Hisense has moved some of its TV production to Africa (photo: WSJ)Bing Zhang, research director for Greater China at DisplaySearch, has posed the question: is China’s TV industry slowing down (http://tinyurl.com/pwy6yen)?
Zhang’s question was prompted by results from two of China’s leading TV makers, Skyworth and TCL. In 2014, Skyworth’s shipments grew just 1% in China, and 24% overseas (mainly to OEMs); TCL’s overall LCD TV volume was down 3.5%, to sub-16.6 million units. Shipments in China were down much further – 14% – to 8.5 million units. It is possible that 2014 may be the first time in years that TV sales in China will decline.
TV sales grew while government subsidies were in effect, but these are a short-term boost and lead to an unfavourable comparison (subsidies were in effect between 2011 and 2013). The TV market in China had a CAGR of 7% between 2010 and 2014.
New Chinese manufacturers, such as Lenovo, Xiaomi and LeTV, as well as Korean brands, are challenging traditional tier one Chinese companies. These newcomers and internationals have an advantage in the ability to distribute through online channels, which are on the rise, rather than building their own channels.
DisplaySearch expects Chinese TV demand to recover steadily, as the huge installed base reaches end-of-life and needs replacing over the next two or three years. The new energy efficiency Pacemaker plan will also provide incentives to replace.
The biggest challenge facing tier one Chinese brands is finding a new growth market, as there is no more room in the Chinese market. They will have to look overseas. Making a brand known and accepted by consumers outside China is a big challenge, so many manufacturers have been focusing on OEM and ODM clients. However, an increasing number of companies – including Haier, Lenovo, Huawei and TCL – are selling goods under their own brands. People are also becoming less brand-conscious for TVs, which is a good thing for these makers.
