Profits are decreasing, and TV industry transformation is imminent

As China continues to introduce policies that stimulate the development of the color TV industry, China has become the world's largest LCD TV market. However, in the third quarter, the overall performance of the color TV industry in the Chinese market was sluggish. While domestic TV companies such as Konka and TCL have all posted poor performance, Samsung also said recently that the overall performance has been dragged down by low demand for LCD TVs, and that another major Korean company, LG, has announced a sharp drop in gross margin. On the Japanese side, Sharp also announced an expected announcement of a drop in net profit.
The reporter learned that the reason for the general decline in the profits of the color TV industry is the price war in the LCD TV market. Experts said that China’s becoming the world’s largest color TV market is not enough, and its development must be benign and healthy. To achieve this, it must rely on the joint efforts of color TV manufacturers at home and abroad.

Leap in the world's largest flat-panel market

According to the latest research report from the survey agency DisplaySearch, China will be the largest LCD TV market in the world this year. It is predicted that China's sales of flat panel TVs will reach 40 million units this year, surpassing 39 million units in the US market, and become the world's largest LCD TV market.
"China's color TV market can become the world's largest market, thanks to the various favorable policies that have been introduced in the past two years." Hao Yabin, vice president of China Electronics Industry Association, told China Electronics News.
At the end of 2008, the Ministry of Industry and Information Technology, the Ministry of Commerce, and the Ministry of Finance jointly launched the home appliances to the countryside policy, which greatly stimulated TV sales in the third and fourth-tier markets. Since the second half of 2009, flat-panel TVs have been included in the area of ​​rural TVs, which has accelerated the popularity of flat-panel TVs in the Chinese market. In October 2010, sales of household appliances to the countryside reached 16.59 billion yuan, and the top three sales were color TV (5.01 billion yuan), refrigerators (4.97 billion yuan) and water heaters (1.7 billion yuan).
At the beginning of 2010, the home appliance trade-in activities were kicked off. This is a good opportunity for China's color TV industry. As of November 4, 2010, the appliance replacement policy drove new appliances to sell 26.72 million units, with sales exceeding 100 billion yuan.
Obviously, in the home appliances and home appliances trade-in, the color TV has become one of the most beneficial products, which has also played a catalytic role in China becoming the world's largest LCD TV market.
The policy of encouraging the development of the color TV industry is not just that. At the beginning of this year, with the continuous advancement of the triple play policy, the opportunity for color TV industry development is once again in sight. The reporter learned that at present, Skyworth, Konka, TCL, Haier and other domestic color TV companies have targeted smart TVs. Samsung, Sony, Sharp and other foreign brands are also actively making technical reserves in this area.
In addition, the upcoming implementation of flat-panel TV energy efficiency standards on December 1 this year has become one of the most stimulating policies for manufacturers. In July and August of this year, domestic color TV companies generally completed the transition from CCFL to LED. The hot sales of LED TV in the fourth quarter will make the Chinese market once again become the focus of the world.

Chinese and foreign companies generally have low profits

Although China has become the world's largest LCD TV market, there are not many color TV companies that have really earned a lot in this market. Compared with the high profits of white companies, most color TV companies in the Chinese market only take the amount, and profits are generally low.
Recently, domestic and foreign color TV companies have released their third-quarter financial reports. The TCL Multimedia Financial Report showed that listed companies suffered a loss of HK$991 million in the first three quarters of this year. According to Li Dongsheng, Chairman of TCL, “The market judgment of Internet TV and LED LCD TVs is a major cause of losses.” Konka executives said that the delay in the introduction of LED TVs has had a negative impact on Konka’s profitability.
Not only did Konka and TCL have lower profits from domestic color TV companies, even Japanese and South Korean companies with good profit conditions in previous quarters also experienced lower profits. A few days ago, Samsung Electronics announced the report figures for the third quarter total revenue of 40.23 trillion won. Samsung's overall performance growth has nothing to do with the color TV business. Samsung explained that the low demand for LCD TVs has dragged down overall growth.
Another major Korean electronics giant, LG, suffered operating losses of 185 billion won in the third quarter. The gross profit margin of the LG TV business unit during the quarter was only 2.3%, which was half that of the same period of last year.
On the Japanese side, Sharp's net profit fell to 14.3 billion yen, compared to 17.72 billion yen in the same period of the previous fiscal year. Sharp said: Sharpe by the continued strength of the yen, the global market demand for large-size LCD TVs fell, and LCD TV manufacturers have cut prices and other unfavorable factors, Sharp lowered its market expectations for the current fiscal year.
“The decline in the profits of color TV companies is not unrelated to the price war that has taken place in the Chinese market. From traditional CCFL TVs to LED TVs, 3D TVs, and now to smart TVs, the price war has become the most important means for Chinese and foreign color TV companies to launch market competition. One of them.” Hao Yabin said.

Return to value war is the direction

The Chinese color TV market supported by numerous favorable policies has become the global focus. Many foreign brands want to share a share in the Chinese market, so the price war in China's color TV market is fierce.
The reporter learned that in August of this year, domestic color TV companies cut down the prices of many CCFL products in order to clear their inventory and deal with the energy efficiency standards of flat-panel TVs to be implemented on December 1. Many product prices have fallen by more than 40%. In the LED TV market, Samsung, Sony, Sharp and other companies have taken the lead in launching price wars with the price cuts of upstream chip and panel makers, trying to dominate the market. According to statistics from the National Day market, Zhong Yikang showed that the price of LED TVs has generally dropped by about 30%.
With the ever-increasing pace of technological upgrading of the global color TV industry, color TV industry continues to undergo profound changes: Under the influence of triple play, 3D and other factors, the traditional scale-up competition model of the color TV industry has been difficult to adapt to the needs of the current market competition. The competition in the global color TV industry is more based on the value supply competition that meets consumer demand on the brand and technology.
However, in the Chinese market, there has been no change in the situation in which “domestic companies are constantly cleaning up inventory of old products and foreign companies are constantly launching price wars in the new product market”. "China's color TV industry needs healthy and long-term development. Not only does China's color TV companies need to change their thinking, foreign brands also need to change their thinking. It is not a long time to rely on price wars," said Hao Yabin.
As profits have been decreasing year after year, domestic color TV manufacturers, who have made pains to learn from their mistakes, have consciously abandoned price warfare strategies since 2008. The chief engineer of the Haier Group Information Products Division told reporters at the China Electronics News: “In these years, Haier has firmly grasped the development trend of the three networks, three-screen integration and other industries, and launched related technologies and television products. To impress consumers."
Xu Hongjun, deputy general manager of Konka Multimedia Marketing Color TV Operation Center, also told the China Electronics News reporter: “Price wars are not long-lasting. Color TV companies need to impress consumers from the applications and experience, and impress consumers with the value of products. So Konka introduced a smart TV."

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