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The Survival And Development Of Small And Medium-sized Lithium Battery Enterprises
Jul 18, 2018

Near the end of 2014, due to the pressure of business and fierce competition in the industry, many lithium-ion battery manufacturers have staged the tragedy of bankruptcy, and there are more than 30 small and medium-sized lithium-ion enterprises such as World Energy, China Investment, Pilot, and Biddick. Can escape this tragic ending.

Most of the lithium-ion companies' products are for mobile phones, tablets, e-cigarettes and mobile power. The concentration of mobile phones and mobile power markets has increased dramatically, and the demand for electronic cigarettes has shrunk rapidly. In addition, the technical requirements for the demand for mobile phone lithium batteries are also getting higher and higher: the shape requirements are getting smaller and thinner, the capacity requirements are getting higher and higher, and the safety requirements are getting higher and higher...

It is understood that an annual production capacity of 20 million Ah production line requires at least 50 million yuan of investment; for battery companies that have no funds to accumulate, only through bank loans can capacity expansion be maintained. Most of China's lithium battery capacity is low-end repeat, homogenization competition, often through the price war, extended account period to obtain customers; another bad business environment is the root cause of lithium battery manufacturers fail one after another. This is because most of the downstream customers of lithium battery cells in China are small and medium-sized PACK factories or electronics factories. In the process of developing customers, there is a big gap in the development of customers, and there are many rebates, and the collection of accounts is difficult.

The gross profit margin of battery business is generally around 20%; after deducting sales expenses, financial expenses, after-sales service, equipment depreciation, etc., most companies have a net profit margin of less than 5% or even a loss. Therefore, companies without a group background can only obtain corporate cash flow by borrowing new debts in the form of old debts. Like Changhong New Energy, a well-known battery company with the background of Changhong Electric Group, Pinsheng is an excellent battery company with accumulated funds. These powerful lithium battery companies can survive and develop in this fierce competitive environment.

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