By Zhuang Guangping
In the first quarter of this year, influenced by the global financial crisis, both the production and sales volume in color TV industry of China fell down; however the sales volume of flat panel TV represented mainly by LCD TV increased greatly on the contrary. Encouraged by a series of national policies, domestic market is speeding up the upgrade towards flat panel TV consumption. In the first quarter, the total retail volume of LCD TV in China was 5.71 million sets, increasing 88 percent year on year, and exceeded that of CRT (Crystal Ray Tube) color TV which was 4.97 million sets for the first time. It was a historic leap forward.
Color TV consumption "borrowing the east wind"
"Home appliance to rural areas" project is being carried out in the countryside in full swing. A new round of bidding for color TV sent to rural areas has lifted the highest limited price to 3,500 RMB Yuan and the number of bidding models has been increased to thirty, which has directly driven the population of large-size LCD TV in rural market. "A number of companies have chosen 32-37-inch LCD TV as the main bidding products. And some companies have chosen 40-42-inch as the alternative." The deputy president of China Video Industry Association (CVIA), Lin Yuanfang assessed so after investigation, "The growth rate of LCD TV in the countryside this year will be over 70 percent."
"Home appliance to rural areas" project made the price of LCD TV fall. In the first quarter, the price of most LCD TV sets fell greatly compared with the same period of last year. Now the price of LCD TV is only about twice of that of CRT with the same size. Meantime color TV consumption is speeding the upgrade process. However domestic color TV population in China is about 430 million, among which the FPD population is only 30 million, occupying just 7 percent of the total. The upgrade space of color TV is huge.
On 21st of May, National Development and Reform Commission and Ministry of Finance of PRC together launched the "Waste management project for energy-saving products", according to which consumers will get financial subsidies when they buy ten categories of first-class or second-class energy efficiency products including air-conditioning, refrigerator or FPD TV. Judging from the air-conditioning machines for which this project has already been implemented, consumers will get a subsidy ranging from 300 to 850 RMB Yuan when they buy energy-saving products, and relevant energy-saving subsidy policy for FPD TV is expected to be published in the near future. A related leader in National Development and Reform Commission expressed, the energy-saving subsidy policy could pull an annual demand of 400 to 500 billion RMB Yuan and raise the market shares of high-efficiency energy-saving products by ten to twenty percent, reaching over thirty percent.
Industrial chain is "interlocking"
Besides the favorable policy on consumption, domestic FPD TV industry also gets support from the industrial chain aspect. In the "Adjusting & Revitalizing Plan for Electronic Information Industry", the construction of FPD industrial chain is included in the strategic program. "The problem of lacking upper-stream panel industrial chain, which has once been limiting the development of FPD TV in China, will probably get settled", said Lin Yuanfang.
Regarding the business performance, major color-TV whole manufacturing companies in China successively put the emphasis on the extension toward the mid-upper stream of industrial value chain and on the core competitiveness construction in FPD era. As for the display panel, there are over eight high-generation LCD panel production lines including those in construction and the ones declared to be built. With the contribution after they are put into production, together with the efforts of existing panel production lines in China, it's basically possible to realize the "self-sufficiency" of panel supply. "Its long-term significance to China's color TV industry could be compared with that of the introduction of one hundred production lines in CRT era", said Lin Yuanfang.
Domestic color TV companies also get involved to a great extent with engine module business which occupies about 70 percent of the whole cost of LCD TV. On one hand, by directly connecting whole machine and module to reduce the intermediate circulation processes and speed the turnover, they achieve more value-added space and cost competitiveness advantage; on the other hand, with the systematic design of whole machine and module, they have realized standardization inside the system and differentiation to the outside and finally improved the comprehensive competitiveness of the products and the technology innovation capacity of the company. In early 2008, TCL Group had launched construction project of module and whole machine integration which won the largest investment scale and the most perfect technology among domestic color TV producers at present. With the project the annual production capability of 8 million pieces will be realized at last. Hisense Group and Konka Group will also build a production capability of 3 million pieces and 2.4 million pieces separately by the end of 2009.
Brand transformation "better and better"
The international brands have established high-end image in consumers' mind by mastering the core technology of panel display. "But now domestic panel display industrial chain gradually becomes mature", the deputy secretary-general of China Electronic Chamber of Commerce, Lu Renbo said, "The quality of domestic panel can be compared with that of international brands."
Lu Renbo expressed, in recent years, with the increasing improvement of panel display technology, the production and manufacturing capability of domestic color TV companies also got further strengthened, and product stability and performance was greatly enhanced.
Besides technology guarantee, "domestic panel industry owns cost advantage, relatively perfect service channels and fine market recommendation." Domestic companies have their own management system regarding product quality control. "Now companies all realize that product recommendation is quite important. A good public praise means good quality, good after-sale service and good comprehensive competitiveness." Lu Renbo believed, "color TV companies invest a lot in product quality control."
Since the second half of 2008, as the technology level and service quality have been increasingly improved, domestic LCD brands in China have regained supremacy on urban market. At the end of the first quarter of 2009, domestic LCD TV gained 71 percent of urban market shares, with a 23.5 percentage over that in the first quarter of 2008. In the first quarter, regarding the product sales structure of domestic color TV brands, 76 percent and 78 percent of the sales volume of TCL and Hisense came from LCD TV market. Therefore a steady and fast transition from CRT-oriented to LCD-oriented product structure is realized.
