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Price war waged in TV market
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THE year started with television companies introducing new concepts and technologies. However after months of much fanfare, the price war, usually the last resort of television makers, resumed as usual.
Changhong, a giant in the television industry, with headquarters in Sichuan Province, kicked off the price war by slashing 20 per cent off its prices, almost across the board. Hesitantly TCL, based in Huizhou, Guangdong Province, followed suit. And Konka and Skyworth, both based in Shenzhen, were also forced to lower prices.
In the past, there have been several price wars in China's television industry, an intensively competitive market. There were times prices became so irrational that some television makers had to cut down on quality in order to fit into a competitive price range.
However this price war has more rational reasons behind it, according to some industry insiders. For example, the president of Skyworth said that improved research and development capacity, streamlined distribution and logistics management have all helped television makers to cut their production costs.
Furthermore industry experts say that lower prices of raw materials also justify this round of price cuts. They also point out that with products' life cycles shortening this forces the television makers to lower prices on the older-style products. New technology and improved production processes also have resulted in a lower product cost.
China's television industry entered the era of thin profits in 1996 when the first large-scale price war started. In April 1996 China lowered its import tariffs on some products, including colour television sets, this forced Changhong Company to announce price cuts in order to compete with foreign television makers hoping to sell their products in China. In the ensuing five years, price wars took place six times.
Consumers are of course the beneficiaries of these price wars, but the increased competition has also forced Chinese television makers to improve their technology and production processes.
(Steve Liu )
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