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Last updated at: (Beijing Time) Friday, December 05, 2003

Switch on to TV innovations

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The recent release of plans by many information technology (IT) conglomerates to develop high-grade televisions, which boast more advanced technologies, is a heavy blow to the outlook of domestic TV makers, who have dominated the market for the past two decades.

Earlier this week, US computer giant Hewlett-Packard announced a scheme to launch large-screen liquid crystal TV sets to the Chinese market by next spring. Domestic computer maker Lenovo also confirmed its plan to develop high-resolution digital TV sets.

Similar plans were already announced weeks ago by some other leading IT companies, including Dell, Motorola and Samsung.

For domestic TV manufacturers, the influx of high-tech outsiders may not actually be that devastating considering domestic firms' competitive edge in relation to low prices and established national service networks. But a recent major shift in government policy will add considerable strains.

Last month, the State Administration of Radio, Film and Television announced the experimental launch and promotion of digital TV programmes nationwide starting from 2005. All analogue TV broadcasts, the system which is in use currently will end by 2008.

While meeting consumers' demand for better TV services, as well as high-tech companies' desire for hefty profits in the new business, the scheme has obviously left traditional analogue TV makers out in the cold.

If domestic TV companies do not want to be left out of the new market, now is the time to review their old price-oriented strategies.

Domestic TV prices have kept declining for several years, largely because TV makers undercut each other to grab bigger market shares. It is not uncommon that some TV makers earn less than 100 yuan (US$12) for every colour TV set sold.

Although the competition has benefited consumers to some extent, it does not sharpen TV makers' technological edge. Ironically, the picture tubes, the core component of TV sets, still have to be imported because no domestic TV makers are technically capable of producing them.

Moreover, constant price cuts have sapped TV makers' profitability as well as sustainability in development.

They were the leaders of the domestic market a decade ago in the contest with expensive Japanese TV brands. This time, if they make full play of their technological potential, it is not impossible they will gain a footing in the digital TV market which is said to be worth 600 billion yuan (US$72.5 billion) in terms of manufacturing alone.

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