Price War Is The Inevitable Product Of The Development Of Market Economy, But LED Screen Enterprises Need To Beware Of Low Price

- Jul 02, 2019-

In the past two years, price war has always been a topic lingering in the LED display industry. However, looking into its essence, the outbreak of price war is closely related to the development of the industry, which is an inevitable phenomenon in the development of the LED display industry. From the mid-1990s, the color TV industry first started the pioneer of price war in China, and then triggered price wars in various industries, with manufacturers, merchants and brands trying to win the market with low prices. LED screen enterprises follow the principle of profit maximization. When products are in short supply, enterprises tend to increase prices, which not only increases profits but also maintains the market balance. However, when the market competition enters the white-hot stage, seizing market share becomes the key factor of whether LED screen enterprises can survive or develop. At this time, price reduction becomes an effective means for enterprises to rapidly increase market share. With the price reduction of one enterprise, other enterprises have to follow the pressure of survival, and the price war inevitably happens.


No matter which enterprise starts first, the price war inevitably exists


The LED display price war seems to have been initiated by several leading enterprises, which use their abundant capital and scale to suppress the price in order to profit. However, its essence is the stage that LED display screen industry must go through in the market economy environment after the rapid development of more than 20 years. It is conducive to enterprises to play their own advantages in the market and maintain the market vitality. The essence of price war is to achieve the best and eliminate the bad, the survival of the fittest, which is the survival law of all things in the universe, but also the development law of market economy. If the law of the jungle is the rule of biological elimination, then price war is the rule of market elimination. Therefore, price war exists in every line and industry of market economy, waiting for the opportunity to develop, without exception. When the market economy develops to a mature stage, the market is basically saturated. In order to grab the market, enterprises compete with each other at low prices, resulting in price wars. So many LED screens in the face of price war, both to see the essence, but also to maintain enough concentration, active response.


Price wars will re-integrate the whole industry. Enterprises with large production scale, low production cost, advanced production technology, new production equipment, reasonable enterprise management methods and excellent product quality can merge or squeeze out some weak enterprises in the market through fierce price wars. The re-integration of the industry is conducive to the overall improvement of product quality and the stable and orderly development of the market, so as to improve the overall efficiency of the industry and help enterprises to form economies of scale. It is not about who started the price war first, it is not about who is participating in the price war, it is just the inevitable product of the industry development to a certain stage.


Beware of low price competition, beware of routine


Price war is a "double-edged sword", which will also do harm to the competitive environment of LED display industry. Throughout the price war in various industries, there are always a few enterprises that rise and fall rapidly, the whole process is like fireworks. Why? The reason is that these enterprises, taking advantage of the chaos "looting", took advantage of the price war loophole, by hook or by crook, to seek profits. Finally, because the foundation is not stable, the interests of the building fell, leaving a series of after-sales problems to the channel, suffering the channel. Therefore, under the price war, each channel business must be careful the low price enterprise's routine, prevents falls into the trap, otherwise only will suffer oneself.