Industry Survey: 72% Chinese LED Companies Say It’s Unlikely to Profit Due to Coronavirus Outbreak

The outbreak of coronavirus has affected the whole industry and LED is no exception. To further understand how individuals participate in the industry see the impact of coronavirus, LEDinside conducted a survey to provide a different insight of the industry.

LEDinside collected 7471 voluntary samples and a valid sample of 6622. The result showed that 28% of the survey samples think their companies will still make profit under the circumstance. 38% say they are expecting business loss and the rest think the company will break even.

(Image: Pixabay)

21% of the voters work for companies locate in Guangdong, 17% in Shanghai, 15% in Jianxi, 12% in Jiangsu, Zhejian. There are also 470 voters working for companies in Hubei. The answers goes in line with the LED company distribution in China as these Chinese provinces have more registered LED related business.

Voters are from the supply chain of the LED industry including wafer production (20%), packaging (21%), lighting (17%), display (16%), sapphire (12%), backlight (4%), automotive (7%) and others.

70% of the survey samples work for middle size companies with number of employees from 51 to 500.

Starting from February 9, most of the voters say that they can accept one to two weeks of delay for resume operation, meaning the latest until February 24 would be acceptable.

If the expected day of plant reopening is set on February 17, 44% of the survey sample think the rate of work resume will be 50% to 70%, 27% of voters think it will be lower than 50%. As many cities are still locked down and many people under quarantine, workers in China have difficulties traveling to their working places. As a result, even if factories resume operation, they might still be challenged by labor shortage.

Companies in different provinces also varied expectation for work resume rate. For Hubei province, the origin of the novel coronavirus outbreak, only 6% say that they can have 90% of employees back if reopening on February 17.In Shanghai, Jianxi and Zhejian, also less than 10% of the survey samples expect to have 90% workers back.

Work resume rate expected by provinces on February 17

The majority of the voters say the LED industry will more or less affected by the epidemic but not as series as service industry.

In order to prevent infection, the survey samples say companies have been collecting information about the health condition of its employees and advocating public health information related to epidemic prevention. 69% of the voters say their companies will distribute masks to employees and 59% say their company will sterilize working areas regularly.

For 1Q20, 67% of the sample think the revenue will drop within 10% or remain stable, while 16% think it will decrease by more than 10%. Still 17% react optimistic and see revenue growth in 1Q20.

The most challenging difficulties for LED companies, according to the survey, is shortage in raw material that the upper steam suppliers cannot deliver the required materials on time. Shortage in labor force and insufficient working capital are also highlighted.

Small and middle size factories are most likely to be significantly impacted by the novel coronavirus outbreak especially when it comes to delay in production. Therefore, many voters say they expect assistants or subsidies from the government to survive. 38% of the sample want subsidies for employee insurance; 27% voters expect one month rent subsidy for factories. Also 25% say tax free for one month.

Impacts of the coronavirus outbreak on the industry is definite and will continue. However, for those who participated in the survey, still 38% think their company will profit in 2020 and 34% think they will manage to break even. 28% of voters, on the other hand, expect business loss.

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