TV price war com­ing to an end

China Daily (USA) - - BUSINESS - By SHI JING in Shang­hai shi­jing@chi­nadaily.com.cn

The price war among Chi­nese TV man­u­fac­tur­ers which has been rag­ing for nearly four years is fi­nally ap­proach­ing a truce.

The first com­pany to cease fire was Le Hold­ings Co Ltd. On Mon­day, the com­pany an­nounced it would raise the prices of some TV sets by 100 yuan ($14.5) and some oth­ers by 300 yuan. It was just two months since it an­nounced a first round of price in­creases for its TV prod­ucts in Septem­ber.

Liang Jun, pres­i­dent of LeTVZhixin Elec­tronic Tech­nol­ogy (Tian­jin) Co Ltd which is re­spon­si­ble for Le Hold­ings’ TV busi­ness, ex­plained in his per­sonal WeChat Mo­ments that they will stick to the rule of sub­si­diz­ing the hard­ware with the help of its al­ready built ecosys­tem. Mean­while, the prices fixed for the TV sets will mean lit­tle profit for the com­pany.

With its first TV set un­veiled in early July 2013, LeTV Zhixin sold nearly 9 mil­lion TV sets by the end of Oc­to­ber. How­ever, LeTV Zhixin reg­is­tered a net loss of 56.87 mil­lion yuan in the first half of fis­cal year 2016.

The last straw was the higher price of LCD pan­els, which takes up nearly 65 per­cent of a com­plete TVset.

Ac­cord­ing to con­sult­ing and re­search firm IHSMarkit, ris­ing de­mand for LCD pan­els, ex­ceed­ing mar­ket sup­ply, has re­sulted in the price in­creases in China. Ac­cord­ing to the lat­est quote in the in­ter­na­tional mar­ket, a 40-inch 1080p high-res­o­lu­tion LCD panel has seen its price rise by $17, while most of the TV mak­ers in China at­tract con­sumers with sets only priced at around $280 each.

Com­pa­nies apart from LeTV have re­al­ized that low price is not the way out. Zhou Kun, chief ex­ec­u­tive of­fi­cer of Bei­jing Fun­sh­ion On­line Tech­nol­ogy Co Ltd, an­other lead­ing mar­ket player, said in a meet­ing in late Oc­to­ber that the com­pany will no longer pro­duce any low-price TVs. The com­pany will no longer fo­cus on on­line dis­tri­bu­tion chan­nels. It will open 200 phys­i­cal stores to com­pete with tra­di­tional TV mak­ers.

56.87 mil­lion yuan LeTV Zhixin‘s net loss in the first half of fis­cal year 2016

Tra­di­tional TV man­u­fac­tur­ers also hold neg­a­tive views re­gard­ing low prices. Liu Tangzhi, vice-pres­i­dent of lead­ing Chi­nese TV man­u­fac­turer Sky­worth Group Ltd said dur­ing a news con­fer­ence on Nov 16 that the ir­ra­tional low prices set by some TV mak­ers is against eco­nomic rules. He even called for govern­ment ad­min­is­tra­tive bod­ies to in­ves­ti­gate un­fair com­pe­ti­tion in the Chi­nese TV in­dus­try.

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