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Foreign producers are entering the price war to grab an increased share of China's high-end TV market, ratcheting up competition.
Domestic TV producers ignited a price cutting war in the high-end sector as early as in February. Prices of high-end products, including plasma display panels (PDP) TV sets, liquid crystal display (LCD) TV and rear projection TV (RPTV), have kept falling since then.
Some major foreign brands slashed their product prices later in a bid to fend off domestic rivals.
For example, South Korean TV maker Samsung dropped the prices of its LCD TV by an average of 18 to 20 per cent this month.
"The moves of these foreign TV makers indicate the changing situation in the global and Chinese TV markets," said Luo Qingqi from Pully Consultants Co Ltd, a consultancy specializing in electric home appliances.
Traditional cathode ray tube (CRT) TV sets still have the largest market share, but CRT technology will be gradually replaced by new display models like LCD or PDP.
It is estimated that global CRT TV sales will drop to 76 per cent of the total TV market in 2007, compared with last year's 93 per cent.
Some international TV producers plan to leave the traditional TV market and focus on the high-end sector as technology further updates.
Japanese TV maker Sharp stopped its production of CRT TV sets in Nanjing, East China's Jiangsu Province in May. And it plans to close all CRT production worldwide by the first half of next year.
Others firms like Matsushita, Samsung, LG and Toshiba also intend to completely shift to the high-end sector.
"Foreign players are now competing to see which one of the three display models (PDP, LCD, RPTV) will be the most popular in the future market," Luo said.
Market performance of the first half of this year shows that the LCD TV has the advantage, he said.
According to an estimation made by Sino-market Research Ltd, the LCD sales will reach 165,000 sets, a year-on-year growth of 200 per cent.
However, no matter which model wins the market, domestic TV makers are facing great challenges.
"Home players do not have any advantages when mass production enables foreign TV makers to further cut their prices close to domestic products," Luo said.
The only way for Chinese TV makers to survive in the highly-competitive market is through technology updates and innovation, but this is hard to do, he said.
Domestic TV makers currently rely heavily on foreign suppliers in terms of core technology.
"The Chinese Government should stipulate a new industrial policy to foster the sector's development," Luo urged.
He added that the Chinese TV manufacturing industry is facing hard times when foreign players make use of the country's advantages in labour and raw material costs to strengthen their competitiveness.
Now, foreign TV makers not only have a larger share of the high-end TV market, but are also squeezing domestic brands in the traditional market.
Japanese giant Sony launched a price war by launching a 1,999-yuan (US$241) 29-inch CRT TV set last month.
(China Daily July 27, 2004)
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