Abstract: The new coronavirus epidemic is profoundly affecting or changing the fate of many companies. In the case of a sudden decrease in operating income or even negative earnings, on the one hand, the enterprise cannot start normal operations, on the other hand, it must continue to bear the costs of employee wages, production rent, and loan interest. For those large companies with strong strength, the two or three months of shutdown caused by the epidemic may only hurt the fur, but for small and medium-sized enterprises, it is to hurt the bones to save lives.
The epidemic situation of new-type coronary pneumonia is still continuing. What impact does the new coronavirus epidemic have on enterprises, especially LED companies?
According to analysis by relevant industry sources, LED and other industries will be inevitably affected under the impact of the epidemic. In the long run, the impact of the epidemic on the LED industry will gradually decrease. At present, it is not easy to make a judgment on the market trend facing the enterprise. Everyone still focuses on fighting the epidemic. Because the supply, production, logistics, and market of the enterprise are closely related to the trend of the epidemic, the epidemic is controlled, and various industries will continue to recovery.
85% of SMEs can’t last 3 months?
The new coronavirus epidemic is profoundly affecting or changing the fate of many companies. In the case of a sudden decrease in operating income or even negative earnings, on the one hand, the enterprise cannot start normal operations, on the other hand, it must continue to bear the costs of employee wages, production rent, and loan interest. For those large companies with strong strength, the two or three months of shutdown caused by the epidemic may only hurt the fur, but for small and medium-sized enterprises, it is to hurt the bones to save lives.
Zhu Wuxiang, Professor of Finance, School of Economics and Management, Tsinghua University, Wei Wei, Professor of Management, Peking University HSBC Business School, and Liu Jun, General Manager of Beijing Small and Micro Enterprise Comprehensive Financial Services Co., Ltd., jointly infected 995 small and medium-sized enterprises with Wuhan’s new coronavirus The questionnaire survey on the impact of pneumonia epidemic situation and appeals showed that 85% of SMEs could not be maintained for three months.
995 SMEs’ cash balances can maintain the survival time of enterprises (from: China Europe Business Review)
First, 85.01% of the company ’s account balance can only be maintained for a maximum of three months. In addition, 34% of enterprises can only maintain one month, 33.1% of enterprises can maintain two months, and only 9.96% can maintain more than 6 months.
That is to say, if the epidemic lasts longer than three months, then more than 80% of the funds in the accounts of SMEs cannot be maintained!
Secondly, 29.58% of companies expect the epidemic to cause a drop in operating income of more than 50% throughout the year. In addition, 28.47% of enterprises are expected to decline by 20% -50%, and 17% of enterprises are expected to decline by 10% -20%. In addition, the proportion of unpredictable enterprises is 20.93%.
Source: China Europe Business Review
In other words, SMEs, which account for more than 50% of the total revenue, are expected to fall by more than 20% for the whole year!
Thirdly, 62.78% of the enterprises attributed the main expenditure pressure to “employee wages and five insurances and one pension”, and the “rent” and “loan repayment” accounted for 13.68% and 13.98%, respectively.
Source: China Europe Business Review
Simply put, no matter for labor-intensive or capital-intensive enterprises, “employee compensation” is the biggest pressure.
Fourthly, in the face of the pressure of cash flow shortage, 21.23% of enterprises will seek “loans”, and 16.2% of enterprises will take measures to “stop production and shut down” In addition, 22.43% of the enterprises will sharpen the knife to employees, and adopt the method of “reduce staff and reduce salary”.
The result is that companies will either lay off employees in disguise or spend their debts!
Business impact
Two U.S. lighting companies issued a statement on the impact of the epidemic
Cooper Lighting Solutions stated that in order to prevent and control the epidemic, the Chinese government suspended air, road and rail travel around Wuhan and imposed restrictions on travel and other activities nationwide.
Because of the travel and logistics bans imposed by the Chinese government, Cooper Lighting ’s product suppliers have extended the Lunar New Year holidays to ensure the safety of employees. Therefore, the delayed operation will cause the supply chain of certain products of the company to be interrupted in the next few weeks. Therefore, product delivery may be delayed to make up for the wasted time.
