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TCL Corp. (000100) televisions now hang in Beijings Great Hall of the People, replacing Panasonic Corp. (6752) sets in a sign that Chinas biggest flat-panel TV maker is piling on to the woes besetting Japans industry.
The TCL Multimedia Technology Holdings Ltd. (1070) unit leapt past both Panasonic and Osaka-based Sharp Corp. in the first quarter to become the worlds fifth-biggest liquid-crystal display TV maker by market share, according to researcher to DisplaySearch. Sony Corp. (6758), which has said its counting on expanded sales channels in China to help narrow losses on TVs, came third behind South Koreas Samsung Electronics Co. (005930) and LG Electronics Inc. (066570)
TCL Multimedias rise in the ranks comes as a near postwar -high yen, falling TV prices, South Korean competition and slack demand in Europe and the U.S. have left Sony, Sharp and Panasonic with a combined 1.6 trillion yen ($20 billion) in annual losses. Panasonic has even lost the distinction of worlds largest high-definition 3D TV at 103 inches, bested again by TCL, which makes a 110-inch model.
The Japanese makers are in a lot of trouble at the moment, so they are taking their eye off the ball a little bit in China, said Jean-Louis Lafayeedney, an analyst at JI Asia in Hong Kong. That is good for TCL.
The retrenchment of Japanese electronics makers, which have idled production lines and slashed output of TVs to pare inventories, adds to the challenge of winning customers like Hu Fugui, a Beijing-based advertising executive.
Made in China
At a Suning Appliance Co. store in the capital last month, Hu watched Rise of the Planet of the Apes on a 46-inch TCL set as he shopped. He ended up buying TCLs Internet-ready L46V7300A-3D smart TV, for 6,599 yuan ($1,035). The price was 14 percent less than for the comparable Sony model and a 21 percent discount to the closest Panasonic set in the same store.
The quality of the TCL brand is just as good as anything you get with imports, Hu said.
To spur sales in China, TCL in April said it would open 3,000 new stores this year. The expansion will focus on the countrys interior, where many buyers have yet to switch to flat-screen TVs from older sets with cathode-ray tubes. Those consumers are also further from coastal markets like Shanghai and Guangzhou, where Japanese and South Korean imports have dominated sales.
Tier Drops
TCL Multimedia intends to boost sales in so-called third- tier to fifth-tier cities and rural areas while increasing market share nationwide, spokeswoman Linda Wang said by e-mail.
Sony expects its TV sales in China to outperform the industrys after it expanded its retail network in regional cities, not just Beijing and Shanghai, said Yasuhiro Okada, a Shanghai-based spokesman for the company.
We are trying to boost our position by expanding our retail network and by strengthening large sets and high-end models, Okada said. China is a very competitive market.
Sonys TV business lost money for an eighth straight year in the 12 months ended March 31, contributing to a record 457 billion-yen net loss. The unit will probably lose about 80 billion yen this fiscal year as sales drop 11 percent to 17.5 million sets, the company forecast in May.
China Target
Panasonic expects to stop losing money on TVs in the quarter starting Jan. 1, the company said in May. The Osaka- based company reported a record 772 billion-yen net loss last fiscal year and its TV unit has posted four consecutive years of losses.
China is important as part of Panasonics strategy to sell more products in developing countries, said Yuko Hosaka, a Tokyo-based spokeswoman. The company has seen sluggishness in China partly because of local competition, Hosaka said.
There is an overheated battle between TV makers, including local manufacturers, trying to win a large share of the market, Hosaka said. TCL is a big competitor to us that has a high market share.
Overseas Stumbles
TCL Multimedias success in China contrasts with its stumbles in expanding sales in Europe and North America. The company set up a joint venture in 2004 with Thomson SA, maker of RCA brand TVs, and then took over Thomsons business in North America and Europe in 2005.
The operations lost money and dragged TCL Multimedia to net losses that totaled more than HK$4.6 billion ($593 million) from 2005 to 2010. The company reported net losses very year except 2009.
The TCL unit returned to profit again last year after shutting plants in Europe in 2008, and ending sales of RCA- branded TVs in North America in the second quarter of 2010.
They can earn a profit in the China market, but the profit in their home market has been eroded by loss-making overseas operations, said Yuji Fung, an analyst at Oriental Patron Securities. According to management, they are now doing less overseas and building up the brand in the home market, which is driving a turnaround.
One way TCL Multimedia is appealing to Chinese consumers is by offering models that make it easier for to watch video, movies and television shows via the Internet.
