Wang Donglei: LED development cannot rely solely on subsidies

Wang Donglei: LED development cannot rely solely on subsidies In the outside world, Wang Donglei has two titles, one is the bread machine king, and the other is the LED industry predators. For these two "nicknames", Wang Donglei said with a smile: "I position myself as an engineer."

In the small home appliances do a good job, he led the BDO Runda LED transformation. In the five years after he entered the LED market, he invested 7 billion yuan to invest. At present, BDO Runda has become one of the largest LED chip production companies in China. At the beginning of this year, BDO Runda acquired 1.3 billion shares of Leishi, becoming the majority shareholder of NVC. After entering NVC lighting, BDO Runda has always been concerned about the market's synergies.

As the chairman of two listed companies of BDO Runda and NVC, Wang Donglei has his own experience in industrial transformation, LED industry development and private enterprise management. In an exclusive interview with reporters from the 21st Century Business Herald, he said: “Before we become the top three in the world, I will not do other things. Just like I used to be a small home appliance, I would like to peak first and then consider other things.”

"There must be a big investment in the LED industry."

"21st Century": BDO Runda has been doing small home appliances before, why did it choose to transition to LED industry during a peak period?

Wang Donglei: I inspected the LED market for two years and decided to invest. BDO Runda is actually a company that has grown with China’s economic development. Our OEM of small household appliances is a low threshold, low investment, and creativity. We have indeed reached the top of it, and the market share of the three products is the highest in the world.

China’s economy is overheated, all raw material prices have increased, and workers’ wages have also been increasing. These things are not what we can be controlled by entrepreneurs. Environmental changes also prompted us to transform. At that time, the state encouraged strategic emerging industries. I chose to inspect lithium iron phosphate batteries for wind power, LED, solar energy, and electric vehicles. After inspection, I decided that listed companies would concentrate on making LEDs. We enter from the lower reaches and go upstream. With the support of local governments, we do upstream from the downstream, make lights, do display screens, quickly go on to make chips, make epitaxial wafers, and complete the entire industrial chain.

"21st Century": What is the positioning of small appliances in the strategic deployment of BDO Runda? Why do you throw 7 billion when you switch to LED?

Wang Donglei: Small household appliances are a key point in our industry positioning. After several years of adjustments for small household appliances, the number of workers has fallen from nearly 20,000 to more than 6,000. Sales have also fallen by nearly 30%, but they have achieved double shifts, that is, to the high end. OEM transformation, transfer to the brand. The quality of business is also better. From 2014, we can maintain healthy growth. I think the adjustment is basically in place. In the past few years, the small household appliances segment has developed for the company and provided cash support for LED transformation.

The five-year investment will be nearly 7 billion yuan. The investment is very large. Actually, BDO Runda has a basic philosophy of doing business. It is only doing one thing for a while. Since it has chosen to be an LED, it must be done well. For lighting companies, we are already the first in China. Our goal is to achieve the top three globally in five to ten years. This must be achieved with two leading talents. One must lead the technology and the second must lead. Both are indispensable. To lead, you must invest so much money.

In fact, in the semiconductor industry, we are still a small business. However, the semiconductor industry does not allow the existence of small businesses. The semiconductor industry is a monopolistic company in the future. It must have a large enough scale and enough scientific research investment to support its future development. So 7 billion is not too much. For the LED industry, this is not a big number, but the investment for a private company is still very large.

"The synergy with NVC will appear"

"21st Century": After entering the LED industry, BDO Runda also conducted a series of acquisitions. What is the original intention of the plan to acquire NVC?

Wang Donglei: The acquisition of NVC itself is accidental. However, the acquisition of a lighting company with a brand name and a brand name is the first day for BDO Runda to do LED planning. Because there were some problems inside NVC at that time, it provided us with an opportunity for acquisition. We shot it quickly and quickly. The response is fast, which may also be a benefit of private enterprises.

