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February 9, 2010

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3D and Internet TV stimulate fresh demand in China

TELEVISION manufacturers in China are poised for robust sales this year as the government continues to stimulate consumer spending and technological evolution pushes people to think it's no longer good enough to have just a standard TV in the home.

Television sales in 2010 are forecast to surge almost a third to 44.3 million units, according to All View Consulting. That would follow a 10 percent gain in sales last year, when the market began to recover.

"We are at a turning point," said Chen Xiaodong, secretary-general of the China Digital Home Industry Association. "Televisions will no longer be merely display devices. Rather, they will be vital platforms for home digital 3D, Internet surfing and entertainment."

Integrating the lowly home TV set with the wonders of the digital age is fast becoming a reality. Last month, at the Las Vegas International Consumer Electronics Show, the world's largest consumer technology exhibition, Internet televisions, 3D technology and LED backlight played starring roles.

James Cameron's sci-fi spectacular "Avatar" has helped feed the 3D frenzy. The action-adventure movie has racked up US$1.859 billion in worldwide box office sales, sinking the previous record set by "Titanic" in just a little over six weeks' time.

TV makers are sparing no effort to try to cash in on the public passion for immersive media that put the viewer inside the image, redefining the ultimate home theater experience.

Domestic TV makers and their global competitors showcased their latest 3D television models at the Las Vegas show. Among Japanese manufacturers, Panasonic unveiled a 152-inch 3D screen, the largest in the world, and Sharp rolled out a 3D model imbedded with a Blu-ray player. South Korea's Samsung and LG also displayed their 3D line-ups.

According to US-based DisplaySearch, global shipments of 3D televisions will surge sixfold to 1.2 million units in 2010 from last year. The number could be 64 million units by 2018.

Sony has announced that its 3D products will hit the market this summer, and Panasonic plans to sell some of its models to Chinese consumers this year.

Domestic players TCL, Hisense and Changhong also had 3D displays at the Vegas show and are now working on retooling for mass production. No timetable was announced for introduction to the market.

Industry analysts said a thriving 3D television market will depend on content.

"The 3D industry is far from mature, and 3D-mode programs are limited," said Yang Dongwen, vice president of Chinese consumer electronics company Skyworth Group. "And producing that content is not easy."

Web revolution

Yang noted that it took 10 years and US$500 million to produce "Avatar."

"But 3D has promising potential and is, of course, the future trend," he said. "Only it takes time to improve the techniques and upgrade relevant equipment such as video players."

Internet TV is also part of the television revolution. In the Chinese market, TCL, Changhong, Haier and Konka are leading the charge to create a platform for information sharing, news updating, distance education, online shopping, chatting and interactive home entertainment. The boob tube may be tomorrow's computer.

"As the number of Chinese netizens tops 400 million, this year may experience an explosive demand in Internet TV," said Sha Gang, vice president of multimedia for Konka Group.

Konka announced in late December that the company would focus on the promotion of Internet TV in 2010 and no longer produce standard flat panel sets without Internet access after May. The company is targeting sales of 3.5 millions Internet TV units in 2010, just under half the number of flat panel sets it expects to sell.

TCL said in November it would stop manufacturing non-Internet TVs larger than 40 inches, and Changhong suspended production of average flat panels larger than 32 inches.

"The transition is as important as the transition from black and white to color, from CRT to flat panels," said Han Qing, vice president of TCL Group. "We predict Internet TV will be increasingly popular, and the Internet function will be bundled into all models."

All View Consulting estimates sales of Internet TVs in China will grow more than 50 percent to 30 billion yuan (US$4.39 billion) this year, accounting for 30 percent of the liquid crystal display televisions on the market.

However, Internet TV is facing the same problem as 3D formats: the development of programming has yet to catch up with the advances in hardware.

"Forming alliances with content providers will be key to propelling the development," said Huang Xinzhong, general manager of multimedia marketing for Konka Group.

While TV makers scramble to get the latest bells and whistles into their products, their fortunes this year may also be determined by sales of a more traditional sort.

Rural discounts

China, as part of its economic stimulus program, is shoveling a lot of money into rural areas that have lagged the urban seaboard in consumption. About 900 million people live in China's rural areas. Sales of home appliances and consumer electronics in the countryside totaled 69.26 billion yuan last year.

Television purchases are included in the government subsidy program available to farmers and other rural residents.

The subsidies on TVs were increased this year to cover TVs that cost as much as 7,000 yuan, up from 3,500 yuan last year. Rural residents who buy TVs at prices below 3,500 yuan are eligible for a 13 percent price rebate.

For TV sets costing between 3,500 yuan and 7,000 yuan, a 455 yuan subsidy will be paid.

The increase opens up the market to more expensive foreign brands. Last year, only Sharp and LG had access to the rural subsidy program. In the first round of bidding this year, held in late January, Samsung, Panasonic, Toshiba and Philip also took part.

"The home appliance incentives in the countryside will be a key channel to expanding their presence," according to All View Consulting.

TV sales in the countryside could reach almost 18 million units in 2010, and 71 percent of the sales will be underpinned by the more generous subsidies, the consulting firm said.

Sony was absent again from the bidding last month since none of its products were eligible for the program. The government has set some requirements on design, technology and service networks that participants in the rural program must meet.

But Sony isn't ignoring the market potential. It has plans to entice consumers in the countryside with lower-priced models. The Japanese electronics giant has introduced 26-inch sets costing 2,399 yuan and a 32-inch LCD set costing 2,999 yuan, making products competitive with domestic models.


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