"Domestic TV makers are making little profit because of intense competition
and a lack of core screen production technology," said Lou Qinjian,
vice-minister of information industry.
Skyworth Group, one of China's largest color TV producers, said its profit
margin was merely two percent in 2005.
The complaint was echoed by many other domestic TV makers.
Of the 40 million color TV sets China exported last year, flat-panel TVs
accounted for 19 percent in quantity but nearly 50 percent in value, said Lu
Renbo, a market economy specialist with the State Council Development and
Research Center.
Chinese companies rely heavily on imported technologies to produce high-tech
TVs. Higher costs mean that a flat-panel 32-inch TV sells for at least 6,000
yuan (750 U.S. dollars), twice as much as a same-size CRT model.
"We need to master the complex flat-panel manufacturing processes in order to
survive in the cut-throat high-tech competition that is led by the Japanese,
Koreans and Taiwanese," Lu said.
New guide to China's economy
Chinese companies would love to run out winners in the field of high-tech TV
production, and their success or lack of it may become a new guide to China's
economy because success translates into higher domestic consumption as well as
more exports.
China enjoys the advantage of low labor costs -- which in the manufacturing
sector in general are three times lower than in Mexico and Hungary and twenty
times lower than Japan and the United States.
Another factor in favor of Chinese manufacturers of plasma and LCD displays
is the growing demand for high-end TVs from the expanding Chinese middle income
group.
The Ministry of Information Industry, which is responsible for IT and
electronic products, said China produced about three million LCD TVs in the
first half of this year, up 165 percent on 2005.
Sales of flat-panel TVs jumped to 2.1 million units in 2006. Ministry
analysts say the figure could climb to seven million by the end of this year to
make up nine percent of China's total TV output.
To keep up with the trends in the global industry, many
domestic TV makers have injected huge funds into research and development.
Average investment in R&D exceeds three percent of revenues and a raft of
new technologies and devices have been developed.
(For more biz stories, please visit Industry Updates)
