BYD to Reap Benefits in 2014 After A Decade of Vehicular LED Lights Investments21-06-2014
BYD Marketing Director Mr. Xiao explained the return on investment for the company LED investment, and discussed their current situation and future developments.
The China-based company has invested RMB 1.9 billion (US $305 million) over 10 years to develop a LED supply chain. The companys revenue in 2013 reached RMB 200 million and is expected to grow to RMB 500 million in 2014.
BYD invests RMB 1.9 billion over 10 years to establish LED supply chain
LED was still a new concept when it first made its show in the Chinese market in 2003. That year, BYD established an optoelectronics division for the R&D and manufacturing of optic related products ,such as mobile phone cameras, LED package products, and camera flash lights.
Demand for vehicular LED lights began to grow slowly around 2010 and BYD took the opportunity to establish its lighting brand. By the end of 2010, the company had already invested RMB 1.5 billion to complete the distribution of their supply chain and vertically integrate LED epiwafers, packaging, and application products.
The vehicular LED lighting market started to take off in 2013. The company established a new subsidiary in Guangdong province in China focusing on EMC to support large scale energy efficiency renovation projects.
When asked why the company invested large amounts of money to create a small LED supply chain, Mr. Xiao answered: "The vertical integration of downstream, mid-stream, and upstream supply chain is helpful towards mass production. It helps to reduce costs and keep quality under control. This leads to mass production with superior price and quality. We use cost/performance ratio to secure market share.”
BYD seeks large breakthroughs as long term brand strategy
Bargaining power is important for manufacturers entering high level development phase due to serious product homogenization and the industrys intense price competitions. In addition, with the parent companys massive financial support, BYD LED Lighting has been promoting products and brand construction. The company can be often seen promoting products at trade shows in China and other countries.
BYD LED Lighting began launching their products in super retail centers such as Walmart, Sundan, and Carrafour in 2009 when consumers vehicular LED lighting awareness was still low. During vehicular LED lighting business early stages, the company suffered long period of revenue loss to promote brand recognition. In regards to the companys brand expansion plan this year, BYD intends to expand vehicular LED lighting brands through various market channels by continuing to host investor and distributor conferences, and designer salons, said Xiao.
BYD has "innate" multi-distribution channel advantages
BYD LED Lighting has a natural strength in establishing channels that include construction, distributor, and e-market channels.
Through cooperation with all levels of government through various company branches throughout China, the companys revenue greatly benefited. BYD has many branches in China, which have paid large tax sums. Government support along with the companys business strategy has provided many local business opportunities.
BYD offers a good foundation and stability for distributors. "BYD Lighting has a total of 130 distributors in 2013, and we anticipate the number to reach 350 by 2014," said Mr. Xiao, "BYDs automotive 4S shops have spread all over the country. Among them, many 4S store have grown alongside BYD for many years. These shops not only have large funds, but strong loyalty to BYD."
BYD adds smart lighting to already abundant product line
BYD LED Lighting showcased new smart products for use in coal mines, gas stations, and petrol sector. The color tunable tunnel lighting and infrared sensor high bay lights have an energy efficacy of 70 percent and have higher added value. The products have already began sales in Greece, the U.S., and South East Asia. The product line has also extended from household lighting, commercial lighting, landscape lighting, indoor/outdoor lighting, and specialty lighting to industrial lighting and LED drivers.
Competition in the LED lighting industry is fierce. When speaking about future development, Mr. Xiao stressed that: "BYD Lighting will not take part in cut-throat price competitions. We place a lot of importance on long-term business development. Branding, distribution channels, and product quality consist the core of our competitiveness. After 10 years, companies who adopted low pricing strategies will be unable to survive in the market. BYD LED Lighting, however, will remain strong."