Philips heavy attack LED traditional lighting faces life and death

On December 15, Philips (China) Investment Co., Ltd. and Chengdu Municipal People's Government formally signed a memorandum of strategic cooperation, announcing the investment in the construction of Philips LED professional lighting project in Chengdu High-tech Zone.

“The project covers an area of ​​about 35,000 square meters. It is planned to invest more than 25 million Euros from 2011 to 2015 and will provide 800 jobs.” Mr. Kong Xianghui, Executive Vice President of Philips and CEO of Greater China, said, “Future Base It mainly produces outdoor and indoor LED lamps of Philips brand, and has the functions of industrialization and customization of products. At the same time, the project also includes an LED lighting application center, which will also serve as a customer experience center."

Seeking LED localization

At the beginning of this year, Philips just announced a strategic plan to build another “home market” in China in addition to the Netherlands and the United States. As one of the important implementation measures of this strategy, Philips announced in June this year to set up its second regional headquarters in China in Chengdu High-tech Development Zone.

“We will achieve greater success in the Chinese market by creating a more local business model and better serving the Midwest,” said Kong Xianghui, executive vice president of Philips and CEO of Greater China.

But for Philips, achieving "bigger success" may not be easy. In fact, because the cost of LED is still too high, it is more dependent on local government's municipal engineering for digestion. Some skeptics believe that foreign-invested companies do not seem to have the advantage of local companies in projects that cooperate with local governments.

Liang Hanfeng, president of Philips Lighting's Greater China region, is not willing to respond directly to such questions, but he admits that “the Chinese government is actively promoting LED street lighting, and local governments play a very important role, which requires us and city decision makers to have More interaction."

For Philips, which is in the “downturn”, China is clearly a market that cannot be missed.

Philips, based in the Netherlands, operates in the areas of lighting, healthcare and quality of life. Among the three business divisions, Philips's lighting business accounted for about 40% of its overall sales, of which 10% came from China.

In 2010, Philips' overall performance in China increased by more than 20%, surpassing Germany to become Philips' second largest market in the world, second only to the United States. In China's business, the growth of LED street lighting is faster.

"Unlike some European countries, the Chinese government has given the entire LED industry a strong support and has greatly promoted the development of the industry. Moreover, China's urbanization development process has also accelerated the development of the LED outdoor lighting industry." Liang Hanfeng Said to reporters.

At the beginning of November, the National Development and Reform Commission, the Ministry of Commerce, the General Administration of Customs, the State Administration for Industry and Commerce, and the General Administration of Quality Supervision, Inspection and Quarantine jointly issued the "Announcement on the gradual ban on the import and sale of ordinary lighting incandescent lamps", and decided to start from October 1, 2012. The gradual ban on the import and sale of ordinary lighting incandescent lamps in stages according to the size of power is also widely regarded as a major positive for the development of the LED industry.

For Philips, which is in the “downturn”, this is clearly a market that cannot be missed. In fact, Philips just released its third-quarter earnings report, its third-quarter net profit fell from 524 million euros in the same period last year to 76 million euros, a sharp drop of 85% year-on-year; revenue fell from 5.46 billion euros in the same period last year to 5.394 billion EUR.

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