance manufacturing companies in Beijing. Local companies in the industry are mainly engaged in engineering business, with a small number of OEM businesses. The impact of the price increase of raw materials on local lighting companies is very limited.”

The reporter found in the interview that the impact of this round of price increases in the lighting industry on large companies and small and medium-sized enterprises is obviously different. As a result, raw materials will not be unavailable. This is different from the situation where bicycle exports are booming in 2020, and companies in the industry cannot buy some raw materials and parts even if they pay high prices.

First of all, when small companies increase prices, large companies have the ability not to increase prices, and small companies are more vulnerable to price increases than large companies. According to the staff of the Jiangsu Lighting Electrical Appliances Association, some large enterprises and large dealers in the industry have already had considerable inventory, and now they are taking out the inventory for emergency, so as not to increase the price. Zhao Hui said that large companies have different price increases for different customers, and their price increase strategies are different. "It may not increase for large customers, but the increase for small customers is larger."

Second, the anti-risk capabilities of large companies and small and medium-sized enterprises are significantly different. "Price increases have little impact on large companies, because large companies have strong bargaining power and have more inventory and reserves in important materials. Small and medium-sized enterprises in the supply chain are greatly affected by price increases because small and medium-sized enterprises have weak bargaining power and financial strength. It is not strong either. This wave of price increases may be a reshuffle in the end, and some small and medium-sized enterprises with insufficient anti-risk capabilities have just withdrawn." Zhao Hui analyzed.

In Zhao Hui’s view, even if the price of raw materials rises, there is no shortage of supply, and downstream companies will not be unable to buy raw materials because of this. “Because the industry has basically reached the ceiling in recent years. The domestic general lighting market has been low in the past few years. In the competitive situation, the price is basically near and below the cost line. Under the current opportunity, the price can rise slightly above the cost line. Moreover, the production capacity of upper and midstream chips, packaging, etc. are all in excess. For the chips used in lighting, it mainly depends on automated production, the machine can quickly produce a large output as soon as the machine is started. It is just that the cost of purchasing raw materials increases after the price increases, or the delivery time becomes longer."

Zhao Hui also added that in recent years, the industry's fundraising projects have mainly been in the display field, and very few fundraising projects have been in lighting projects. Some companies in the industry also want to enter market segments with higher gross profit, such as plant lighting and other fields. His words have also been confirmed by companies in the industry, and some leading companies have indeed made great efforts in subdivided fields. An LED chip company from the upstream of the lighting industry revealed to reporters that the company is a leading company in the field of LED chips. The current LED chip orders are large, but the company mainly maintains its existing advantages in the field of LED chips. At present, it is the integrated circuit products that are placed high hopes and promoted.