After a relentless price war and tough competition against local
brands in 2006, foreign flat TV makers expect a better year ahead
through adjustments to attract more domestic consumers, strong
innovation capacity and an abundant supply of flat TV panels.
According to the State Information Center, Chinese consumers
bought 4.77 million flat TV sets LCD and plasma screens out of a
total 35 million TV sets purchased in the country in 2006.
Although the share of flat TV sets was only 13.6 percent of the
total, sales of LCD and plasma TV sets accounted for 36 percent of
93.59 billion yuan in total sales last year.
Growth in the number of flat TV sets shipped was also impressive
with a rise of 151 percent.
"China will become a major arena of competition in flat panel TV
sets for global TV makers before new technologies come out," said
Cai Ying, head of the State Information Center Market Information
Division.
LCD TV sets accounted for over 80 percent of the shipment of
flat panel television sets last year. Plasma screens represented
the remaining 20 percent, a rate expected to continue as market
leaders, including domestic firms Skyworth and Konka, as well as
Sony and Toshiba, focused their production lines on LCD.
Last year, domestic brands continued their dominance in the LCD
TV market with a share of almost 65 percent. And of the top 10
players, only three firms Samsung, Sony and Toshiba were foreign
brands.
When measured in sales, foreign brands showed better
performance, taking 45 percent of the total.
The performance of foreign brands in 2006 was much better than
the previous year, when they only held 20 percent of the LCD
market.
"Foreign brands will see a better time in 2007, especially in
first- and second-tier cities," said Lu Renbo, a senior TV market
expert with the State Council Development and Research Center.
First- and second-tier cities refer to the metropolises of
Beijing, Shanghai and Guangzhou, as well as other provincial
capitals.
Statistics from Gome Eletrical Appliances Holding Ltd, the
largest home appliance retail chain in China concentrated in large
cities, show the share of foreign brands rose to 44 percent in 2006
from 31 percent in 2005
The State Information Center predicts the shipment of LCD TV
sets will grow by 80 percent this year to 7 million units, while
the plasma set market will see a 35 percent increase to 1.1 million
units.
Liu Buchen, president of the home appliance market consulting
firm SBFM Management Consulting Co Ltd, believes foreign brands
will be able to get about a half of the market share in 2007.
One unexpected change for foreign brands in the flat panel TV
market last year was a sudden shift to LCD TV sets.
While plasma TV sets are popular in other countries due to a
better visual performance on big screens and a larger viewing
angle, the market suffered a setback in March when most plasma sets
tested were unable to meet the national standard for
high-definition TV.
The reality that plasma TV sets are most attractive in large
screen configurations above 42 inches also hinders their
development as ordinary consumers do not have an appetite for such
big screens.
It was an unexpected blow to companies like Samsung and LG, both
of which have LCD and plasma products, and Panasonic and Hitachi,
which focus on plasma products.
But they adapted in the second half last year when they began to
shift production and resources to LCD products, and domestic brands
have seen increasing competition.
Foreign manufacturers, attacked with price wars from domestic
players for over a decade, have now learned how to fight back in
cost competitiveness.
Prices of mainstream 35- to 46-inch products fell by almost 40
percent last year, according to the State Information Center.
Liu with SBFM estimates the average price of domestic 37-inch
LCD products will be about 8,000 yuan, while that of foreign brands
will be 11,000 yuan. The price gap will be affordable for Chinese
consumers, who usually think foreign brands are better quality than
domestic products.
Supply may become a key factor for foreign brands to pull even
in the competition.
Foreign brands such as Samsung, LG, Sony and Sharp have their
own production facilities for flat TV panels, a key component in TV
sets, and that gives them strong bargaining power on supplies and
global reach in procurement.
Y. S. Lin, an account manager with Chi Mei Optoelctronics Corp,
one of the world's top three flat panel producers, said supply of
flat panels will be adequate in the first half of 2007, but there
could be supply problems in the second half due to increasing
global demand.
Chinese TV makers, which aim to have a bigger say in the supply
of panels, have set up three production plants, but because flat
panel manufacturing requires large capital outlays, the three firms
issued a statement in December announcing that they were
considering a merger.
The merger is expected to delay the volume production, thus
adding uncertainties to domestic TV makers, many of which are
investors in the production facilities.
(China Daily January 26, 2007)