The company works diligently with each supplier to prioritize production plans and personnel return to ensure the best possible support for customers. At the same time, the company will actively manage any affected product lines and provide alternative products where possible.
In addition, the company is working closely with major suppliers and partners and will use locally sourced materials and components to enhance the capabilities of North American manufacturing facilities.
Satco said that the company is working with the factory’s management team to develop a plan to return high-quality items to production and give them priority. Although Satco’s inventory level is high, it is expected to have a certain impact on the supply chain in multiple domestic warehouses. Satco will act swiftly and take all reasonable measures to ensure that normal inventory levels are quickly restored during this outage and that customer needs are maximized.
Satco hopes to resolve this problem quickly and healthily. The company will continue to observe the situation and will provide new information as the situation develops. (Source: LEDinside)
Zhao Chi shares: the epidemic has a certain impact on the company in the short term, but the impact is not large
Zhao Chi said that overall, the epidemic had little impact on the company. The total number of employees of the company is more than 10,000, of which Hubei employees account for less than 4%, and Hubei employees in the LED sector account for about 2%. From the perspective of personnel, the impact on the company is relatively small; Generally speaking, it is the off-season. The company ’s original Spring Festival holiday is two weeks. Compared with previous years, the impact of the epidemic is to increase the holiday by one week, and the impact on the time is relatively limited. The LED industry chain is mainly focused on itself, and the overall resumption of work on materials has been delayed, which will have a certain impact in the short term. I believe that there will be a big improvement in the supply chain at the end of February.
Maida figures: Malaysian factories have not been affected by the epidemic
Up to now, all domestic subsidiaries of Maida Digital have resumed work in accordance with the requirements of the local government in the near future. The company has purchased sufficient protective masks, thermometers, disinfection water and other protective equipment in advance, and the office premises before the start of construction Carry out thorough disinfection to ensure normal operation.
In addition, Maida figures have indicated that part of the production capacity has been transferred to the Malaysian plant, which has been officially put into use in 2019 and mass production has begun. This part of the production capacity is currently not affected by the outbreak.
Changfang Group: The epidemic has a certain impact on the company’s operations
Changfang Group stated that the epidemic has a certain impact on the company’s operations. Specifically, due to delayed rework and restricted raw material logistics, it will affect production, resulting in delayed delivery of orders accordingly. After resumption of work, the company will organize employees to work overtime and make full use of it. Production capacity to make up for losses as much as possible.
They said
From the upstream substrate, chip to downstream packaging section, the number of LED manufacturers in the core epidemic areas of Wuhan and Hubei is limited, and only a few manufacturers are affected; LED factories in other regions of China are limited by the slow progress of personnel resumption and cannot be recovered in the short term. Full production.
Overall, the LED industry has been in oversupply since 2019, and there are still stocks available for sale, so the short-term impact is not large, and the mid-to-long term depends on the resumption status. Among them, the LED packaging industry chain is mainly distributed in Guangdong Province and Jiangxi Province. Although it is not the center of the epidemic, due to the large manpower demand and the majority of employees from the immigrant populations across China, the mid- to long-term lack of work If it is not resolved, the impact will be more severe.
As for the demand side, various companies have started to pull goods in advance and raise the inventory level, thus pushing up a wave of stocking demand; each production link will decide whether to respond to price increases based on their respective supply status.
———— A global market research institution, Jibang Consulting and its Tuoyan Industrial Research Institute
Despite the impact of the epidemic, the lighting industry is still expected in the future
In 2020, the lighting industry has a difficult start.
If it is said that other industries affected by the epidemic are experiencing severe winter development, then the severe winter of the lighting industry was as early as December last year. The time has come for the notification of the “political performance project” and “face project” issues (hereinafter referred to as the “Notification”), and the subsequent arrival of the new crown epidemic is undoubtedly worse.
The direct impact of the epidemic on the lighting industry includes: delay in the resumption of work of most companies, no new projects by design units, slow sales of products, construction projects have basically stopped, and related exhibitions have been delayed …
For the design, product and engineering construction units of the lighting industry, according to the survey data published online, the companies affected by the epidemic accounted for 52.87%, the general companies accounted for 29.51%, and the smaller companies 15.16%, only 2.46% of the companies said they would not be affected by the epidemic.
