[When the price war breaks, where will the lead battery industry go?] When it comes to the term "price war," people in China are not unfamiliar, especially in the 20 years from the transition from planned economy to market economy in China. The voice of "war" will ring from ear to ear. Today Xiao Bian is talking about a sub-market for China's manufacturing industry – the lead-acid battery market for electric bicycles. In recent years, lead-acid batteries have repeatedly seen the words of the media, and because of the "price war", they frequently appeared again. One round of “price war†has not only made the lead-acid battery market for electric bicycles quickly become one of the important battlefields for China’s manufacturing “price warsâ€, but it is also continuously annihilation of the actual value of its products. Concern: When will the price war break? Lead-acid battery industry will go from here?
In the normal market economic environment, "price" can often reflect the "value" attached to the goods. When prices become a kind of “weapon†for market competition, the various subjects in the market will more or less become victims of this “warâ€.
In the Baidu Encyclopedia, "price war" is interpreted as "a kind of commercial competition between enterprises through competing to reduce the market price of goods," its purpose is to suppress competitors, occupy more market share, digest inventory. The formation of such a competitive market base is a highly homogenized product. This is actually a major pain point in the lead-acid battery industry for electric bicycles.
Electric bicycles are undoubtedly one of the best inventions that could solve the basic needs of the people in the last century. Due to its appearance, the Chinese people’s travel difficulties caused by the vast territory and inadequate transportation facilities have been greatly alleviated. Lead-acid batteries, with their advantages of stable performance, low price, strong energy, safety and reliability, have been leaping forward with the development of China's electric bicycle industry.
It is also due to the relatively simple structure and technology of China's huge electric bicycle market and electric bicycle products. In the past 20 years, numerous e-bike brands that are difficult to count have emerged in the market. Lead-acid battery companies for electric bicycles also accompany each other. Outside the formal large enterprises, all kinds of unknown workshops have blossomed (reduced after the industry rectification). However, behind the prosperity of the industry, the degree of homogeneity of lead-acid battery products for electric bicycles is serious, and the added value of products is extremely low. In addition to the very few varieties of lead-acid battery products on the market, there is almost no difference. Many consumers simply do not know how to choose which type of battery, and it is consumers and the industry itself who are ultimately damaged.
When a market is large enough, anyone can share a "cake." However, in recent years, with the development of new energy vehicles, the emergence of shared travel concepts, and the gradual improvement of public transport networks, people’s travel options have become increasingly diversified, and electric bicycles are no longer the primary choice for people to travel; With the increase in consumption levels, people's demand for battery life, weight, and environmental protection are increasingly demanding. Lithium batteries have begun to spark "admission" due to their declining cost, and lead-acid batteries are no longer the only choice for electric bicycles.
The shrinkage of the application market makes lead-acid battery manufacturers “uncomfortable†but “very helplessâ€. The simple technology and low-tech level that allowed enterprises to quickly put into production and quickly occupied the market has transformed into a “stumbling block†that hinders the market segmentation of enterprises. The low added value of battery products and the lack of innovative technology in the industry are also doomed to snatch. In the market, prices seem to be the only "weapons" that companies can choose.
According to statistics, from 2012 onwards, news of a “price war†for lead-acid batteries for electric bicycles will appear on the media almost every 1-2 years. The main reasons for the "price war" in each round are not the same, but they are nothing more than the following:
1. Grab the market. The market of an industry is limited, and the scale of development of industry companies is also limited.
When there are more people participating in the "cake," the "cake" that everyone can share will inevitably decrease. However, the product structure of the electric bicycle lead-acid storage battery company is exactly the same, the technology added value is low, the product lacks innovation, and the products lack variability. In order to seize the market, you can only rely on the "price war."
Analysts once pointed out that the recent “increasing intensity†price war has both the taste of robbing the market and the compulsion of competitors. In the field of "battery is king" in the field of electric bicycle lead-acid batteries, quickly withdraw funds through a low-cost strategy, and a large market can be obtained with a small loss. In contrast, this is still a "benefit" deal.
2. Cost-effectiveness. Large-scale economy brings down the cost of the industry, and the cost reduction will naturally drive prices down. For companies with cost advantages, the “price war†is actually a manifestation of their outstanding advantages.
3. Overcapacity. This seems to be the "old cliché" of the electric bicycle lead-acid battery industry. A fully-developed market will inevitably result in excess capacity once new inputs are added. The capacity of the electric bicycle lead-acid battery industry has almost been saturated since the peak of the industry. Once the production capacity is excessive and the inventory is overstocked, a new round of “price wars†will surely be formed.
A netizen who claimed to be the head of a leading manufacturer in the battery industry said: "The price war has been playing, and the most fundamental reason is overcapacity. When the price of the battery has been rising, the money is too good to make, so Expanding capacity and capacity expansion, and then discovering that there is excess capacity, it has been playing a price war to capture the market, and it has been falling.â€
The world's electric bicycle battery market is almost all concentrated in the country, and the environmental remediation eliminates the production capacity of illegal companies. In order to make up for this part of the capacity vacancies, large companies begin to expand their production capacity, and ultimately they can only be digested through “price warsâ€. The "price war" has also become a "speed-increasing agent" for the industry's reshuffle.