When the acquisition of NVC, basically no obstacles, only spent a week. At that time, the conflict between NVC's board of directors had reached an almost irreconcilable point. After BDO Runda entered, it improved the ecology of the board of directors. Everyone can sit down and discuss the development of the company. Moreover, BDO Runda as a major shareholder also made some reorganizations, which improved the ecology of the entire board of directors and restored it to normal operation. As far as possible to meet the interests of each shareholder. This is everyone's welcome.

In addition, as a flagship company in traditional lighting, NVC Lighting urgently needs to rapidly transition to LED, and it urgently needs a company with a deep foundation of LED to promote their transformation and make their transformation faster. The development of the enterprise itself is also a need, and it is also a powerful combination. Based on these two points, the board of directors at all shareholders level welcomes us.

"21st Century": From the time of acquisition to almost one year now, what impact did this year's development have on the two companies?

Wang Donglei: I am now the director of the Academia Sinica of NVC, and it is faster to promote this matter. BDO Runda and NVC now look at the channel division of labor, now Drew is a light source, NVC lighting, the two company product lines properly separated. This is also to avoid direct competition and complement each other. This was basically approved by the two company board of directors and the cooperation was better. Now the product preparation of DHL is also in place. After the products are in place, the sales growth in NVC is good. The running-in was a bit slower, but now it seems that it is getting more and more mature, and sometimes the promotion cannot be done overnight. It takes time.

"21st Century": In addition to the possibility of seeking expansion overseas, what are the next strategies of BDO Runda and NVC?

Wang Donglei: For NVC, I hope to increase the market share in China and continue to maintain the number one position in the Chinese market. Overseas, I hope to work hard for a long time to make NVC's brand global. Mr. Wu Changjiang went to overseas more recently and is also working hard to promote this matter. For Dehao and NVC, we will work harder to promote their integration. Through their integration, they will complement each other and achieve synergies. This is the most important task for us in the next one to two years.

"LED industry cannot rely on subsidies alone"

"21st Century": The development of LED companies is still affected by the policy, the government had previously carried out some high subsidies.

Wang Donglei: LED is still losing money in the past few years, you see our huge investment interest expenditures, make money rely on government subsidies to live. There are still government subsidies, but the intensity and intensity of subsidies are gradually decreasing. LED is also an industry actively supported by various governments. Countries support this strategic new industry from the perspective of energy conservation and environmental protection.

If there is no government subsidy, corporate profits will have an impact, but the company will be healthier. BDO Runda should have failed to get some subsidies, but it seems to me that it is a fortune. From the data on this financial report, a non-operating income, a kind of operating income, rely on government subsidies, early, long-term significance for business operations, the company ultimately rely on self-reliance.

However, due to a large number of government subsidies in previous years, the release of production capacity, LED chip prices dropped rapidly, the rapid growth of the downstream popularity will inevitably bring about the increase in upstream demand, that is to say does not rely on government subsidies, the industry can already have a market Competitive. For BDO Runda, it is a whole industry chain factor. When the upstream pressure is a little bit heavy, the downstream is very good. Because the cost is low, the sales volume and profits will go up.

"21st Century": The LED industry is now also overcapacity, and underemployment of enterprises is relatively common. What do you think of the future of this industry?

Wang Donglei: LED lighting is the fourth revolution in lighting, 90% of human lighting will be replaced by LED, the current penetration rate is less than 10%, the market is very large. Therefore, the LED industry is a bright industry and the outlook is very good. For those of us who do industry, it is difficult to encounter an opportunity for an industrial revolution. Then LED lighting is precisely a revolutionary transition. When China's global lighting is replaced with LED, this is a large market. Research, the total size of the global market has nearly trillion. From now to the next few years, the outlook for the industry itself is bright.

The first phase of the LED itself is now the alternative use, and the second phase will change the human habit of using light to become intelligent lighting and emotional lighting. This will create a new era of human use! With the support of the Chinese government, the Chinese turned the LED into a popular product overnight. This makes us feel the creativity of the Chinese people, how powerful the creativity of Chinese entrepreneurs and the Chinese government are.

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