LED investment "herd effect": LED "investment" becomes "overdraft"?

Taiwan Dongbei Optoelectronics Group invested $25 million in LED optoelectronic device production project recently officially started in Beijing Digital TV Industrial Park, Jiangsu Dongbao Optoelectronics Technology Co., Ltd. invested 1.2 billion yuan to build LED Optoelectronic Industrial Park project, Yunnan Waldorf Optoelectronics Technology Co., Ltd. The company invested 110 million yuan in LED lighting product research and development center and production base completed......

In recent years, the phenomenon of LED investment has become increasingly obvious. Whether it is a listed company, a private enterprise or a foreign company, it seems that "LED" is equivalent to "making big money", even making clothing, making panels, doing real estate, and doing mobile phones. They all came in and wanted to invest in the LED industry. Concerns in the industry, the emergence of this "herd effect", I am afraid that LED "investment" will become "overdraft", and ultimately let investors "no blessings."

Undoubtedly, the huge market potential of the LED industry today shows unlimited business opportunities. Because LED light source has the advantages of energy saving, environmental protection, and digital design, it can be widely used in backlights, advertising displays, automotive lighting and traffic information identification, general lighting, etc., and its replacement for traditional light sources is accelerating. In particular, the country began to phase out incandescent lamps this month, which undoubtedly freed up more room for energy-saving lamps and LED lighting.

However, the broad market outlook is the main cause of the LED investment boom. In the process of trading, LED investors have the phenomenon of learning and imitating, “having a kind of learning”, blindly emulating others, and forming a so-called “constrained psychology”, which is also a common phenomenon in the market behavior of some enterprises in management. Due to the lack of information and lack of understanding of the LED industry, it is difficult for LED investors to make reasonable expectations about the future uncertainty of the market. It is often to extract information by observing the behavior of other companies and individuals in the industry. In the continuous transmission, many people's information will be roughly the same and strengthen each other, resulting in a herd behavior. The “herd effect” of LED investment is a nonlinear mechanism of collective irrational behavior caused by personal rational behavior.

The flock is a very scattered organization. Usually, it is blindly left and right, but once a head is moved, other sheep will sneak up without thinking, completely disregarding the possibility of wolves or not far away. There is better grass. Obviously, in recent years, the government has used subsidies to attract corporate investment, and thus promoted the mode of local GDP growth, in order to stimulate the domestic LED industry investment to flourish. Even the government wants to support and invest in the LED industry. Will other investors continue to “sit steady”?

As far as the Pearl River Delta region is concerned, Guangzhou Optics Valley, Kyushu Optical Valley and Jiangmen Guangbohui are all projects built under the support or investment of the government. The emergence of the “herd effect” is generally in a highly competitive industry, and there is a leader (leader) in this industry that has taken the main attention, so the entire flock will continue to imitate the leader’s every move. Where do the leaders go to "graze" and the other sheep go where they "golden".

The reporter learned from an industry insider that there are only two types of investment in the LED industry. First, in order to speculate on the concept, such people do not understand the industry at all, only know three English words of LED; second, they are directed at the government financial subsidies. Even bidding at a low price.

It is inevitable that you will be eaten or eliminated after following other people's ass. The most important thing is that individuals who want to enter the LED industry must have their own ideas. It is a shortcut to stand out from the crowd without taking the usual path. Whether you are joining an organization or starting a business, the ability to maintain a sense of innovation and independent thinking is critical.

Conclusion:

The "herding effect" tells us that many times, not the proverb says - "the eyes of the masses are sharp." The general public in the market is often prone to losing basic judgment. People like to join in the fun and people. Therefore, collecting information and keenly judging is to let people reduce the blind investment behavior of LED investment and use the best method of rationality. Rational use and guidance of herd behavior can create regional brands and create economies of scale, thereby achieving better results than benefits. With more and more market entrants, the competition in the LED industry, where the threshold is not high, will become fierce. LED investors should pay attention to the industrial bubble and beware of the funds and spirit “overdraft” after excessive LED investment.

(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)

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