TV Disparities: Giving Up or Moving On

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  The world’s attention was grabbed by the news that Sony is going to sell its PC business VAIO brand to Japan Industrial Partners, but along with the new was Sony’s plan to do apart its TV business for the purpose of saving cost.
  Meanwhile, Panasonic and Toshiba began to increase the pace of streamlining the TV business in China. Panasonic plans to move the digital AV department into the sector of white house appliance along with air conditioners and refrigerators.
  While Japanese companies are giving up their TV business, their Chinese peers are putting numerous efforts in this field, trying to fill in the blank left by the Japanese companies.
   The Rise of New TVs
  Sony’s reduction in the TV business is easy to explain. Its TV business has been in loss for ten straight quarters. So it needs to reduce the burden by turning it into a wholly-owned subsidiary companies.
  Apart from Sony, Panasonic’s TV business also met great losses in these years, which contributed a lot to its deficits. It has closed several TV factories in China and announced the stopover of producing plasma display TV, which is going to happen this March.
  It is generally believed that the recession of foreign companies have left a great space in the Chinese market waiting to be filled. The panel TVs with big displays are no longer the exclusive advantages of foreign brands. Local companies are marching aggressively into the high-end market. Blessed by their low prices and the government’s policies, they could easily drive off the foreign companies and claim the market used to belong to them.
  Previously, TV companies usually gain benefits from selling the hardware. The products in the market, as well as their prices, were usually driven by the TV makers, or the manufacturers of display screens, the most important part of a TV.
  As of 2013, when Chinese Internet giants represented by Xiaomi and LeTV got into the TV market in a high profile, the TV industry for the first time was connected with the word –content. However, even though Xiaomi and its peers have advantages in the content, its expertise in TV, or hardware, was far from being satisfactory. In addition, the delivery and after-sale service are always problems for them.
  Changhong, Skyworth and other Chinese TV companies take the lead in turning to the contents. With the concept of household Internet applied, these Chinese companies are conducting a reform to the TV industry, turning their focus to the consumers’ need for contents.   This move boosted the cooperation between TV makers and Internet companies. The two parties, which are respectively good at hardware and contents, are working together to shift the Chinese TV market. Iqiyi, Alibaba and other astounding names in China’s Internet industry, are frequently reported to work with TCL, Skyworth and Hisense on the development of contents. Together they have smart TVs, which are strong weapons they used to fight against the set-top box developed by Xiaomi and so on.
  In comparison, Japanese companies represented by Sony do not have these advantages. Without any knowledge about what contents the Chinese consumers favor, they cannot find proper partners to develop the right contents. They still hold to the original strategy of earning money through hardware, which is close to being eliminated by the market.
   The Competition in High-end Market
  Previously, the foreign TV brands represented high-end market and lofty price while the domestic TV brands mostly stayed in the low-end part.
  But as the foreign brands are giving up their original stronghold, domestic companies in China are also ready to break the tradition and march into the high-end market – they launch into the field of big-display TV with smart functions. They are no longer bound by the low prices of their products. Changhong, for example, made out the new smart TV pricing at around 10,000 yuan.
  This definitely detonated the market which is used to the cheap products, especially when the rudimentary smart TV – and most of smart TVs are rudimentary – are usually sold at around lower than 2,500 yuan.
  For this “unusual” price, Liu Hai- zhong, spokesman for Changhong, said:“To carry on the price war with lowend and cheap products will damage the profits of the entire TV industry. In our opinion, the price war is going to be ended in 2014. And the core of competition in TV industry is going to return to the contest for consumers’ needs. The chaos has been haunting the smart TV for too long. Our new product is a chance to get the new business pattern to work.”


  On February 7, the stock price of Changhong hit the historical high and increased by 26% in one month, showing the popularity of its high-price smart TV.
  Experts believe that the end of the subsidies for energy-saving home appliances have struck home at those TV manufacturers which still followed the low-price strategies. Most brands have seen the drop in their gross profit margin.
  Luo Qingqi, board chairman of Palor Consultancy, said that there was little space for the smart TV to drop their price in 2014, almost shredding the conditions for the price war to be started. Just because of this, most of the TV manufacturers have made significant changes to their policies.
  Just as a senior executive of TV maker said, the competition in 2014 will feature the technological and content contest, which represents the ultimate the direction of the TV industry in China.
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