Hongyan Electric: LED lighting transformation path

[Source: "High-tech LED - Research and Review" April issue / reporter Tang Guirong] " Into the LED lighting, is the need for transformation and upgrading of Hongyan, industrial integration." Wang Hongcheng, president of Hangzhou Hongyan Electric Co., Ltd. (hereinafter referred to as Hongyan Electric) "High-tech LED" said that after going through the reform of the state-owned enterprise, Hongyan Electrical Appliances, now hopes to once again "extend in the LED lighting market".

In March of this year, China Putian Group and Hangzhou Municipal Government signed a strategic cooperation agreement in Beijing. According to the plan, China Putian will support the construction of Hongyan Electric (Lin'an) energy-saving lighting industrial base, with a total investment of 500 million yuan.

According to Wang Micheng's vision, Hongyan Electric's LED lighting transformation adopts a "three-step" approach. The first step is to establish a lighting joint venture company by holding the lighting joint venture company of Dongbei Optoelectronics Co., Ltd. in Taiwan to improve its technical level. The second step is to rely on China Potevio's strong resource advantage to win government orders. In the next step, Hongyan Electric will establish 1,000 image stores across the country, extending its reach to the general lighting market.

"The lighting business headquarters that has been in operation for 4 years, after strong intervention in LED, is expected to drive the entire lighting business of Hongyan Electric to turn around and realize the company's overtaking in the lighting industry." Wang Micheng said that 2012 is a company for the company. An important gateway.

According to the plan, Hongyan Electric will achieve sales revenue of 500 million yuan in lighting business in 2014, and become a listed company within 5 years. In this regard, Wang Micheng is full of confidence: "Hongyan electrical sales performance will add another zero, and have to rely on LED. This will be the highlight of our enterprise transformation."

Dongying Optoelectronics
In 2011, due to the lower-than-expected global LED LCD TV market performance, China's Taiwan LED packaging factory with LED backlight as the main source of revenue began to target the estuary to the lighting. Dongbei Optoelectronics is one of the representative companies. Wang Micheng said that "High-tech LED" said that when he chose to cooperate with Dongbei Optoelectronics, Hongyan's goal was "not willing to be a second- and third-line brand."

Although Hongyan is a subsidiary of China Putian, when it enters a new industry, it still needs to seek resources from the outside. In the past, most domestic companies will choose to cooperate with international big companies to exchange technology for the market. Hongyan is no exception. Wang Micheng pointed out that the reason why Hongyan can also be favored by Dongbei Optoelectronics is that it is a hit and a share of the interests of the two parties. "At the beginning of the cooperation between the two parties, the interest mechanism was resolved according to the equity ratio and a win-win situation was reached."

What makes Wang Micheng a headache is that at present, Hongyan Electric has tens of thousands of marketing locations throughout the country, but the lighting performance in the past three years has been a loss for three consecutive years.

What excites Wang Micheng is that Dongbei Optoelectronics' products have been very popular in South Korea and Japan. In the first year of the establishment of the joint venture company, the sales of 50 million yuan will be realized.

In 2011, Hongyan Electric invested in the construction of an internationally advanced SMT patching workshop, and introduced a complete set of equipment for light and color performance and light distribution of LED lamps. According to previous planning, by the end of this year, Hongyan Electric will also build LED packaging production line in Lin'an, Zhejiang.

Next, Hongyan Electric will start to create the "smart lighting" feature sign, that is, through the development of intelligent products, open up the relevant industry chain, with the highly integrated industrial clusters of Hongyan Electric, Hongyan Lighting and Hongyan Intelligent, in different fields. The advantage of convergence between the electrical connection and the building electrical control system integration solution.

Relying on China Putian
In accordance with the previous strategic cooperation agreement signed with the Hangzhou Municipal Government, China Putian will set up China Putian Intelligent Lighting Research Institute in Hangzhou with a total investment of 200 million yuan, including 100 million yuan in the first phase, and support projects funded by the Hangzhou Municipal Government. All invested in the construction of the institute. The institute will be established at the Wuyan Electrical Appliances Wuchang Production Base and form a research and development capability. When the conditions are ripe, the construction will start in Lin'an Qingshan Lake Science and Technology City.

At the same time, the two parties also indicated that in the future construction of the LED lighting demonstration project in Hangzhou, the Hangzhou Municipal Government, China Putian and Hangzhou Hongyan will also work closely together.

According to the reporter's understanding, China Putian, as a central enterprise, will assist in the implementation of the national “Twelfth Five-Year Plan”, in which LED is the key procurement product. According to the plan, in the future, China Putian will provide a complete set of LED energy-saving renovation projects for domestic public works, such as airports, railway stations and central enterprises. As a core subsidiary of China Putian, China Putian has clearly stated: "The future LED will be placed in Hongyan."

Wang Micheng said that "High-tech LED" said that because of its relationship with China Putian, the company will be given priority in government subsidies for research and development expenses. “Follow-up, the Institute will enhance the research, design, manufacturing and industrial application levels in the LED field through cooperation with relevant research institutions, universities and enterprises.”

From the industrial layout to the innovation of business model, Hongyan has entered a rapid transformation. This transformation undoubtedly benefited from China's Putian's series of LED strategic initiatives.

In addition to financial support, China Putian's strong driving force for Hongyan Electric also comes from government orders. In March of this year, Hongyan Electric won the bid for the LED lighting project of Hangzhou Metro Line 1. In addition, Hongyan Electric has also obtained some local government projects and overseas aid projects through China Putian. The Zhejiang Provincial Government has proposed that Qingshan Lake Science and Technology City clearly requires the Zhejiang Provincial Government to connect with central enterprises. Putian also said that as long as LED related policies, Putian will certainly support Hongyan.

However, Hongyan Electric is also facing enormous challenges. On the one hand, the company needs to fully cooperate with the rapid expansion of China Putian; on the other hand, LED lighting is only a small part of China Putian's business. In the future, China's Putian can only play the role of "transfusion". If the company really develops, it needs to play its own hematopoietic function.

Wang Micheng said that Hongyan Electric will gradually develop its own channels. At present, the company has set up a dedicated channel development department, focusing on government project projects and establishing a dealer network worldwide. At the same time, the company's traditional electrical industry marketing channels can also effectively drive the LED lighting business. It is reported that Hongyan Electric will develop more than 1,000 image stores next year, and has now developed 100 dealers.

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