In the LED display industry circle, with the maturity of the industry and the improvement of the requirements of the mid-end market in all aspects of products, there has always been a saying that "don't always try to be the first in the market, be the only one in the subdivision field". , Especially in the current accelerated period of industry upgrading and transformation, cutting-edge market segments are also more in line with the main theme of the current development of the entire industry.

"If an enterprise is expected to earn socially acceptable normal profits in a free, open and competitive market through normal operation and management, then the enterprise is viable. Otherwise, the enterprise is not viable." — -Lin Yifu "Development Strategy, Viability and Economic Convergence"

400 million! In 2016, Sanan Optoelectronics received a subsidy of 359 million, and reached a new high in 2017, receiving more than 400 million subsidies, becoming the “king of subsidies” that year.

my country's subsidies to the LED industry are large, wide-ranging, and long-lasting, which are rare. Take subsidies as an example. In 2017, the state's support for the LED industry continued unabated. In addition to San'an, many companies received huge subsidies. For example, Huacan Optoelectronics received government subsidies totaling 348,363,200 yuan in 2017; Qianzhao Optoelectronics received government subsidies totaling 77,115,400 yuan in 2017; BDO Runda received government subsidies of 142,114,600 yuan in 2016, similar in 2017.

It is an international practice to support or protect related industries in the country through government subsidies. The LED industry in my country started late, and most of the expensive LED production equipment in the early stage was imported, which brought a huge burden to enterprises and made the development of the industry extremely difficult. However, since its inception in 2003, it has developed into the world's most important LED R&D and production base in just a dozen years, thanks to the strong support of LED companies from governments at all levels across the country.

Historically, this kind of support policy has undoubtedly been successful in promoting the development of the industry, and these supported companies have indeed grown into the mainstay of the industry and made great contributions to the development of the industry. The rapid development of the industry and the stable market environment all depend on their strength. However, as my country's reform and opening up enter the deep water zone, and the basic status of the market economy has risen, the development model of government investment to drive economic growth will undergo a fundamental change and become a market-oriented investment model.

This is not good news for companies that rely too much on subsidies, especially those whose profits account for too much of a subsidy.

First of all, companies whose subsidies account for a high proportion of profits have poor profitability. Once they leave the huge subsidies, their survival will be in jeopardy. With the deepening of my country's reforms, especially financial reforms, government-led investment may be greatly reduced, and the practice of supporting industry development through subsidies and other forms may also be abandoned. That is, companies will no longer receive high subsidies. If so, companies that rely on subsidies for survival will face tremendous pressure to survive.

The second is pressure from SMEs. Due to its engineering nature, the LED display industry has a very strong demand for funds. A veteran in the industry said: In the LED display industry, companies with an annual profit of 50 million are barely full. The profit margin of the project is generally not very high. The profit of 50 million means that the enterprise needs to pay several times of the advance funds. It is rare for SMEs to receive subsidies, not to mention huge subsidies. Coupled with the difficulty of financing in the market, even if some SMEs are excellent, they have not achieved much development under the constraints of capital.

The reform of the financial market, on the one hand, has reduced the support funds for large LED companies, on the other hand, has broadened the financing channels for small and medium-sized LED companies, and eased the pressure from capital. Ebb and flow can make companies that have been struggling to survive with unprecedented competitiveness. Even the tiger is very stressed in front of the wolves.

Finally, and most importantly. Companies that have long relied on subsidies for profit or even survival have weak "viability". Before the reform, most of our state-owned enterprises were in a state of loss, and there were many reasons for this. There are institutional reasons and market reasons, but the most important thing is the weak competitiveness of state-owned enterprises in the market. Isn’t it the “new state-owned enterprise” that LED companies are now being subsidized?

"New state-owned enterprises" are not only weak in their "viability", they are also being continuously weakened. Everyone has inertia, and a company composed of people is certainly no exception. In the comfort zone created by subsidies, the innovation ability of the enterprise may not be weakened, but it will affect the extent to which the enterprise can exert this ability. Only companies that are struggling to survive can squeeze out every bit of their potential and find their own way.

Ma Yun said: The most important thing for a company is to survive. Of course, it means to live on your own strength. Can a company that survived by subsidized companies survive the market-led model?

The market environment is changing, the industry is maturing, and high subsidies will gradually drift away. Even investment subsidies will gradually decrease. It is time to put aside subsidies. After tax rebates and the rise of the PPP model, BOE will become a legend!