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Rising costs make it difficult to do business

This year, the lighting market seems to have no off-season, the industry has been in a cold state.

Now, due to the continued impact of the epidemic black swan, reduced customer traffic and plummeting orders, coupled with rising costs, small and medium-sized enterprises have been caught in bankruptcy and closure.

Compared with five years ago, the average profit margin of the lighting industry has dropped from 7% to 6% in the past two or three years, and this year, affected by the epidemic and rising costs, it is estimated that 5.5% will not be reached, and the industry's profits are getting thinner and thinner."

In the lighting industry earnings decline year by year in the background, as one of the subdivision of the industry lighting market is also not very good days.

Since this year, affected by multiple factors, the lighting market declined again.

Since 2020, affected by the new crown epidemic, the amount of customers fell and thus led to a decline in corporate orders, which is one of the reasons for the thinning of profits.

In addition, there is a continuous increase in the price of raw materials, labor, shipping, exchange rate exponential growth.

Specifically, since the beginning of 2021, the price of brass, one of the raw materials for lighting, has risen all the way to about 80,000 yuan per tonne, and materials such as plastic, aluminium, glass and iron have also risen continuously.

At the same time, the rise in labor costs and shipping costs have also narrowed the profits of lighting companies.

According to shipping industry data, the cost of shipping a container from Asia to Europe recently was about 10 times higher than in May 2020, while the cost from Shanghai to Los Angeles rose more than six times.

The reason for the price increase is that supply is outstripping demand. Currently, benefiting from the effective control of the domestic epidemic, the global market orders still plagued by the epidemic are mostly concentrated in China, the demand for commodities and raw materials continues to be high, there is a surge in demand for shipping, and freight rates for containers and bulk carriers continue to hit new highs.

Therefore, when raw materials, labor, shipping, and even exchange rates and other types of costs are layered onto the product, the lighting industry will also become more difficult days.

It is worth mentioning that, for the reasons of the downturn in the lighting market, industry insiders pointed out that, in addition to the above factors, but also with the industry is in transition related.

Therefore, at a time when the lighting consumer market is changing, traditional lighting companies need to think about how to keep pace with the market.

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