In the past two years, it's become increasingly clear that the pace of globalization for domestic enterprises has significantly accelerated. The 2016 International Lighting Fair in Frankfurt serves as a strong example, showcasing how "China's powerful lighting industry" is emerging as a new voice on the global stage.
China's overall development strength is remarkable, with companies from all sectors actively participating in the global market. As a result, domestic firms are now entering what is commonly referred to as the "new normal."
Many major Chinese LED giants have been targeting overseas markets over the last few years, expanding their influence from the domestic market to a global scale. With the domestic LED industry structure largely established, the international market is becoming a key growth area for future profits.
While Chinese companies focus on overseas expansion, more and more global LED leaders are turning their attention back to China, leading to an intensified competition between domestic and international players.
**Chinese LED Companies Go Global and "Capture" Markets**
Despite China's leading position in the packaging market, there remains an undeniable fact: many domestic packaging companies are large in size but not necessarily strong. The operating conditions of these companies vary widely, and the future of most SMEs looks uncertain. In recent years, several companies have even fallen out of the market.
For domestic firms looking to enter overseas markets, patents, technology, and distribution channels are crucial. Leveraging capital through mergers and acquisitions has proven to be one of the most effective strategies.
Take Mulinsen, for example, a leading Chinese LED packaging company. It holds competitive advantages in three core areas: technology, production scale, and industrial chain integration. In March of this year, its successful acquisition of Landvewans marked a breakthrough in its overseas business, positioning it as a global leader in LED packaging and lighting.
In March 2017, Huacan Optoelectronics announced plans to acquire 100% equity in Harmony Corelight (Yiwu) Optoelectronics Technology Co., Ltd. by issuing shares. This move followed an earlier transaction where Harmony Corelight acquired MEMSIC, Inc. in cash.
In May 2017, Stereo Optoelectronics acquired the Nitto fluorescent film project in Japan. This acquisition enabled Stereo to become the most complete CSP manufacturing enterprise in China. Not only did it gain access to core technologies, but it also significantly reduced CSP material costs, accelerating the development of this important segment.
In June 2017, Feile Audio completed the acquisition of Xiwannian after two years of planning. This was seen as a critical step in Feile's internationalization strategy. According to Fei Lesheng Zhuang Shen, going global is no easy task. To establish a presence in Europe and the Americas, companies must pay a high price and invest a long time. Through capital-driven M&A, Feile was able to acquire well-known brands, expand its global sales channels, and gradually set up overseas factories and R&D centers, achieving a true global layout.
It's clear that through these overseas acquisitions, Chinese LED listed companies have gained advanced technology, broken through patent barriers, and reduced risks and development costs. By leveraging the experience curve effect, they've gained a competitive edge in products.
Additionally, overseas M&A is an effective way for Chinese companies to quickly enter the international arena and expand their market presence. By utilizing established foreign brands and existing market channels, they can significantly shorten the market development cycle.
However, it's important to note that as the pace of global integration accelerates, the domestic and international environment for Chinese companies is becoming more complex. Whether in market development or financial operations, there are risks that need to be carefully managed.
**International LED Companies Enter China to "Capture" the Market**
While Chinese LED companies are striving to go global, international LED giants are also setting their sights on the Chinese market, aiming to strengthen their presence here.
According to research from the High-tech Research Institute’s LED Research Institute (GGII), the global LED lighting industry has been accelerating its shift toward China. Domestic lighting companies are expanding overseas rapidly, while foreign firms are scaling back their international frontlines.
Philips Lighting, a global leader, has been heavily investing in product development tailored for the Chinese market, offering cost-effective, high-value solutions. It has also attempted a “low-price strategy†to capture market share.
Philips has demonstrated strong control over product promotion, channel management, and brand building in China. Facing a dynamic LED market, it has responded positively through continuous innovation and faster development, showing its deep commitment to the Chinese market.
Similarly, Osram has been actively expanding globally. In 2014, it established its first LED back-end factory in Wuxi, which became the second-largest Osram project worldwide. With rising global demand for Osram LED products, the company launched the second phase of its Wuxi plant expansion in August. This project will more than double the current production capacity and create over 2,000 jobs.
According to Lim Khoon Teck, General Manager of OSRAM Opto Semiconductors, the second phase of the Wuxi plant is expected to start production in early 2019. This expansion will further solidify Osram’s leadership in the Chinese LED market and contribute to local economic growth in Wuxi.
Undoubtedly, international LED giants are increasing their presence in China, bringing improvements in talent, technology, and operational environments. Local companies stand to benefit greatly. While international firms operate on a global scale, many Chinese firms remain focused on the domestic market, lacking a broader global vision. To achieve “global leadership,†this mindset must change.
The 2017 High-tech LED Annual Conference will take place on December 21–22 at the Shenzhen Baoan Dunxi International Hotel. Industry leaders will gather to discuss topics such as “Strategic Positioning in the Deep Integration Era†and “What Will Win the Final Battle Between International and Local Companies?†Join us to explore valuable insights and stay ahead in the evolving LED landscape!
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