What is the real reason why LED lighting companies "closed up?"

In recent years, under the general economic environment in which domestic and international economic conditions have continued to slump, the number of corporate failures has collapsed, among which there are not a few hundred million yuan worth of industry leader companies. This can not help but let the lighting and lighting industry people feel the biting, heavy cold winter chill, and the economy The arguments of sluggish economy, rising costs, fierce competition, plummeting orders, low profits, and difficulties have also become the industry’s acknowledged cause of bankruptcy.
However, is this true?
If the order is reduced simply because of the severe competition, I think this should be a common phenomenon in the industry. Should not all of the reduction be imposed on these companies? Moreover, the reduction of orders does not happen suddenly. There is often a process in which companies can fully respond to the adjustment of their own human resources, production scale, product inventory, product category, and other costs. At the most, most days are uncomfortable, and they will not be able to do so. So what are the basic reasons for the collapse of a company?
The author found out through visits and investigations that the vast majority of these failing companies are caused by capital chain breaks. In general, the financial crisis of an enterprise due to insufficient operating funds usually has the following three conditions: First, the company expands too quickly and exceeds its financial resources to allow it to conduct business, resulting in excessive transactions, resulting in insufficient working capital; Second, due to the increase in inventory, delays in receiving payments, and payment advances, the cash flow rate slowed down. At this time, if the company does not have sufficient cash reserves or loan quotas, it will lack the incremental capital investment and the existing stock funds will be The slow turnover can not meet the needs of daily production and operation activities of the company. Third, the working capital is occupied for a long time, and the company has long-term lags in cash inflows because it cannot generate working capital in the short term. In the lighting industry, there are many cases in which the capital chain breaks down, and many of them fall into the third category.
It is understood that many lighting business owners have drawn funds that are normally used for business operations, and have invested in them. Some have relied on enclosures, bought real estate, and some have stocks and stocks. ** Ten gambling loses for eleven, and the collapse of defeat is a matter of self-acquisition. However, the purchase of real estate and enclosures is justified by appreciation. How can this result in the disruption of capital flows?
Here, we will give a simple example to analyze: For example, the company’s normal operating capital of 50 million yuan to invest in the purchase of 5,000 yuan per square metre of real estate, the property continued to appreciate to 10,000 yuan a square, theoretically earned 50 million, but It's just a digital game of cake hungry. House prices will rise and they will fall. Only when these properties are sold at 10,000 yuan/sq.m. are cashed, otherwise they are pressured on their own hands. Today's value is 100 million yuan, tomorrow it may only be 50 million, or even 30 million. This is like a game of drums and flowers. You will feel fortunate and excited in the first round of turning to your hands. In the second round, you will feel worried and entangled. In the third round, you should feel frightened and panicked. Become a tightrope and take the risk, only to sell off the game when the appreciation, in order to avoid becoming a fool stuck with greed.
In the lighting industry, most manufacturing companies and accessory suppliers have a three-month or even six-month billing period, and the settlement with the dealers is cash or monthly settlements, so that the companies have their own payables to the parts suppliers. Two months payment. Therefore, if a company with annual sales of 200 million yuan, he will have 40 million yuan in funds. When he used this 40 million yuan to invest in real estate or land, it meant overdraft for two months of payment. In this case, if the order is stable, of course, there will not be any big mistakes. However, when the orders shrink sharply due to economic downturn, fierce competition and other factors, it will lead to deficits if not reliable and rapid. Channels can easily cause businesses to fail due to the disruption of capital flows.
This phenomenon has become even more apparent in the logistics industry. Lighting companies in the lighting and lighting industry not only earn freight on products, but they also hold large sums of money from manufacturers on behalf of manufacturers. The capital flow is abundant, and it stands to reason that How can the flow of funds break? However, in the ancient town, there are no shortages of logistics company running events every year, and some scale is not small. Among them, apart from the fact that the individual misconducted shipping department is likely to deliberately “run the road” for fraud purposes, the overwhelming majority hope to operate in the industry for a long time and become bigger and stronger. Most of the reasons for the road are probably related to the capital chain breakage caused by over-investment with the company's purchase price.
Capital flow is the foundation for the survival of a company and directly affects the survival of the company. Recently, the relevant state supervision departments have further strengthened supervision and control over the bank’s pool of funds. The bank’s banking system has been fully tightened, and the threshold for SMEs has been further improved. Therefore, in the current situation, lighting companies should strengthen capital flow management and investment risk control, and must not take the normal operating funds of enterprises to take risks because of greedy and illogical high investment returns.