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Harmfulness of low-price competition in the LED display industry

by:Toponetech     2021-06-14
The price competition of companies has become increasingly fierce. With the further advancement of corporate concentration and the influence of the rise of sub-categories, conventional products are facing the crisis of oversupply, and market shares are competing for market share one after another. In this battle without swords and guns, most of the companies have made a strong living under the huge operating pressure, and customers enjoy the preferential prices brought about by this. Even the wind of low prices also involves project engineering, and the phenomenon of winning bids at low prices has repeatedly occurred. How could it not be the result of vicious competition. Moving forward, forcing manufacturers and enterprises to embark on a path of innovation. But what cannot be neglected is that the damage caused by the price competition to all enterprises will also be difficult to wipe out the low profitability and difficulty in operating. Why cut corners? Starting at the end of last year, upstream LED chips, PCB boards and other original materials were opened to increase prices. trip. A few days ago, the news of the price increase of the original materials came again. Judging from the situation in the first half of the year, under the fierce competition, the low-level companies seem to have replaced customers and even distributors, becoming the ultimate bearers of price increases. . Moreover, in order to speed up the reshuffle of enterprises, large companies have added another fire, taking the lead in reducing prices, and there has been no sign of price increases so far. There is no doubt that in the future, even if individual manufacturers increase their prices alone, the overall price of LED displays will not be able to return to their early years. Under the high pressure, there are people who work hard and operate carefully, and there are no shortage of people who take risks. Under the condition of rising costs and falling prices, according to the usual production and operation mode, the profitability of companies is bound to become thinner. Moreover, after the price drop in the past few years, the profit margin of LED displays has shrunk significantly. This profit has fallen again. I am afraid that for some manufacturers, they are already at the end of the battle. If they are not shifting to production and operation of high value-added products, they will only Can reduce costs. There are undoubtedly two ways to reduce costs-intensive production and cutting corners. The Chinese people have always believed in the idea of u200bu200bgood quality and low price, but the so-called low price is not relative to the cost. When the price of the shopping mall is so low that it may cause the manufacturer to lose money, where does the beauty of the goods come from? However, due to the vicious price competition, the dilemma that has caused manufacturers to continue, and whether the low-priced products obtained by customers can still ensure the quality is not known. The investment in research and development costs are high, the price is difficult, the products are difficult to sell, and the long-term earnings are low. It is not easy for companies to maintain normal operations. What's more, there is a triangle debt situation in the industry. The first reduction will most likely be research and development funding. As we all know, in product development, in addition to forming a skill team and carrying out skills reserve, it also needs to prepare corresponding equipment, and most importantly, it needs to continue to invest a lot of funds, and when the development effect can be put into mass production, it is difficult. Expected. Under the tight budget, it is natural to slow down the pace of research and development. In addition, some manufacturers want to actively carry out product innovation and promotion, in order to advance product functions and quality, and increase product competitiveness. In such a thankless situation, the innovation activity of manufacturers is frustrated, and the pace of enterprise development and advancement will also become slow. Moreover, after this round of low prices has passed, companies may form a situation dominated by several large companies, and other companies and latecomers will find it difficult to shake their positions. Under the greatly reduced competition pressure, these companies will become more conservative and lack the motivation to develop innovatively. For a long time, it is not conducive to the innovative promotion of LED displays. It’s a habit to talk about price and whoever spoils the customer. As far as the customary touch display products are concerned, short-term use cannot find out whether the quality of production is lower and whether it is more simple to fail. Therefore, customers enjoy the manufacturer’s righteously. Let profit, for a long time, it is inevitable that there will be errors in the perception of the reasonable price of screens. Undeniably, the price drop has caused some customers who did not plan to purchase LED displays or choose lower-priced displays to switch to LED displays due to the drop in purchasing costs, which will promote the expansion of the market to a certain extent. The potential customer group is broader. But now companies are stuck in the vortex of vicious low-price competition and cannot escape, and companies cannot escape a series of sequelae such as the decline in innovation activity and the decline in shopping mall activity.
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