Foshan Lighting Zhongxincai: The real opportunity is coming now

â–¡ reporter Wang Chengsheng

Chairman of Foshan Lighting, Zhong Xincai


The 65-year-old chairman of Foshan Lighting, Zhong Xincai, is dressed in a simple and spirited manner.

"This is a good thing for us. The real opportunity is now coming." In the face of the increasingly embarrassing financial statements, the Zhonggen Foshan lighting for 45 years, the one who made it into the "Chinese lamp king", but the words are amazing.

Scale expansion to reduce costs

"The gross profit margin of international electric light source giants such as Philips and Osram is generally around 7 to 8 percent. Foshan Lighting's previous gross margin of 30% is certainly not sustainable."

Zhong Xincai believes that there are currently more than 1,400 home appliance light source enterprises in China. The reason for this situation is that the gross profit margin of the products has been too high, and it is possible to make money by making a small family workshop. With the increase in costs, the decline in product gross margin, and the increase in environmental protection requirements, these small factories will gradually be phased out in the next few years. From an international point of view, because domestic costs and supporting facilities are still very competitive, it is impossible for industries to transfer to foreign countries in the short term. Therefore, more industry integration will be carried out in China, and the market will be transferred to first-tier companies in the industry. .

“Foshan Lighting, which is large in scale, good in quality and high in brand awareness, can take advantage of the rapid development of this industry integration process. This is the consensus of our management, and we are very confident to do this.” Zhong Xincai has a firm tone.

In order to grasp the industry consolidation opportunities caused by the decline in gross profit margin, Foshan Lighting plans to reduce costs and increase total profits through scale expansion in the next few years.

For example, Zhong Xincai said that because a furnace cannot be shut down, the fuel consumption of a glass furnace that produces 1.5 million lamps and 1 million lamps per day is equal. The management of two production lines and three production lines by a middle-level manager is actually not much different. Some logistics departments also have a lot of room for utilization. After the industry integration, some markets have been released, and Foshan Lighting can achieve economies of scale by expanding the scale.

Foshan Lighting has always been known for its steady operation. In the past ten years, the company has not paid a penny of bank loans. On the contrary, the annual cash in the bank is nearly one billion yuan, equivalent to one-third of the net assets. The company's production scale expansion is also basically based on its own development, and the production base is mainly concentrated in Foshan. This is also a reason why the company believes that the company's return on net assets has fallen.

For the scale expansion in the future, Zhong Xincai believes that Foshan Lighting will take full advantage of the opportunities of industry integration and take the strategy of going global, in addition to accelerating the investment and construction of its own production base. Looking for some production equipment, but the enterprises that have difficulty in the competition in the industry cooperate with Foshan Lighting, export technology and management, and let these enterprises be Foshan lighting OEM (OEM). If the cooperation is smooth, it will not rule out that some factories will be acquired in the future. At present, this piece has achieved initial success. The total number of OEM products in 2007 reached 14.55 million, a 19-fold increase over 2006.

According to Zhong Xincai's plan, Foshan Lighting will double its production capacity in the next few years, especially in the area of ​​energy-saving lamps, and finally achieve an annual output of 400 million.

Multi-strategy should deal with industry shuffling

In addition to capacity expansion, the company's multi-variety operation, domestic and foreign market promotion is also considered by Zhong Xincai to be a strong guarantee for the industry integration risk.

Foshan Lighting is currently the most widely used electric light source enterprise in China, avoiding the short-term industry risks of single varieties. For example, due to the promotion of energy conservation in Europe and the United States, ordinary light bulbs are regarded as products that are about to be phased out, and many domestic enterprises have stopped production. However, after all, there are still huge demand in other parts of the world. Since the second half of last year, due to the influence of supply and demand, the company's product prices and ordering prices have risen all the way. On the contrary, energy-saving lamps, which have always been regarded as the future direction of development, have led to a sharp decline in exports due to the decline in North American consumption power.

In terms of domestic sales, the company has continued to increase investment in recent years, and the export ratio has dropped to about 40% from the previous 90%. From the first quarter of this year, this strategy successfully avoided the risk of foreign trade decline.

In addition, the company's product quality is good, brand awareness is high, and product price increases are not without space. “After last year we raised prices for some products, some customers did run, but they came back after a few months. Why? Our brand and quality are the main reasons. Others are not comfortable with the use of 1 The cheerful Zhong Xin said with a smile.

Technology is also considered by Zhong Xincai to be the key to future success. "In the next few years, we still adopt the following strategy in technology, and will not invest too much in the research and development of technical theory, but will increase investment in the application field. From the current point of view, LED lights will be the main development in the future. Direction. We plan to invest 100 million yuan in the development and production of LED lamps in the future, and strive to seize the opportunities in the future market."

In Zhong Xincai's view, domestic electric light source enterprises are not suitable for premature investment in the development of the most advanced technology theory. This is not only a relatively large investment risk, but also a very long output time. The strengths of domestic companies should be placed in the application field. The LED chip patent was applied by American companies in 1988. However, after 20 years of market capacity is still very high and the application field is now invested, it can avoid this long waiting period and directly enter the rapid growth period of the product.

After some smashing, the future development strategy of Foshan Lighting has clearly emerged.

At the end of the interview, Zhong Xincai said plainly: "Reliably, the title of China's capital banknote cash cows, we will continue to maintain."

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