4. Increase in production costs. The prices of commodities, in addition to being affected by the application market, are also related to political factors to some extent. In recent years, due to the turmoil in the international situation, domestic environmental protection improvement, and changes in the application market, the price of raw lead has been fluctuating and fluctuating. The cost of raw materials for battery manufacturing companies has decreased. However, more and more stringent environmental protection policies in China have caused companies to increase their environmental protection investment in controlling pollution. At the same time, other costs such as manpower and material resources have also increased year by year, as well as the levy of excise duties for lead storage batteries. These factors have accumulated, causing battery manufacturing. The overall cost of the company has risen, and corporate profits have declined accordingly. In order to obtain greater profit margins, some companies often adopt a "price war" to obtain profits in a short period of time through low-cost sales and return funds.
The "price war" set off by the two leading industry giants Chaowei and Tianneng will also directly affect the entire industry of electric bicycle lead-acid batteries.
In addition to large companies with cost advantages, small companies that lack competitive advantages in the price war are eliminated and there are almost no winners in "price wars" caused by other reasons.
In the "price war" of the electric bicycle lead-acid battery industry, the dealers located on the channel were first damaged. In the electric bicycle lead-acid battery industry, the “first payment after settlement†mode is usually implemented. The “price war†allows dealers to pay for the additional cost of sales in order to pay back, and ultimately the dealer is “unacceptableâ€. Some netizens stated that in the “price war†in 2015, there were dealers hanging out: “Spike! Sending benefits to return old and new customers at a loss! xxx series (batteries) trade-in shock price, not 299, also Do not 199, as long as 149 yuan, grab is to earn, a limited number, when finished!" Such advertising content, which can also imagine the fierce "price war".
In recent months, the "price war" in the lead-acid battery industry has begun to pick up again.
After market research, the author found that 48V12Ah electric bicycle lead-acid batteries, the price per group fell from 390 yuan in 2017 to 340 yuan in early 2018, and has now fallen to 280 yuan, a decrease of 28.2%; and 48V20Ah battery, from The $600 in 2017 and the $540 in early 2018 have now fallen below 480 yuan, a drop of 20%. The decline was so great and the speed was so fast that the dealers who had already picked up the goods had to be sold at a loss, and they were “dare not to re-arrange†for the sales that followed. It can thus be seen that the fierceness of the "price war" in this round has not diminished compared with the previous few.
After the "price war" has become a market normal, the "price mechanism" that should have stimulated the normal development of the market has completely failed, and the vicious competition in the market is rampant. This will also lead to the destruction of the entire industry ecosystem and the loss of the "soil" for healthy development. Insiders pointed out that in the past few years, the "price war" of lead batteries broke out. If the leading enterprises in the industry did not take the initiative to raise prices, the battery and electric bicycle industries could suffer a devastating blow.
Consumers who seem to benefit from the "price war" are actually victims of "price wars." Low-price competition will often lead to the shoddy of some products. Frequent changes in sales prices will also cause consumers to lose their trust in brands and products. This is especially true in the context of the current endless stream of alternative products. "It is very likely that consumers will gradually abandon electric bicycles, resulting in a gradual shrinkage of the industrial market."
As a product of the market, the "price war" has its inevitability and rationality. It is also a means to promote the market and promote the development of the industry. However, in the electric bicycle lead-acid battery industry, "price war" seems to have lost its "adjustment ability" and become a "black hand" that pulls the industry into the vicious competition. The price war of electric bicycle lead-acid batteries has been repeatedly criticized by industry experts, business leaders, distributors, and even consumers, so how can we solve the “illness†in this industry?
First, the industry leading enterprises should not maliciously set off a "price war", respect the laws of market development, and use the market "sufficiency of the fittest" to eliminate outdated small businesses and achieve the goal of purifying the industry.
Secondly, industry companies must constantly increase their efforts in technological innovation, product development, and product added value to improve product differentiation and resist the risk of "price wars." Such as through differentiated products and technologies, enter the subdivided target market, sort out the core competitiveness of the enterprise; implement differentiated management, attract consumers through its own products, services, etc., to win the market; improve service quality, and serve consumers through high-quality services. Create value...Different competition can create more new markets, and it can also make the competition of enterprises more easily.
At the same time, companies in the industry can initiate the establishment of industrial price strategic alliances, and through the price constraint mechanisms widely recognized by coalition companies, restrict product pricing and resist unhealthy and even malicious “price wars†in the industry.
Protecting the interests of consumers, protecting the rights and interests of middlemen, and protecting the healthy development of the industry are not only the responsibilities and obligations of leading companies in electric bicycle lead batteries, but also the common responsibility of many industry enterprises. In the increasingly fierce "price war" today, the whole industry should join hands to jointly maintain the fair order of the electric bicycle lead battery market, in order to promote the healthy development of electric bicycle lead battery industry.
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