This week, the most exciting news in the home appliance industry came from the market research firm GfK. According to its latest statistical data, the top five brands in China's flat-screen TV market are all domestic brands, ranked as follows: Hisense, Skyworth (Weibo), Changhong, TCL (Weibo), and Konka.
The corresponding A-share listed companies for these brands—Hisense Electronics (600060), Sichuan Changhong (Weibo) (600839), TCL Group (000100), and Shenzhen Konka A (000016)—also performed notably well this week. Hisense Electronics saw a weekly stock price increase of 16.79%, while TCL Group and Shenzhen Konka A both exceeded 10%. Sichuan Changhong increased by 6.62%, all significantly outpacing the market.
However, some insiders pointed out that the latest market share rankings did not form last year; the public has overinterpreted this information. In fact, with the rapid release of various products such as smart TVs, 3D TVs, and cloud TVs, the competition battleground for black goods enterprises has shifted to "software." The future launch of Apple TV and IT companies' penetration into the TV industry will escalate this "war." Prior to this, Chinese black goods enterprises may have about two years of preparation time.
Insiders: Overinterpretation of Ranking Data
Market research firm GfK recently released the latest statistics on China's TV market. As of last year, the rankings for market share were as follows: Hisense ranked first with a market share of 13%, followed by Skyworth and Changhong tied for second with 12%, and TCL and Konka tied for third with 10%.
Among the top five in market share, there was no presence of foreign brands. Samsung Electronics, the global leader in the TV market, fell to eighth place in China's TV market with a 7% share. Sharp and Sony of Japan ranked sixth and seventh respectively, while South Korea's LG Electronics ranked tenth.
According to reports by *The Economic Observer*, Hisense Electronics recently announced that its 2011 performance grew by more than 100% year-on-year. TCL Group expects to achieve a net profit of 950 million to 1.1 billion yuan in 2011, growing by 120% to 150%. Additionally, Sichuan Changhong's performance increased by over 190% in the first three quarters of last year. Only Shenzhen Konka A reported a loss in the first three quarters of 2011. However, the company stated that good operations in the color TV business in the fourth quarter improved overall profitability, expecting to achieve profitability for the whole year, though with a significant year-on-year decline.
The stock performance of the four major black goods enterprises on the A-share market this week was also very notable. Hisense Electronics had the largest weekly increase at 16.79%. Since the company announced its earnings forecast on January 13, its stock price has risen by more than 40%. Following closely was Shenzhen Konka A, which turned losses into profits in the fourth quarter, with a weekly increase of 13.16%. TCL Group rose by 12.5%, and Sichuan Changhong by 6.62%. Compared to the rise in the Shanghai and Shenzhen indices this week, these four companies significantly outperformed.
"One doesn't quite understand the market's reaction because the current ranking of market share in the flat-screen TV industry wasn't formed last year; it has been like this for a long time. If there is any change in this latest data, it would be that the gap between the first and second places has widened, with Hisense firmly holding the top position," an insider told *The Economic Observer*. The public has overinterpreted this data.
In fact, as early as 2007, data from market research company Zhongyikang showed that the top six in China's flat-screen TV market share were Hisense, Skyworth, Samsung, TCL, Konka, and Changhong. At the time, domestic and foreign brands were fiercely competing. However, starting from 2008, China's liquid crystal display (LCD) panel industry broke through technological blockades, making control over LCD panel purchase channels no longer the key to competition between domestic and foreign brands. Coupled with the influence of the global market, Samsung fell out of the top five in China's TV market.
From the "Golden Age" to the "Final Feast"
New Fortune analyst and Guojin Securities home appliance industry researcher Wang Xiaoying told *The Economic Observer*, "Perhaps it sounds somewhat pessimistic, but China's TV market has already reached relative saturation. After experiencing several golden years of development, Chinese black goods enterprises are now enjoying their final feast."
What is referred to as the "golden development period" refers to the years from 2008 to 2011 when China's black goods market experienced the popularization of LCD TVs, the popularization of LED LCD TVs, the introduction of 3D TVs, and the introduction of smart TVs. There was also policy support such as rural electrification and trade-ins. In fact, this trajectory already shows that competition in the TV industry has shifted from "hardware" to "software."
Anxin Securities pointed out that after experiencing high growth in 2009 and 2010, the entire home appliance industry began to slow down in the second half of 2011. Considering the impact of the European debt crisis, policy withdrawal, and slowing real estate sales in 2012, it is expected that the sales growth rates for air conditioners, color TVs, washing machines, and refrigerators in 2012 will be 6%, 6%, 5%, and 3%, respectively. The sales growth rate for TVs remains relatively high among home appliances. Moreover, the emergence of smart TVs has changed the way traditional color TVs progress technologically. This shift from single-dimensional display technology changes to display technology plus application will further reinforce the consumer electronics attributes of color TVs, shortening the update cycle for color TVs.
Smart TVs will experience a popularization process similar to that of LEDs. Although these are not revolutionary products compared to traditional color TVs, smart TVs have a stronger substitution effect compared to LEDs, so this effect will be more significant. When 3D TVs sold well last year, Jiang Haiwang, secretary of the board of directors of Hisense Electronics, told *The Economic Observer* that the proportion of 3D TV shipments from Hisense increased rapidly from 2% at the beginning of 2011 to nearly 30% by the end of the year. It is expected that the proportion of shipments in 2012 will continue to rise until it reaches about 50%, which is roughly the limit. At this speed, the industry expects that the volume of smart TVs will increase in the second half of 2012.
The Arrival of "Apple TV" May Not Be All Bad
The emergence of smart TVs has already shifted TV competition from "hardware" to "software." In fact, IT manufacturers such as Lenovo and Apple have successively expressed interest in developing TV products, already posing potential threats to China's black goods manufacturers.
"It can almost be confirmed that Apple is developing a digital TV with an iOS operating system." After multiple Silicon Valley individuals informed the media of this information in August last year, public attention to Apple's TV has never waned, and predictions for its product launch time have moved up from the end of 2012 to April.
Ren Minqi, an analyst at Zhongtou Advisor's home appliance industry, said, "The launch of Apple TV will inevitably impact the domestic TV market, as Apple Group has established its brand status through the excellent performance of its iPhone and iPad series. This intangible asset will benefit Apple TV, combined with its own excellent system platform and application software R&D team, making its advantages quite obvious."
However, Wang Xiaoying has a different view. She told *The Economic Observer* that after Apple TV is launched in the U.S., it will still take time to enter the Chinese market, at least requiring approval from the State Administration of Radio, Film, and Television. Regarding the built-in content in TVs, negotiations and compromises need to be made with the Chinese side. One might say that for the next two years, Chinese TV companies will still have relatively good days ahead and should focus on new product development.
"Additionally, I believe that the entry of Apple TV into the Chinese market is a good thing. Currently, Chinese manufacturers have developed various smart TVs, but consumers are confused and acceptance is not high. With the influence of Apple in the electronics market, it can help us cultivate a consumer base and play a leading role in technological development," Wang Xiaoying said.
Moreover, whether it is competition with foreign TV brands or the impending competition with IT companies, the channel advantages of the current major domestic black goods enterprises are relatively obvious. In future competitions, the aforementioned insiders stated that companies like Hisense Electronics and Skyworth Digital have great potential. Relatively speaking, Shenzhen Konka's advantage is not as evident.
Share to: >； Related Reports: Google accelerates leadership in the TV technology revolution Who will seize the opportunity in the smart TV race? Changhong beats Apple, globally launches Chinese voice-activated smart TV Broadband upgrade could become a new opportunity for China's smart TV development Weibo recommendation | Sina Technology Official Weibo