TV price war coming to an end
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.