Pan Jie: price will accelerate the formation of market segments

Price war is the LED lighting industry in recent years has been a topic of concern, then, in 2015 LED lighting products will continue to price war? The ongoing price war, lighting enterprises have what impact?

LED product prices will continue to decline

Foshan electrical lighting Limited by Share Ltd chairman Pan Jie believes that a lot of enterprises through the price war to get the scale, through the size of the search for additional value, which may be in some of the circulation of products which is a better way. He also said that in 2015 the price of LED product will decline still, there are two reasons: first, no matter how cold market, in 2014 there are still many enterprises in the expansion, the capacity of the whole industry are increasing, such as upstream of photoelectricity, Taiwan funded enterprises are increasing the capacity of three, high investment upstream, resulting in capacity consumption pressure more so, the downward trend in price is predictable; second, before the LED package, chip, beads in the whole system cost is very high, the highest reached 60% ~ 70%, but now the cost of LED has dropped to about 30% to 40%. In the traditional sense, the cost of structural components in the increase, more room for optimization. Therefore, the whole system in the case of continuous improvement in technology, with more open, bringing the cost reduction space, so prices will continue to decline.

Prices will accelerate the formation of market segments

At the same time, pan Jie believes that the price does not necessarily mean that there is no profit, if the price to obtain the scale effect, there will be a certain profit margins. The standard products will gradually enter into a stable period, LED lamp, light bulb, not like before the crazy price, first, now is the stage of progress, technology is relatively mature; second, when the price is down to a certain extent, volume and price elasticity is not so good. There is a saying that the economic effect of diminishing marginal effect, is the first time the price elasticity of the fastest, the second price is not so obvious, the price will be able to maintain sales only three times. So when prices fall to a certain extent, the system costs and traditional lighting has a replaceable, relatively speaking, it will enter a stable period, unless there is a new technology to replace it.

Whether it is the integration of intelligent lamp or lamps, the price is actually a good sign of trend, the circulation of products in the future will not always go down, the system can develop more room price changes. Of course, the price will be painful, but it will accelerate the formation of the market segments, the value of the brand and channel penetration will slowly precipitation, the future will be more correct path of development.

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