'Spring' in the battery industry

by:Power Kingdom     2021-04-26
Judging from the status quo of the industry, severe overcapacity will inevitably lead to price wars or cost competition, and too fierce competition will result in product prices below the cost line, and some companies will be eliminated because they cannot bear losses. In fact, under the vigorous rectification of policies, a large number of companies have already withdrawn, and the remaining companies are companies with a certain degree of strength, and all have the desire to expand against the market. It will take longer for these companies to get out of the game.   Spring is after winter. Unlike the laws of nature, it is often difficult to predict how long an industry’s winter will last. For the lead-acid battery industry, some optimists say that it is the coldest time in winter and spring will soon be; there are also pessimists who say that this winter may be relatively long and that spring may be far away.   When will the spring of the industry appear, it depends on many variables, including the expectations and behaviors of enterprises, the pattern of market competition, and industrial policies. Starting from these variables, although it is difficult to draw conclusions about when winter will end, at least it can be inferred what policy makers and companies should do in order to end winter and usher in spring as soon as possible.   Referring to the experience and lessons of other industry integration, the desire to increase industry concentration is not always realized. The general approach is to support large companies and eliminate small companies. However, if small companies are eliminated and there are a large number of large companies and they are unwilling to leave, then further integration of the industry will be difficult and it is likely to be in the winter for a long time. Conversely, if there are a few companies in the industry that are very strong and other companies are hard to beat, then an oligopoly pattern may eventually form.   For the lead-acid battery industry, the formation of an oligopoly may be the expectations of all parties. On the one hand, the company has achieved bigger and stronger, and on the other hand, the pollution problem is also easy to solve. But it must be seen that this is a more long-term goal. Considering that the number of companies has shrunk significantly, the goal of this round of price wars is actually to eliminate medium-sized companies and leave large companies behind. However, the expansion of large enterprises is also very 'fierce'. Even if medium-sized enterprises are eliminated, there will still be serious overcapacity in the industry, and further integration is still hopeless.   Therefore, the lead-acid battery industry must rely on industrial policies to get out of the predicament. First of all, the market order should be maintained, so that those who are eliminated in the policy objectives are really eliminated. It is understood that there are also some 'guerrilla' type underground factories, which are unlicensed and low cost, and even have 'advantages' such as low transportation costs and timely after-sales service in some regional markets. This also brings difficulties to the industry. Little pressure.  Secondly, industry mergers and reorganizations should be promoted to speed up the exit of small and medium-sized enterprises. Some companies are unwilling to withdraw, mainly because the equipment is newer and the previous investment has not been recovered. Although the maintenance of production will also make a loss, the loss of the suspension of production is even greater. In order to promote mergers and reorganizations between enterprises, on the one hand, it is necessary to set a reasonable total production capacity target for the industry and limit the excessive expansion of homogeneity. Mergers and acquisitions must become an important method of enterprise extensional development; on the other hand, it should be for the conversion of enterprises. , Suspension of production to provide appropriate financial support. Looking forward to the future, the lead-acid battery industry may also usher in a colder winter, but 'without a bit of cold, no plum blossoms will be fragrant.' As long as the industry authorities take advantage of the situation and further introduce relevant policies, the industry will surely usher in A brand new spring.
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