Comparable Quality
Shopping at Suning, Hu stops to look at TCLs L46V7300A3D smart TV, scrolling through the sets Internet menu and selecting the icon for Tencent Holdings Ltd. (700)s online video site. With a click of the remote, hes watching actor Sean Bean in the film Cash.
Foreign brands including Sony and Panasonic have lost much of their allure for Chinese consumers now that local sets offer comparable quality at lower prices, said Hu.
Investors have also noticed the companys focus technologies, including light-emitting-diode displays, which yield sharper images, and the Chinese governments support for industry.
TCLs performance has gained the attention of investors like Lu Yu, the San Diego-based co-portfolio manager of Allianz AGIC Emerging Markets Opportunities Fund.
Yus fund was the largest buyer of TCL Multimedia shares in the second quarter, according to data compiled by Bloomberg. The stock has surged about 34 percent this year, compared with the benchmark Hang Seng Indexs 5.4 percent advance.
Attractive Investment
We think TCL is an attractive investment because the migration toward more LED TVs will improve their product mix, said Yu. Yus fund acquired a 872,000 shares of TCL in May, according to data compiled by Bloomberg. The Chinese government is expected to focus on developing domestic consumption, which favors TCL, who sells most of their TVs within China.
TCL Multimedia is projected to report its second consecutive annual profit this year for the first time since 2003-2004.
Net income will jump 63 percent to HK$736 million this year, the average of eight analyst estimates compiled by Bloomberg. The TCL unit is rated buy by 10 analysts and hold by six others, according to the data.
China has announced 26.5 billion yuan in subsidies for five types of energy-saving appliances, including LCD TVs, TCL said in a June 6 statement.
TCL Multimedia said it has 259 models that qualify for the rebates, the most of any manufacturer.
Some Sony models qualified, according to spokesman Okada, without specifying how many. Panasonic spokeswoman Hosaka said none of its models are receiving subsidies.
At the Suning store where Hu bought his TCL set, there were nine TCL models with subsidies of 300 to 400 yuan each, while only three Sony models had the subsidy.
TCL were already expanding their market share before the subsidy program began, said Fung of Oriental Patron. Now the subsidy can help them further expand their sales of high-end products.
Surging TCL in China Adds to Woes of Japanese TV Makers: Tech - Bloomberg
The TCL Multimedia Technology Holdings Ltd. (1070) unit leapt past both Panasonic and Osaka-based Sharp Corp. in the first quarter to become the worlds fifth-biggest liquid-crystal display TV maker by market share, according to researcher to DisplaySearch. Sony Corp. (6758), which has said its counting on expanded sales channels in China to help narrow losses on TVs, came third behind South Koreas Samsung Electronics Co. (005930) and LG Electronics Inc. (066570)
TCL Multimedias rise in the ranks comes as a near postwar -high yen, falling TV prices, South Korean competition and slack demand in Europe and the U.S. have left Sony, Sharp and Panasonic with a combined 1.6 trillion yen ($20 billion) in annual losses. Panasonic has even lost the distinction of worlds largest high-definition 3D TV at 103 inches, bested again by TCL, which makes a 110-inch model.
The Japanese makers are in a lot of trouble at the moment, so they are taking their eye off the ball a little bit in China, said Jean-Louis Lafayeedney, an analyst at JI Asia in Hong Kong. That is good for TCL.
The retrenchment of Japanese electronics makers, which have idled production lines and slashed output of TVs to pare inventories, adds to the challenge of winning customers like Hu Fugui, a Beijing-based advertising executive.
Made in China
At a Suning Appliance Co. store in the capital last month, Hu watched Rise of the Planet of the Apes on a 46-inch TCL set as he shopped. He ended up buying TCLs Internet-ready L46V7300A-3D smart TV, for 6,599 yuan ($1,035). The price was 14 percent less than for the comparable Sony model and a 21 percent discount to the closest Panasonic set in the same store.
The quality of the TCL brand is just as good as anything you get with imports, Hu said.
To spur sales in China, TCL in April said it would open 3,000 new stores this year. The expansion will focus on the countrys interior, where many buyers have yet to switch to flat-screen TVs from older sets with cathode-ray tubes. Those consumers are also further from coastal markets like Shanghai and Guangzhou, where Japanese and South Korean imports have dominated sales.
Tier Drops
TCL Multimedia intends to boost sales in so-called third- tier to fifth-tier cities and rural areas while increasing market share nationwide, spokeswoman Linda Wang said by e-mail.
