On the reform of the LED display industry: using the market to allocate resources
Recently, Shanxi Province officially released the “Opinions on the Implementation of Structural Reform of Coal Supply Side in Shanxi Provinceâ€. As a major coal province in China, Shanxi’s goal of de-capacity has finally “fallenâ€. The coal supply side reform proposal proposes that by 2020, Shanxi Province will orderly withdraw more than 100 million tons of excess coal production capacity.
If the traditional Chinese industry is a puffy patient, the supply-side reform is a good medicine. The government's policy support is only an external means, and the palliative treatment needs a cure. How to solve the supply side from the internal reasons is the most important thing.
So how to solve the supply side problem from the internal reasons, maybe we can look at the LED%CF%D4%CA%BE%C6%C1.html' style='font-weight: bold;color: #900916;border-bottom: 1px #900916 dotted; padding-bottom: 2px;' target='_blank'>How the LED display industry does it. Unlike the state-owned assets such as coal and steel, most of the LED display industry is private. The LED display industry is more dependent on market competition in the face of supply-side reform.
Looking closely at the development of the LED display industry over the past few years, the LED display industry has begun to use the power of the market to destock, de-capture, deleverage, and adjust the structure before the state proposes supply-side reform. Why do you say this, because the competition in the LED display industry is too fierce, the traditional LED display capacity is seriously over-capacity, and only companies can go to inventory through price wars, and after a round of price wars, many production capacity is backward. Enterprises have closed down in market competition.
At the same time, it is precisely because of this fierce market competition environment, which led to the emergence of small-interval LED display products, because the small-pitch LED display has a high technical threshold, which leads to the strength of this field. The enterprise can get involved. It can be said that the appearance of the small-pitch LED display not only brings new profit points to the LED display enterprise, but also plays a role in adjusting the structure.
At the same time, LED display companies that can survive the price war are enterprises with certain strength. These surviving enterprises have undoubtedly further strengthened the industry concentration through listing, mergers and acquisitions, financing, etc. The LED display companies listed in the past few years have grown substantially, and the expansion of scale has reached the goal of de-leveraging and cost reduction. It is not difficult to see that in the spontaneous competition of the market, we went to the stock; went to the production capacity; at the same time, it also played the role of adjusting the structure and de-leveraging.
In fact, de-capacity, destocking, and short-boarding are essentially the effective reconfiguration of resources. This function should be mainly undertaken by the market, and the government should not interfere too much. If excellent production capacity cannot win from competition and backward production capacity cannot be eliminated due to various reasons, then China's economic structure will be difficult to adjust in place, making it difficult to achieve developmental power transformation and achieve high-quality economic development.
In Xiaobian's view, market competition is undoubtedly more conducive to the completion of supply-side reforms in the industry, and the market competition in the LED display industry is undoubtedly the most representative. From the development of the LED display industry, it can be seen that by eliminating a group of inferior enterprises through the market, a number of high-quality enterprises will be produced, and then through these leading enterprises to drive other supporting enterprises, then an excellent industrial ecosystem can be built. Only by competing for resources in the market can the industry be healthy and sustainable.
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