[Source: "High-tech LED Research Review" August issue Hu Yanling]
Recently, Philips released its second quarter 2012 earnings report. According to the financial report, the company's sales in the second quarter reached 5.9 billion euros, a year-on-year increase of 5%, net income of 167 million euros, and profit before interest and tax amortization of 450 million euros. Driven by the double-digit growth of the light source and lighting electronics business, sales of the lighting division increased by 6% year-on-year, of which LED lighting business sales increased by 37% year-on-year, currently accounting for 20% of the lighting business.
"It is estimated that by 2015, LED will account for 50% of the entire Philips lighting business." Liang Hanfeng, president of Philips Lighting Division Greater China, said that according to the current development of LED, I believe this goal can be successfully completed. He revealed that under the driving of this goal, Philips' LED lighting business grew by more than 100% in 2011.
As the largest application market for LEDs in the future, China is the target market for the major players. Following Nichia, CREE, and Osram have chosen to build LED industry bases in China to realize the localization of LEDs, Philips has also announced the establishment of another “local market†strategic plan in China in addition to the Netherlands and the United States.
At the end of 2011, Philips announced the construction of a Philips LED professional lighting project in Chengdu. In August 2012, the project was laid and laid the foundation for the construction and breakthrough of the largest LED professional lighting solution production base in the west and the most advanced lighting application center in the world.
Chandra Vaidyanathan (hereinafter referred to as Chandra), Vice President and General Manager of the Lighting Division of Philips Professional Lighting Solutions, said: "Strong customer customization is a hallmark of the Chengdu project and is dedicated to leveraging Philips' extensive experience in different segments. Faster speed to meet the individual needs of different customers."
After being invited to participate in the opening ceremony of the Philips Chengdu project, Gaogong LED CEO Zhang Xiaofei and Mr. Liang Hanfeng and Mr. Chandra exchanged views on Philips' strategy in the Chinese lighting market and the prospects of the LED lighting market.
Chandra: 25 million euros is just a rough figure. As the business grows, the final investment may change. On the other hand, Chengdu's lighting application center is not a project from scratch. We have R&D centers and R&D facilities in Shanghai. The Chengdu project is built on the basis of the Shanghai R&D center.
Regarding the expansion, it depends on two factors: one is the future development of the LED industry, and the other is how many opportunities Philips can grasp. There are currently no plans or plans in this regard.
Zhang Xiaofei: Generally speaking, international giants will adopt three business models : independent construction, foundry and joint venture. Before the establishment of a joint venture between Philips and Shanghai Yaming, it was a perfect cooperation, and this time Chengdu's project adopted a model of independent construction and independent investment. In the development of the LED market, what kind of model will Philips adopt?
Liang Hanfeng: Today's LED industry is a very complex and constantly changing industry, so it may be too early to limit yourself to these three options. For the time being, the industrial park in Chengdu is mainly an application center that provides customers with customized services, rather than a production base for producing chips or modules. In addition, why are everyone optimistic about LED prospects? From the designer's point of view, LED is very suitable for highly customized products, which is a very worthwhile factor for LED application or design.
Zhang Xiaofei: At present, most of the LEDs are public lighting, and most of the public lighting is municipal engineering. Chinese state-owned enterprises occupy the best interests in this respect. Philips Lighting, as a foreign-invested enterprise, does not have much advantage in this respect.
In addition, Philips is the leader in traditional lighting. But when the LEDs come, there are four forces in the Chinese market to compete; one is the LED enterprise, the second is the state-owned enterprise, the third is the enterprise that transforms LED from traditional lighting, and the fourth is the layman. The Chinese market is winning by price, and Philips is taking the middle and high-end route. Therefore, Philips has to continue to be the boss of the Chinese lighting market. The competitors are different and the difficulty is even greater.
Liang Hanfeng: Just now you said that Philips is a foreign-invested company. In fact, we don't think of ourselves as a foreign-invested company. We think that we are a local company. The number of employees in Philips in China has exceeded the number of employees in the Dutch headquarters. Our investment in China respects Chinese culture and business rules. As my personal and other management colleagues, we are very focused on getting better business opportunities through friendly communication with local governments.
How to maintain the first place in the Chinese lighting market share depends on the business model. Based on the ever-changing LED market, we will try some business models that we have not tried before, so that we can compete effectively.
We believe that the entire LED industry will be getting better and better in the next five years. Nowadays, the low-end price competition of China's LED lighting industry is very fierce, but the high-end has a lot of value to be explored. This is why we will invest in this project in Chengdu, which is why we are so confident about the future of LED. 　
