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    Counting the real impact of Brexit on the LED industry

    Source: Time:2019-02-19 15:47:21 frequency:

    Since the announcement of the "Brexit" referendum in the UK, it has attracted the attention of people from all walks of life in the international community. The British "Independent" issued a document saying that the referendum was the biggest damage to British politics since the 1920s. German Deputy Prime Minister Gabriel commented on Twitter that "it is a bad day for Europe."
    Since the announcement of the "Brexit" referendum in the UK, it has attracted the attention of people from all walks of life in the international community. The British "Independent" issued a document saying that the referendum was the biggest damage to British politics since the 1920s. German Deputy Prime Minister Gabriel commented on Twitter that "it is a bad day for Europe." The United States has also begun to worry that Brexit will damage its own business investment. According to media forecasts, Brexit will have a major impact on the global economy. After the announcement of the referendum results, CCTV and other major domestic media also made a specific analysis of the impact of Brexit on China's manufacturing industry. The analysis shows that after the Brexit, there is little direct impact on the Chinese economy, and the impact of the chain cannot be ignored.
     
    Then, the Brexit for China's manufacturing industry, and even the LED industry that everyone is most concerned about, is it better than worry or more harm than good? The author of this article will analyze from three aspects, through the specific data to show its main impact.
     
    1. China-EU cooperation strategy will be difficult
     
    In recent years, Sino-British trade has been frequent, creating more and more economic interests in common. In order to achieve mutual benefit, the UK, as a member of the European Union, has gradually turned into an important partner and supporter of China. For example, the United Kingdom vigorously lobbied the EU to recognize China's market economy status to help China achieve tariff reductions. In addition, the UK has also vigorously promoted the China-EU Free Trade Agreement.
     
    If the agreement, which has a multi-billion dollar fund, is successfully signed, it will bring huge trade orders to China's manufacturing industry, which will help to fully open the European market. For Chinese LED companies, the UK also has a huge market, and the size of the UK LED market is also expanding.
    However, once the British "Brexit" is tantamount to indirectly breaking the invisible cooperation ties between China and the EU. The implementation of various trade policies with the pre-EU period will also be difficult and become a high cost of sunk.
     
    At present, China is conducting international trade based on the entire European economy. The Brexit, Sino-European, Sino-British trade may be carried out separately, which adds some uncertainty to China's handling of relations with European countries.
     
    2. Will lose many corporate investment from China
     
    The EU is China's largest trading partner. Within the EU, the UK is second only to Germany as China's second largest trading partner. In recent years, the amount of China's LED lighting industry exported to the UK is also rising.
    London has always been a European financial centre, where various financial and economic activities take place. After the British "Brexit", for the Chinese manufacturing industry, the establishment of the international market will be more difficult than before. Because the European market has been highly integrated, forming a mature market model, local brands are closely cooperating and many Chinese companies are shut out.
     
    Faced with this situation, many Chinese companies choose to enter the UK market, which is relatively loose for Chinese companies, and then enter the European market based on it. Once the UK has voted to leave the European Union, it is tantamount to blocking the strategy of Chinese companies wishing to enter the European market. The UK will lose the trade investment of many Chinese companies.
     
    As a member of the manufacturing industry, the LED industry is now the best time to go out of the overseas market and welcome the opportunity of the new blue ocean overseas. However, after the Brexit, the EU and the entire global economy will be shocked, and the current foreign trade situation is not optimistic.
     
    3. Or disrupt the steps of RMB internationalization
     
    Today, the renminbi has just joined the IMF's monetary package and has taken an important step in the internationalization of the renminbi. China is promoting policies to achieve renminbi settlement with major trading partners, thereby consolidating and strengthening the international influence of the renminbi.
     
    The UK has provided strong support to China in this respect – London has become the second largest offshore RMB settlement centre after Hong Kong. The Brexit, the internationalization of the renminbi will also be affected, the Malayan Bank estimates that the United Kingdom will leave the European Union, the yen will appear the biggest gain in Asian currencies, the increase may be as high as 11.7%, while the exchange rate of the renminbi and the rupee May fall by 5.2% and 5.7% respectively.
     
    As the exchange rate changes directly affect the entire international import and export industry, the cost of importing British products from Chinese LED companies will be reduced, but the profits of LED products exported to the UK will be greatly reduced. What kind of benefits will be generated in the two aspects is not good at present.
     
    The devaluation of the euro has caused international trade turmoil to be inevitable. In the short run, the sharp depreciation of the euro has triggered global economic turmoil and has depreciated against the RMB exchange rate. However, in the long run, the UK will leave the EU and trade freely between China and Britain. On the issue of negotiation of agreements, China will occupy a favorable position.
     
    For the Chinese manufacturing industry, the international market is very important. In recent years, due to the sluggish sales of the LED industry in China, many companies have invested in building overseas markets. After the Brexit, the global economy will still be in a turbulent period. The LED industry will have greater challenges when it goes abroad.