Manufacturers open up new battlefield TV overseas to sell

The main domestic color TV manufacturers seem to be difficult to return to the old flames in the domestic market. The 2014 financial figures have declined in a collective manner and have already marked the first negative growth for the color TV industry for 30 years. The decline continued in 2015.

The weak demand has made the local warfare unstoppable, while the color TV companies are gradually transforming, while the overseas market war is igniting.

Sales and revenue decline at the same time

TV is no longer easy to sell.

On the evening of May 8, TCL Group (000100.SZ) announced the sales of major products in April. Its LCD TV sales volume was 1.411 million units, down 13.6% year-on-year. From January to April, the sales volume was basically the same as that of the same period of last year, with a slight increase of 0.43%.

TV is also an increasingly unprofitable industry. Skyworth Digital (00751.HK), which released April sales data on the same day, announced that its total TV sales volume in the domestic market increased by 14%, while total sales increased by only 3%.

Even the holiday promotions that used to show off in the past did not make the data in the hands of television manufacturers look better. According to data monitored by Ovid Cloud Network, TV retail sales and retail sales fell by 8.4% and 6.6% respectively during the “May 1” promotion.

In 2014, the main TV manufacturers experienced a collective decline in sales and revenue in the local market. IHS DisplaySearch reported that the number of color TV shipments in China's domestic market was the first decline in 2014. Except for Hisense, overall shipments of other five local brands, including Haier, declined by 7%.

In addition to Skyworth Digital, which has not yet announced its revenue data, Hisense's only positive growth in television revenues increased by only 1.8%. Among them, Changhong, which launched Kaike TV in 2014, saw the revenue of television services decline by a maximum of 28.24%.

The decline in sales and revenue directly affects the profitability of the company. The two home appliance companies suffered losses after deducting non-performing loans, of which Konka fell 595.58%, and Sichuan Changhong saw a decrease of 218.3%. According to the data disclosed by Ovid Cloud Network, the average net profit rate of the domestic color TV industry has dropped to about 1.5% last year, becoming a meager profit industry.

No growth and negative growth

Remarks on the decline in color TV performance have been reached in the middle of last year. Skyworth CEO Yang Dongwen once said that the color TV industry will experience the first negative growth in 30 years.

When Yang Dongwen analyzed the 2013-2014 financial report in June last year, he told the China Times reporter that after the expiration of the energy-saving subsidy policy, TV demand continued to weaken in the Chinese market, which caused the annual sales volume to fall short of the expected target.

Liu Weizhi, the vice president of Skyworth, also said in the second quarter of last year that China Electronics Industry Economic Operation Conference had no growth and negative growth, which may be the new norm of the future color TV market.

The withdrawal of the government subsidy program was seen as the direct cause of the decline in shipments in 2014. IHS DisplaySearch's research report shows that the higher base under the subsidy program and local consumer overdraft directly affect the 2014 full-year flat-panel TV shipments.

However, it is worth noting that Internet companies that have succeeded in setting off "Internet thinking" panic disorder have not actually captured much market share. LeTV disclosed that its sales volume for Super TV in 2014 was 1.5 million units, while millet TV's sales were said to be only 300,000 units. According to industry sources, the number of shipments of a product model from a traditional TV manufacturer is not limited to this figure.

Beyond hardware, traditional TV manufacturers are transitioning to content and services. Recently, General Manager Hui Xin of Hisense had stated that Hisense has actually become an Internet company. In the next five years, the profits from content and services are greater than or equal to the current sales of hardware.

It seems that the efforts of local home appliance manufacturers have been reflected for the first time in 2015. Zhang Bing, Director of China Market Research at IHS DisplaySearch, told reporters that both the sales data and the monitoring agency's data showed signs of a turnaround in the first quarter.

According to the data monitored by Ovid Cloud Network, the total volume of retail sales of the Chinese color TV market in the first quarter of 2015 was 12.33 million units, an increase of 13% year-on-year; retail sales totaled 40.4 billion yuan, an increase of 10% over the same period last year.

Domestic manufacturers are busy in the sea

TCL and Skyworth's April data showed that the first quarter's recovery did not last until April. Compared with the unstable domestic market, the fast-growing overseas emerging markets are becoming the main battlefield for color TV manufacturers.

TCL's 2014 financial report showed that its LCD TV sales in overseas markets increased 10.8% year-on-year to 8.06 million units, of which strategic ODM business LCD TV sales increased 48.6% year-on-year to 2.41 million units.

In Skyworth's 2014-2015 financial year, TV sales in overseas markets increased by 35%, while sales increased by 49%.

In fact, overseas acquisitions by local TV manufacturers have been ongoing. Recently, Skyworth announced the acquisition of the TV service of Metz in Germany. Just last year, TCL also announced the acquisition of Sanyo's Mexican TV factory.

Emerging markets such as India and Brazil have become the main battlefield for domestic TV manufacturers to attack. According to the reporter's understanding, Skyworth has already promoted its own brands of TVs in Thailand, Indonesia and other regions; TCL focuses on developing markets in India and Brazil; Konka has already produced the Toshiba brand in Brazil.

Zhang Bing told reporters that after the shrinking of Japanese brands, the Korean brand was added first, and the market risk of overseas brands for local brands was relatively high. “The main target markets are still positioned in emerging markets, low-end consumption in Europe and the United States, and OEM opportunities for second and third-tier brands.”

Zhang Bing is optimistic about the TV industry in 2015. He told reporters: "2015 is a recovery year. As long as the government does not introduce various subsidy policies to 'stir', 2015 is definitely better than 2014."

However, there are also pessimistic forecasts in the industry. The report released jointly by the China Electronics and Video Industry Association and Sanofi Market Research Company even predicts that in 2015, color TVs may lose money in the entire industry; Ovid Cloud expects TV sales in 2015 to fall 1.8% year-on-year.

In 2015, it will be more than half of what we see. Color TV manufacturers will go from here in 2015, and perhaps in the semi-annual report in the near future.