In order to expand the market scale, Samsung, the world's largest color TV manufacturer, has decided to launch affordable TVs. This is not good news for Chinese local enterprises that have always relied on low prices to win. Although Samsung has not clearly stated the timing and volume of shipments in the Chinese market, and it will take some time to establish distribution channels, it is yet unknown whether Chinese enterprises can seize the opportunity to come up with a response strategy.
Kim Hyun-suk, executive vice president of Samsung’s Display Division, said: "Due to the rising demand for low-end TVs, we have been preparing to launch affordable TVs, while also striving to optimize production costs and reduce retail prices. Affordable TVs will be available for sale within one or two months."
In fact, over the past few months, Samsung has launched a batch of flat-panel TVs in Korean retail stores, priced 40% cheaper than other products.
Industry insiders generally believe that the Chinese market will become the main target for its affordable TVs. This is closely related to the fact that the third- and fourth-tier markets in China are gradually becoming the main drivers of color TV sales. Previously, the '2011-2012 China Color TV Consumer Market Development White Paper' released by the China Electronics Chamber of Commerce pointed out that sales in domestic first- and second-tier markets account for 55% of the overall market share, growing only by 4.5% year-on-year, while color TV sales in first-tier cities such as Beijing, Guangzhou, and Shenzhen, which were previously considered the main battlegrounds for TV companies, started to decline, experiencing negative growth for the first time this year. On the other hand, sales in third- and fourth-tier markets, which account for 45%, surged by 17.5% year-on-year. Industry insiders generally believe that the third- and fourth-tier markets will be the main driver of growth for the color TV industry this year. Under this trend, foreign companies naturally do not want to miss the opportunity.
Compared with Chinese companies, Samsung has a stronger brand advantage. Industry insiders believe that consumers are increasingly paying attention to brands. Samsung's rapid development in recent years has deeply rooted its brand in people's minds, something that domestic companies cannot match. Moreover, Samsung possesses upstream industrial chains such as panels and chips, which can significantly reduce the cost of whole machine production, making Samsung more competitive in the third- and fourth-tier markets. "Chinese manufacturers being dragged into a price war is inevitable, and maintaining gross profit margins will be difficult."
However, for Samsung, distribution channels are its biggest weakness. From the results of recent rural appliance programs, it can be seen that foreign brands still face challenges in expanding distribution channels in third- and fourth-tier markets. In fact, as early as the beginning of 2010, Japanese color TV giant Sony tested a low-price strategy in the Chinese market by launching consumer-friendly products. However, due to limited achievements in channel development, the results were not significant.
By Sun Lingli, Business Reporter.
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- Samsung launches its first 55-inch Super OLED smart TV (with pictures)
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