The author believes that the reason for this situation is as follows:
(1) The operation of the lighting industry lacks the support of market demand
At the beginning of the new year in 2020, the overwhelming new epidemic situation caused a sharp drop in the market demand for the lighting industry. The operation of the lighting industry as a whole lacked the support of market demand. This is the largest and fundamental impact of the epidemic on the lighting industry. The survey data shows that the proportion of marketing blockages currently faced by enterprises has reached 60.25%.
(2) There is no play in the protagonist, how can the supporting role be on stage?
The “Notice” issued by the Central Committee in December last year is tantamount to a major earthquake for the lighting industry. After this, many lighting companies have set their sights on the cultural tourism industry and interpreting lights, hoping to cooperate with the cultural tourism industry to perform and cross-border innovation in outdoor landscape lighting. This is undoubtedly a correct way for the development of the lighting industry. However, just as the whole country was preparing for the peak of consumption growth during the Spring Festival, the sudden new crown epidemic caught China’s tourism industry by surprise.
According to relevant data: According to the total revenue of China’s tourism industry of 6.5 trillion yuan in 2019, the industry stagnation for one day is a loss of 17.8 billion yuan. To the cultural and tourism industry, it is like “the mud bodhisattva can’t protect itself from crossing the river”. Where can it drive the “little brother” of the lighting industry? For the lighting industry, relying on the cultural tourism industry to develop the lighting industry is an important way, but “there is nothing left, Mao will be attached”?
(3) Other influences
For the business market of enterprises that export lighting products and indoor lighting companies, it is also the business direction that many companies are optimistic about and follow after the Central Government’s “Notice”. At present, due to epidemic conditions and trade wars, the recent production and operation of these enterprises have also been greatly affected.
My country is the world’s largest exporter of semiconductor lighting products. After the WHO announced that this pneumonia epidemic in China constitutes an “interrupted public health event of international concern”, the direct impact on the export of lighting product companies is self-evident. Many companies in the lighting industry have not only disrupted their annual plans due to isolation and delays in starting work due to the epidemic, but also faced the dilemma of having no operating income and having to bear various costs. Some SMEs are also facing the point of life and death. The outlook is not optimistic.
———— According to the relevant article of the WeChat public account “City Light Network”, Xiong Zhiqiang, the director of Shandong Tsinghua Kangli Urban Lighting Research and Design Institute pointed out that although the impact of the epidemic is great, the lighting industry can still be expected in the future
Health lighting will arrive in advance
In front of the epidemic, health lighting may arrive early. Where does this health lighting start? It should start with the sterilization lamp. Of course, the range of health lighting is very wide, including medical lighting. I think this demand may be just needed.
Of course, health lighting also involves people-oriented human-oriented lighting. This is warm. Lighting is also needed to provide a better life, but sterilization lighting may be a step ahead. Because in the end, it is also necessary to ensure life. It is useless to enjoy life without life, so the era of health lighting will come in advance. I think everyone should have a full preparation.
At present, there are several hot spots that you can pay attention to. The largest hot spot, the UV germicidal lamp is an opportunity for all of us. This germicidal lamp needs to join hands with the packaging factory, chip factory, etc., everyone must pay attention. But what form does this lamp appear, whether it is a bulb lamp or a line lamp, or what other style of lamp, where is it used, whether it is used in a shoe cabinet, used in a kitchen or bathroom, or used in a wardrobe. I think this is an infinite market. In addition to homes, public places should also be used, including subway stations, hospitals, schools and other public places. I think this may be more urgent than using lights in the classroom. UV chips and tubes should be in short supply. After this amount is released, I think it is a very good market, not only domestic but also international. It is worth everyone to discuss, of course, each company has its own method, you can do a little innovation.
Tang Guoqing, Vice Chairman of National Semiconductor Lighting Engineering R & D and Industry Alliance and Director of Semi-Special Committee of China Lighting Society
Post time: May-07-2020