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Development Of Chinese LED Display Industry

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Development Of Chinese LED Display Industry

After experiencing fast expansion in 2012 the LED display industry went through an integration period. Most companies experienced a period of low gross profit margins, slow increasing revenue, and chaotic competition within the industry. The market generally believed that the LED display industry had no competition barriers, serious homogenization, and low investment prices. However, after in-depth exploration of the industry chain, we discovered that the benefits of export oriented LEDs come from their superiority in cost, technology horizontal development, and the expanded market space in other countries. With the growth rate continuing a positive trend for the future, investors should pay appropriate attention to the affiliates that will benefit from the rapidly expanding export businesses.


Cost superiority for LED display equipment


Looking at the LED display industry, Chinese businesses have a clear superiority in price compared to other countries. The current selling price for Chinese LED displays are 35%-50% that of the same product in other countries. Even with a lower selling price, China is still able to maintain a better gross profit margin. The main reason for this is due to resources in China being cheaper and their value added tax (VAT) refund policy. These two aspects allow the cost of Chinese LED displays to be around 35% lower than that of other countries, increasing China’s competitiveness in the market.


At the same time, use of local florescent lighting has also grossly lowered costs. Looking at the cost composition of Chinese local LED displays, the majority is in LED lighting which reaches about 39%. The majority of local Chinese display companies either use local LED lighting or locally packaged LED lighting. Companies in other countries use lighting from other international manufacturers (Nichia, Kortec). Data shows that the price of Chinese lights is 1/3 that of other international manufactures. If assuming that all costs outside of China are the same, and only because of the price difference for lighting outside of China, the cost of local Chinese displays is 44% lower than other international manufacturers.


Also, the salaries in other countries are seven times that of Chinese workers. If the cost remains the same, for example, labor cost, then the entire cost for Chinese displays will be lower by 17%. Products like empty cabinets, steel frames, PCB, and others have a large price difference between China and other countries. On top of that, adding in the cost of design, the cost of local Chinese products is 30% - 50% that of other countries. Chinese LED display exports enjoy a 17% VAT refund rate. The government is predicted to support a further drop in cost.


The Chinese market experiences limitations while other countries’ markets expand


After the explosive increase in the LED display industry in 2010, the entire industry experienced a large drop. Looking at data from other industries, it was clear that even though the entire industry slowed down, the situation for exports was clearly good in the domestic market. Companies all had an increase in sales revenue of about 30%. In the same period, the sales revenue for most Chinese local businesses remained between -10% and 10%.


Currently the level of technology for industries outside of China are already equivalent. From the perspective of terminal clients and downstream usage,many Chinese manufacturer ,including Newstar Optoelectronic Co.,ltd ,we have lots of satisfactory performance in undertake large-scale projects from large exhibition centers to sports centers, even to the Beijing National Stadium and the Shanghai Expo center. Even though there is still a distance between local Chinese LED displays and displays by international manufacturers, aside from ultra high end products, displays that use Chinese LED lights will still reach demands.


In the future, even though Chinese local LED companies will still depend on products with a higher cost performance, the export business will still continue to rapidly develop. Local Chinese listed companies are hopeful to obtain a larger area for development. Investors should pay attention to the affiliates that will benefit from the rapidly expanding export businesses.  

Pub Time : 2015-07-14 09:11:27 >> News list
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