industry news

China Reports Strong TV Growth but RPTVs in Doubt

Despite fierce competition and shrinking prices, China’s TV market is growing at a healthy clip in both domestic and export sales. For example, overall Chinese sales of color TVs in 2004 rose 11% annually to 72.7M units, accounting for 55% of the world's total, according to Asia Pulse. In that same year, China exported 27.7M additional color TVs, 21.8% more than in 2003.

Output from the top 13 color TV makers (in a field of 68 Chinese manufacturers) exceeded one million units last year, with their combined output accounting for 93.5% of China’s total 2004 output. The annual output of TCL was close to 20M sets, while that of the remaining top makers exceeded 8M each.

Almost 90% of China’s TV revenue came from CRTs but that number is changing. According to a report by market research firm iSuppli (El Segundo, CA) (www.isupply.com), flat-panel TV sales in China will account for 11% of total TV revenues in 2005, compared to 6% in 2004 even with major price erosion.

Two major Chinese players, SVA and BOE (set to purchase Philips TV business—see related story this section) have launched 5G TFT-LCD production lines, while overseas companies moved or constructed production lines in the Yangtze River Delta and Shenzhen.

Despite rapid development, China's color TV industry faces many challenges. The industry still lacks core technology, and fierce competition forced down prices. Profitability on sales was only about 2% in 2004 with many foreign companies now collecting patent fees, affecting the margins on Chinese products.

On our recent visits to Asia, we are hearing about a lot of concern for the prospects for MD-RPTVs in China. While Texas Instruments reported that seven Chinese TV makers have used its DLP technology, the fate of RPTVs in China is still dubious. This doesn’t bode well for RPTV makers banking on China as the second major front (after the US) for MD-RPTV sales going forward.

Prospects in China now look decidedly difficult. Price is the major decision factor in China and MD-RPTVs will be challenged here. 42”ED PDP-TVs can be purchased for $1300; CRT-RPTVs can go for as little as $600; BenQ’s Peter Chen has predicted that in Q2’05 a 32” LCD-TV will go for $1000 to $1200; a 37” LCD TV for $1200 to $1500 and a 42” LCD TV for $1500 to $2000. This is now at PDP pricing with higher resolution.

In terms of manufacturing efficiency (number of sets produce for a given line and set of operators), PDP-TV and LCD-TVs are twice as efficient as producing MD-RPTVs. In addition, MD-RPTV sets have not sold that well so far in China. Delays in the DTV standard and lack of DTV/HDTV content are slowing sales too.

As a result, adjustments in MD-RPTV forecasts and strategies are now underway. Some will press for low priced MD-RPTVs to compete in existing cost structure and perceptions. Others will focus on building education and branding of MD-RPTVs in 2005 to pave the way for more higher-value price-performance products in 2006. One will focus on short-term opportunity for low resolution 4:3 sets popular in education markets because they can’t be stolen as easily as front projectors.

May 1 marks the second of the three major selling periods in China. We expect to see significant price movement at that time, so stay tuned.

Contact:
Insight Media
Annmarie Gabisch, 203-831-8564
annmarie@insightmedia.info