Sony expects its TV sales in China to outperform the industrys after it expanded its retail network in regional cities, not just Beijing and Shanghai, said Yasuhiro Okada, a Shanghai-based spokesman for the company.
We are trying to boost our position by expanding our retail network and by strengthening large sets and high-end models, Okada said. China is a very competitive market.
Sonys TV business lost money for an eighth straight year in the 12 months ended March 31, contributing to a record 457 billion-yen net loss. The unit will probably lose about 80 billion yen this fiscal year as sales drop 11 percent to 17.5 million sets, the company forecast in May.
China Target
Panasonic expects to stop losing money on TVs in the quarter starting Jan. 1, the company said in May. The Osaka- based company reported a record 772 billion-yen net loss last fiscal year and its TV unit has posted four consecutive years of losses.
China is important as part of Panasonics strategy to sell more products in developing countries, said Yuko Hosaka, a Tokyo-based spokeswoman. The company has seen sluggishness in China partly because of local competition, Hosaka said.
There is an overheated battle between TV makers, including local manufacturers, trying to win a large share of the market, Hosaka said. TCL is a big competitor to us that has a high market share.
Overseas Stumbles
TCL Multimedias success in China contrasts with its stumbles in expanding sales in Europe and North America. The company set up a joint venture in 2004 with Thomson SA, maker of RCA brand TVs, and then took over Thomsons business in North America and Europe in 2005.
The operations lost money and dragged TCL Multimedia to net losses that totaled more than HK$4.6 billion ($593 million) from 2005 to 2010. The company reported net losses very year except 2009.
The TCL unit returned to profit again last year after shutting plants in Europe in 2008, and ending sales of RCA- branded TVs in North America in the second quarter of 2010.
They can earn a profit in the China market, but the profit in their home market has been eroded by loss-making overseas operations, said Yuji Fung, an analyst at Oriental Patron Securities. According to management, they are now doing less overseas and building up the brand in the home market, which is driving a turnaround.
One way TCL Multimedia is appealing to Chinese consumers is by offering models that make it easier for to watch video, movies and television shows via the Internet.
Comparable Quality
Shopping at Suning, Hu stops to look at TCLs L46V7300A3D smart TV, scrolling through the sets Internet menu and selecting the icon for Tencent Holdings Ltd. (700)s online video site. With a click of the remote, hes watching actor Sean Bean in the film Cash.
Foreign brands including Sony and Panasonic have lost much of their allure for Chinese consumers now that local sets offer comparable quality at lower prices, said Hu.
Investors have also noticed the companys focus technologies, including light-emitting-diode displays, which yield sharper images, and the Chinese governments support for industry.
TCLs performance has gained the attention of investors like Lu Yu, the San Diego-based co-portfolio manager of Allianz AGIC Emerging Markets Opportunities Fund.
Yus fund was the largest buyer of TCL Multimedia shares in the second quarter, according to data compiled by Bloomberg. The stock has surged about 34 percent this year, compared with the benchmark Hang Seng Indexs 5.4 percent advance.
Attractive Investment
We think TCL is an attractive investment because the migration toward more LED TVs will improve their product mix, said Yu. Yus fund acquired a 872,000 shares of TCL in May, according to data compiled by Bloomberg. The Chinese government is expected to focus on developing domestic consumption, which favors TCL, who sells most of their TVs within China.
TCL Multimedia is projected to report its second consecutive annual profit this year for the first time since 2003-2004.
Net income will jump 63 percent to HK$736 million this year, the average of eight analyst estimates compiled by Bloomberg. The TCL unit is rated buy by 10 analysts and hold by six others, according to the data.
China has announced 26.5 billion yuan in subsidies for five types of energy-saving appliances, including LCD TVs, TCL said in a June 6 statement.
TCL Multimedia said it has 259 models that qualify for the rebates, the most of any manufacturer.
Some Sony models qualified, according to spokesman Okada, without specifying how many. Panasonic spokeswoman Hosaka said none of its models are receiving subsidies.
At the Suning store where Hu bought his TCL set, there were nine TCL models with subsidies of 300 to 400 yuan each, while only three Sony models had the subsidy.
TCL were already expanding their market share before the subsidy program began, said Fung of Oriental Patron. Now the subsidy can help them further expand their sales of high-end products.
Surging TCL in China Adds to Woes of Japanese TV Makers: Tech - Bloomberg
