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Foreign firms learn LCD beats plasma TV

By Liu Baijia (China Daily)
Updated: 2007-01-26 09:35

One unexpected change for foreign brands in the flat panel TV market last year was a sudden shift to LCD TV sets.

While plasma TV sets are popular in other countries due to a better visual performance on big screens and a larger viewing angle, the market suffered a setback in March when most plasma sets tested were unable to meet the national standard for high-definition TV.

The reality that plasma TV sets are most attractive in large screen configurations above 42 inches also hinders their development as ordinary consumers do not have an appetite for such big screens.

It was an unexpected blow to companies like Samsung and LG, both of which have LCD and plasma products, and Panasonic and Hitachi, which focus on plasma products.

But they adapted in the second half last year when they began to shift production and resources to LCD products, and domestic brands have seen increasing competition.

Foreign manufacturers, attacked with price wars from domestic players for over a decade, have now learned how to fight back in cost competitiveness.

Prices of mainstream 35- to 46-inch products fell by almost 40 percent last year, according to the State Information Center.

Liu with SBFM estimates the average price of domestic 37-inch LCD products will be about 8,000 yuan, while that of foreign brands will be 11,000 yuan. The price gap will be affordable for Chinese consumers, who usually think foreign brands are better quality than domestic products.

Supply may become a key factor for foreign brands to pull even in the competition.

Foreign brands such as Samsung, LG, Sony and Sharp have their own production facilities for flat TV panels, a key component in TV sets, and that gives them strong bargaining power on supplies and global reach in procurement.

Y. S. Lin, an account manager with Chi Mei Optoelctronics Corp, one of the world's top three flat panel producers, said supply of flat panels will be adequate in the first half of 2007, but there could be supply problems in the second half due to increasing global demand.

Chinese TV makers, which aim to have a bigger say in the supply of panels, have set up three production plants, but because flat panel manufacturing requires large capital outlays, the three firms issued a statement in December announcing that they were considering amerger.

The merger is expected to delay the volume production, thus adding uncertainties to domestic TV makers, many of which are investors in the production facilities.

                                                                        (China Daily 01/26/2007 page15)