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The Competing Strategies of Taiwan LED Industry When Facing the Rise of Red Supply Chain
LED,Red Supply Chain,value chain,
|Publication Year :||2016|
LED is crucial revolution since Mr. Thomas Edison invented the electric bulb. Wide applications of LED make Taiwanese LED industry at the position of worldwide No.1. Taiwanese LED Enterprises enjoyed highest profitability in 2010 but it also attracted heavy competition. To establish LED industry is key subject of Twelfth Five-Year Plan of China. The China LED firms, which government subsidizes created chaotic contest among global LED industry. Tactics of price competition and scale war from China national teams initiated turbulent undercurrents, which are waves of merge and acquisition and cascades of collapses. Even, the international enterprises, such as Philips, Osram, GE and Samsung, are forced to spin-off their LED business or withdraw, successively.
The red supply chain strongly impacts Taiwanese LED industry. Based on government’s subsidies, China LED firms dump LED products in global market. China LED firms offer 5 times salary to poach Taiwanese LED engineers and related talents. Because Taiwanese industry of science and technology is losing competitiveness, the vicious cycle of market price ruggedly dropping, talents seriously loss, then stock price declining, finally China firms acquire Taiwanese LED companies. This story repeats among Taiwanese science and technology industry. A single industry competes with a country that causes disorder between market supply and demand. LED industry falls from cloud to ground. LED business became miserable industry.
This research summarizes and analyzes current situation of Taiwanese LED industry. Under such difficult industrial environment, this research provides strategic thinking and suggestions to government. The other Taiwanese industries, which still have advantages can learn from this instructive precedent to prevent repeated annexation by red supply chain.
From value chain perspective of components, terminals and consumers, development of up and down stream of China industrial chain is mature, gradually. Additionally, under China central and local government strongly fostering, China industries are new force to be reckoned within global electric components industry. Especially in the current market, capital, personnel and other resources have been inclined to China, which we have to pay attention to impacts and challenges to our electronic components industry. Expecting our government and industry can face the red supply chain issues, and actively expand the strain.
From the cross-strait LED plants rivalry, threaten from China is irresistible, China has the world's largest market and consumption capacity, it is better to let them having join venture with Taiwan companies, but not focusing market capital racing, instead of the market.The policy is to join forces to make a stronger industry; Taiwan factory can also be combined with international companies against the red supply chain, such as Epistar can cooperate with the Philips Group, let Epistar and Lumileds merger; Taiwanese companies still have proprietary advantage to innovate continuely, so that the mainland companies can not quickly entered the niche product market; the government should take the leading role in green power, using the large quantity LED lighting to replace the traditional lighting and energy-saving legislation requires the proportion of new building.
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