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Ten major Chinese television makers have banded together to pool technological resources and improve profits by presenting a common front in patent fee negotiations with foreign rivals.

 

The Shenzhen Zhongcai Union Technological Co Ltd, set up on Monday, will pool digital TV patents as well as integrating both domestic and international intellectual property right resources across China's TV industry, said Luo Qiulin, general manager of the company.

 

The 10 shareholders include some industry powerhouses such as the nation's largest TV maker TCL and other major names Changhong, Haier, and Xiamen Overseas Chinese Electronic Co Ltd (Xoceco), each of whom has contributed 1 million yuan (US$129,525) to the fund, according to China Securities Journal.

 

The TV makers will seek to enhance China's R&D (research and development) capacity in the TV industry by pooling resources and sharing knowledge, said an analyst with Hisense, one of the shareholders.

 

"There are more than 400 patents in the pool already with more expected both from within the 10 companies and beyond," said an insider.

 

According to the US digital TV switching timetable, all sets sold after March 1 this year must fall within the technical requirements set down by the US Advanced Television Systems Committee, adopted as an ATSC standard.

 

A China Chamber of Commerce for Import and Export of Machinery and Electronic Products report commented that five of over 170 patent holders of the ATSC standard, including Sony, Thomson and Tri-Vision, demanded US$10 from Chinese producers for each set sold in the US.

 

TCL Chairman Li Dongsheng revealed that every year, Chinese TV makers are charged for patent fees to the tune of US$1 billion, consuming one third of their annual profit.

 

This burden is crippling for China's TV industry, which already struggles for profits, explained Bai Weimin, an official with the Ministry of Information's products bureau.

 

Chinese manufacturers price CRT sets at US$61 on average and LCD TVs at US$320, Bai pointed out, adding that their gross profits of around 10 percent of the purchase price are wiped out by the patent fees. This may push certain companies to abandon the US market altogether.

 

Since the early 1990s, China's color TV producers have endured fixed patent fees, in a bracket ranging from US$5 to US$7, for each TV set they sold.

 

Analysts said TCL and Xoceco were expected to be hit hardest by the new rules given their large shares of TV exports to the US.  

 

Xoceco spokesman Wei Zili declared a call for innovation. He said, "TV producers should accelerate the development of core technologies. This is the ultimate solution."

 

(Xinhua News Agency April 26, 2007)