The Chinese LCD splicing market has achieved rapid growth after entering the market with ultra-narrow edges. Driven by demand and constantly innovating new technologies and products, the Chinese LCD splicing market has flourished unprecedentedly. The growth rate of China's ultra-narrow LCD splicing market exceeded 100% in 2011. In the past five years, the compound growth rate of China's ultra-narrow LCD splicing market has reached 25%.
The high-growth market is also facing a high degree of competition in the market. The relatively low entry threshold for LCD splicing and large-scale market demand have attracted the participation of many manufacturers. Guangdong Victory announced its high-profile entry into the LED LCD splicing market last year and declared: "Our goal is to make Victory the industry leader in LCD splicing this year." "To make Victory the same as the Lenovo in the PC world." But so far, has Vtron reached their goal, is it possible for Vtron to become a Lenovo in the PC world?
The performance of LCD products in the first half of the year was dismal. First of all, let's take a look at the report card of Vtron LCD in the first half of this year. According to the company's semi-annual report announced by Vtron, its LCD splicing products had sales revenue of 38.91 million in the first half of this year. To understand the meaning of this number, we need to look at the situation of other competitors in the same industry.
Nanjing Oudi is also a professional LCD splicing manufacturer. Its annual sales revenue was about 250 million in 2011, and it is expected to reach 300 million this year. The annual LCD product sales revenue of Haikang, Skyworth, Shanghai Lingbo and other companies are around 150 million to 200 million. Victory's sales revenue for the first half of the year may be only one and a half months or two and a half months of sales.
There should be 10 companies with more than 100 million sales in the LCD splicing industry. Therefore, with this transcript, Vtron is difficult to enter the top ten in the LCD splicing industry. This year's "achieving the industry's foremost goal" is probably going to fail.
What exactly prevented the development of Vtron LCD?
LCD splicing products are not good enough. Victron has always claimed that its products have high technical content. However, the current LCD splicing products launched by Vtron on the market are simply grafting some functions of its DLP splicing products to the LCD splicing system. "Compared with other competitors, we have not found any unique features of LCD products launched by VIC," said a senior professional in the splicing industry.
Victory LCD products lack innovation in technical performance and functions, and have no obvious technical advantages, which makes Victory LCD have to fall into the quagmire of homogenous competition with other competitors.
Product pricing is too high According to VIC semi-annual report, the overall gross profit of VIC in the first half of this year was 57.65%. Weichuang's advantage product DLP splicing screen gross profit is 59.57%; LCD product gross profit is 37.56%. Such a high level of gross profit makes VIC's annual report very beautiful and gives investors a lot of confidence.
Let us also take a look at the overall situation of the LCD splicing industry. According to the survey on the big screen display performance list website, the industry currently has a certain scale of LCD splicing screen manufacturers, and the average gross profit level is about 17%. VIC's gross profit is more than double that of its peers. In the cost structure of LCD splicing products, the price of the liquid crystal panel exceeds 60%, and the liquid crystal panel is nothing more than the three companies of Samsung, LG and Sharp, and its product prices are relatively transparent. Therefore, the industry's panel purchase prices are almost the same.
Everyone's product costs are not much different. Wei Chuang is a listed company. No matter its material selection cost and labor cost, it will not be lower than other competitors. Then maintaining high profits double the industry's average gross profit level can only be achieved by increasing sales prices. The price of VIC LCD is generally higher than that of its peers, which is already an indisputable fact in the industry.
In a market where products are highly homogenously competitive, over-priced Victory products severely weaken their market competitiveness. However, as a listed company, the brightest part of Vtron's financial report is the extremely high gross profit level. Victory is neither willing nor able to sacrifice gross profit in exchange for LCD market share. After all, falling stock prices is a more terrible thing.
Immature sales channels Although DLP splicing products and LCD splicing products are both splicing, their marketing models are completely different. DLP is a high-end product in the splicing market, mainly a marketing model for project operations. The LCD is a low-end product in the splicing market, and its sales are mainly channel fast-selling models. Vtron also knows the mystery, so a new team has been formed to sell LCD products.
For Victory, the project operation model similar to the DLP market is definitely their best. But when facing the LCD splicing market, he was still a pupil. But his opponents are not weak.
At present, influential companies in the LCD market, some started as monitors, and some were wholesale TV sets. The product markets operated by these companies are very close to the LCD splicing market. In addition to their huge marketing channels throughout the country, they also have a very mature marketing management mechanism. Taking Nanjing Oudi Company as an example, they have established more than 20 branches and offices nationwide, and the sales channel construction is relatively complete. At the same time, there are large integrators in the professional security market in this market, similar to Haikang and Dahua. The security market is the largest application market for LCD products. The LCD splicing market can be as hot as it is today, and has a very close relationship with the rapid growth of this market. With their years of accumulation, these two companies occupy a very large market share in the security industry market as a professional security integrator, and both companies also have their own brand of LCD products.
In contrast, Vtron in the LCD field is still in a very preliminary state from channel construction to channel management. Coupled with the lack of competitiveness of Victory LCD's own products, it will be a very difficult thing to win a world in this market.
Paradox and Contradiction The phrase "making VIC LCD as an association in the PC world" is actually a paradox in itself.
Since this year, Victory has positioned the company as an industry application solution provider, and specifically invited IBM for management consulting for this purpose. Such a company's positioning hires a solution marketing expert like IBM as a consultant, it should be said that it is very suitable. On the other hand, Vtron has compared the LCD splicing industry to the PC industry, because the LCD marketing market has very clear and simple product sales characteristics, and it is more appropriate to compare it to a PC.
However, the question arises: Is a company that provides industry application solutions suitable for selling a pure PC product?
For this question, IBM's answer is of course no. So IBM sold his PC business to Lenovo in China.
Imagine that if Vtron successfully entered the forefront of the LCD sales industry, that is to say that Vtron successfully made its LCD into the Lenovo of the PC world, then Vtron will face the big positioning and structure of the company. Failure, the gross profit level will also be greatly reduced. Conversely, if Victory successfully builds an industry application solution provider's corporate structure and continues to maintain a high gross profit level, then Victory's success here may be when he abandons the LCD product.
Victory's entry into the LCD industry actually contradicts the company's own positioning and structure. Perhaps like IBM, giving up LCD products is the best way out for Vtron.
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