Recently, Philips released its second quarter 2012 earnings report. According to the financial report, the company's sales in the second quarter reached 5.9 billion euros, a year-on-year increase of 5%, net income of 167 million euros, and profit before interest and tax amortization of 450 million euros. Driven by the double-digit growth of the light source and lighting electronics business, sales of the lighting division increased by 6% year-on-year, of which LED lighting business sales increased by 37% year-on-year, currently accounting for 20% of the lighting business.
"It is estimated that by 2015, LED will account for 50% of the entire Philips lighting business." Liang Hanfeng, president of Philips Lighting Division Greater China, said that according to the current development of LED, I believe this goal can be successfully completed. He revealed that under the driving of this goal, Philips' LED lighting business grew by more than 100% in 2011.
As the largest application market for LEDs in the future, China is the target market for the major players. Following Nichia, CREE, and Osram have chosen to build LED industry bases in China to realize the localization of LEDs, Philips has also announced the establishment of another “local market†strategic plan in China in addition to the Netherlands and the United States.
At the end of 2011, Philips announced the construction of a Philips LED professional lighting project in Chengdu. In August 2012, the project was laid and laid the foundation for the construction and breakthrough of the largest LED professional lighting solution production base in the west and the most advanced lighting application center in the world.
Chandra Vaidyanathan (hereinafter referred to as Chandra), Vice President and General Manager of the Lighting Division of Philips Professional Lighting Solutions, said: "Strong customer customization is a hallmark of the Chengdu project and is dedicated to leveraging Philips' extensive experience in different segments. Faster speed to meet the individual needs of different customers."
After being invited to participate in the opening ceremony of the Philips Chengdu project, Gaogong LED CEO Zhang Xiaofei and Mr. Liang Hanfeng and Mr. Chandra exchanged views on Philips' strategy in the Chinese lighting market and the prospects of the LED lighting market.
From left to right, Chandra Vaidyanathan, Liang Hanfeng, Zhang Xiaofei
How many opportunities are there in the Chinese market?
Zhang Xiaofei: Philips plans to invest more than 25 million euros (about 200 million yuan) from Chengdu to 2015 to the Chengdu LED project. The amount is not too much. Is it not very optimistic about the prospects of the Chinese market, or consider the future in other parts of China? Increase investment?
Chandra: 25 million euros is just a rough figure. As the business grows, the final investment may change. On the other hand, Chengdu's lighting application center is not a project from scratch. We have R&D centers and R&D facilities in Shanghai. The Chengdu project is built on the basis of the Shanghai R&D center.
Regarding the expansion, it depends on two factors: one is the future development of the LED industry, and the other is how many opportunities Philips can grasp. There are currently no plans or plans in this regard.
Zhang Xiaofei: Generally speaking, international giants will adopt three business models : independent construction, foundry and joint venture. Before the establishment of a joint venture between Philips and Shanghai Yaming, it was a perfect cooperation, and this time Chengdu's project adopted a model of independent construction and independent investment. In the development of the LED market, what kind of model will Philips adopt?
Liang Hanfeng: Today's LED industry is a very complex and constantly changing industry, so it may be too early to limit yourself to these three options. For the time being, the industrial park in Chengdu is mainly an application center that provides customers with customized services, rather than a production base for producing chips or modules. In addition, why are everyone optimistic about LED prospects? From the designer's point of view, LED is very suitable for highly customized products, which is a very worthwhile factor for LED application or design.
Zhang Xiaofei: At present, most of the LEDs are public lighting, and most of the public lighting is municipal engineering. Chinese state-owned enterprises occupy the best interests in this respect. Philips Lighting, as a foreign-invested enterprise, does not have much advantage in this respect.
In addition, Philips is the leader in traditional lighting. But when the LEDs come, there are four forces in the Chinese market to compete; one is the LED enterprise, the second is the state-owned enterprise, the third is the enterprise that transforms LED from traditional lighting, and the fourth is the layman. The Chinese market is winning by price, and Philips is taking the middle and high-end route. Therefore, Philips has to continue to be the boss of the Chinese lighting market. The competitors are different and the difficulty is even greater.
Liang Hanfeng: Just now you said that Philips is a foreign-invested company. In fact, we don't think of ourselves as a foreign-invested company. We think that we are a local company. The number of employees in Philips in China has exceeded the number of employees in the Dutch headquarters. Our investment in China respects Chinese culture and business rules. As my personal and other management colleagues, we are very focused on getting better business opportunities through friendly communication with local governments.
How to maintain the first place in the Chinese lighting market share depends on the business model. Based on the ever-changing LED market, we will try some business models that we have not tried before, so that we can compete effectively.
We believe that the entire LED industry will be getting better and better in the next five years. Nowadays, the low-end price competition of China's LED lighting industry is very fierce, but the high-end has a lot of value to be explored. This is why we will invest in this project in Chengdu, which is why we are so confident about the future of LED. 　
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