Since last year, the new crown pneumonia epidemic has ravaged the world, bringing serious disasters to various countries and also having a huge impact on the normal production and living order. All walks of life, including LED displays, have suffered huge challenges. The current epidemic situation is still repeated with the spread of mutated viruses, and the domestic and global anti-epidemic situation is grim.
After the epidemic last year, the LED display application industry experienced a boom in production and sales in the first half of this year. However, due to the surge in raw materials and the shortage of key components such as driver ICs, the industry was significantly differentiated. Most of the orders go to leading channel companies and leading companies with sufficient supply. Small and medium-sized enterprises are not only facing the lack of orders, but also suffer from the double impact of rising raw material prices and insecure supply. The overseas market is limited by the complicated epidemic situation abroad, and due to soaring shipping prices, the difficulty of finding a container, and the appreciation of the RMB, although there has been a slight increase, most export companies that have transformed the domestic market still choose to focus on the domestic market this year, especially the domestic market. The efforts on the channel side have intensified the industry competition pattern.
In order to further stabilize channel resources, advantageous channel enterprises will continue to make a fuss about channel sinking this year, with the distribution of channels in prefecture-level cities and third- and fourth-tier cities becoming the focus. With the maturity of new technologies and new products such as small-pitch COBs and all-in-one computers, related companies have adopted self-built or joint methods to form more subdivided professional sales channels. The LED display field has become a “paradise” for vertical enterprises to cross-border, and more companies such as Lenovo and Skyworth cross-border LED display industry, and bring more fierce competition in the channel field.
The epidemic has changed the industry’s sales model, and raw material price hikes and shortages have reshaped the industry pattern
Repeated epidemics are always tight strings. Although the Wuhan-style draconian measures have not been taken in China, the regional blockade still exists, which also limits the movement of people to a certain extent. Since the beginning of the year, many places in more than a dozen provinces and cities including Hebei Shijiazhuang, Changsha, Nanjing, Hefei, Jilin, Inner Mongolia, Beijing, and Shanghai have experienced short-term closures due to the epidemic. This has caused great inconvenience to the local people, but also caused a lot of inconvenience to industries including the LED display industry. The localization of LED display product sales has become an irreversible demand, which is more consistent with the original intention of some leading companies to deploy channels, and direct sales give way to channels.
At the same time as the impact of the epidemic, due to the rise in global commodity prices, which has driven the collective price increase of related raw materials, among the materials involved in LED display products, the increase of chips is 15%~20%, and the increase of driver IC is 15%~25%. , the increase of metal materials is 30%~40%, the increase of PCB board is 10%~20%, and the increase of RGB devices is 4%~8%. The increase in the price of raw materials and the shortage of key original components such as driver ICs have affected the delivery of industry orders, especially small and medium-sized enterprises. In the market market in the first half of this year, channel companies have become the main force in shipments, and the backlog of goods in the past has been effectively emptied. Leyard disclosed in its third-quarter financial report that as of October 24, Leyard had signed new orders exceeding 10 billion yuan in 2021, an increase of 42% over the same period last year, and its domestic channels have taken the lead in completing the annual order target of 1.8 billion yuan. Absen’s sales through channels this year has exceeded 1 billion yuan. This is the company’s achievement in transforming domestic channels last year in a short period of time, and it also declares that Absen’s domestic channel strategy is effective. From the success of these leading companies in responding to the epidemic, we can still see the clues of some changes in the LED display application industry:
(1) Channel pattern: Channels have always been the foundation of competition in the LED display market. In the past, manufacturers have been emphasizing “the channel wins and the terminal wins”. Today, this iron law has not been broken. No matter how the industry changes or how the times change, the characteristics of LED display products mean that screen companies cannot do without channels. In recent years, there has been a trend of “channel sinking” in the industry, even emphasizing the need to “sell products directly to users”, but the “channel sinking” in the new market environment is not a rush to promote the vertical sinking of channels, but must be optimized in the channel Find the most suitable channel mode on the basis of quality.
(2) Brand pattern: With the mainstream consumer groups in the Chinese market, there is a new understanding of brand power. For example, behind the brand is not only strength, but also responsibility, responsibility and guarantee. As a result, this is also accelerating the overall differentiation of the LED display brand pattern, the entire LED display brand pattern is reshaped, and the rest is king.
At present, China’s LED display brand structure, the number of brands is still too large, and the good and the bad are mixed, showing a situation of “excessive bloated”. According to the business pattern of developed countries, there is still a lot of room for elimination of existing brands in the Chinese market. Under the blessing of external circumstances such as this year’s epidemic, it is expected that from the second half of the year, there will be a round of deep cleaning results of local brands in the terminal market. Brands and zombie brands will be eliminated directly, which will also replace more market space and business opportunities for strong screen companies.
(3) Market competition: The low-price LED display market has been in the market for decades, and the limelight is still unabated. But in fact, when it comes to price promotions, all manufacturers have a “suffering stomach” in their hearts. In the era of quality competition, no manufacturer is willing to compete at low prices, because it sacrifices profits, overdrafts the future, and drags down industry sustainability. Under the background of weak low price war, with the acceleration of industrial transformation and upgrading, manufacturers are actively exploring more business competition methods in terms of products, channels, services and other dimensions, which further enriches market choices and the needs of active users .
As a result, this has also become a breakthrough for manufacturers to activate existing users and grab users who just need them. That is, the diversification of market competition means, not simply competing for low prices. That is, to explore more possibilities around the needs of users in different circles, the layout for different product structures, and the improvement of different service contents and means. Of course, this also requires more costs for manufacturers to incubate operations.
In general, the hot domestic channel market layout from last year to this year has largely “melted” the cold winter of 2020, making the LED display industry re-active in various places, which will become a strong guarantee for the development of the LED display industry in the post-epidemic era.
Post time: Apr-03-2022