China celebrates its National Day holiday at the start of October, which marks the beginning of a longer holiday known as Golden Week. As we noted last month (Display Monitor Vol 21 No 41), the end of energy-saving subsidies helped to keep TV sales during the period lower than the 2013 holiday. NPD DisplaySearch has now said that sales were down 5% YoY.
Other holidays in China late last year and this year, such as the Spring Festival and May Day, have also seen lower-than-expected sales. DisplaySearch’s Bing Zhang notes in a blog post (http://tinyurl.com/nx835jx) that ‘Some are starting to question whether these peak holiday periods produce the same level of consumer activity as they used to’.
LCD TV sales in traditional TV channels were down as much as 15% YoY during Golden Week. However, taking the two weeks before the holiday into account, total sales were up 6%, to 5.4 million units. Zhang writes that sales during the holiday period are becoming less important, ‘likely due to the boom of online channels, which run promotions more frequently’. These promotions have a greater impact on seasonality. Due to aggressive price promotions, the market share of online channels keeps rising. By mid-2015 these channels’ share will exceed 15%, it is thought, and could increase to as much as 30% by the end of the year.
Weakness in TV sales was also caused by panel prices holding steady, or rising, in recent months, limiting price erosion. For example, the price of a 32″ open-cell LCD TV panel rose to around $90 in September, from $80 in June. Despite this, panel demand is still strong from major Chinese brands, which are benefiting from continued demand in the domestic market and strong exports.
Stable panel prices meant that there were fewer models with extremely low prices, even in online channels. DisplaySearch believes that this is the reason that no major local brands achieved positive growth in traditional channels, in either urban or rural markets, during the holiday. Because there were no low-cost models, brands were promoting larger sizes and UltraHD instead. Despite UltraHD TVs costing between 15% and 25% more than 1920 x 1080 models, penetration reached 27% during Golden Week.
Major brands in China have been increasing TV panel purchases and TV set production during the past months, for both export and domestic sales. Brands currently hold 5-6 weeks’ worth of inventory, which is normal, even though sales were lower than expected. DisplaySearch believes that brands will continue to restock panels to meet demand during upcoming promotional periods. They will also try to achieve their 2014 targets in Q4.