Flat panel TV production surged 42% in the first nine months of 2008. The China Securities Journal reports that Chinese manufacturers are now looking to self-produce components to lower costs and increase their competitiveness in the thriving sector.

Bai Weimin, director of the China Electronic Video Association, told a quarterly TV manufacturers seminar that the countries major manufacturers should cooperate on component production to reduce reliance on imports and reduce costs by 10-15%.
 
He said Chinese TV makers needed to shift from a war over prices to a war over value. They should redirect their attention towards product differentiation and after-sales service and acquire upstream manufacturing resources.

The majority of flat screen TV makers in the country have begun mass production of modules, a key component in flat screen TVs. More advanced than traditional cathode ray tube (CRT) TVs, flat screen TVs include liquid crystal display (LCD) TVs and plasma display panel (PDP) TVs.
 
There are around 400 million TVs in circulation in China. With a typical replacement rate of once every eight years over the past decade, China’s relatively new TV market should be close to entering a new replacement phase from this year, Bai said. This will support the rapid expansion of the domestic TV making industry for the next three to five years.
 
Sun Guoxin, a senior official with the China Electronic Video Association, said the CRT TV sector is shrinking quickly while burgeoning exports of LCD TVs are proving a strong driver for China’s growing TV making industry.
 
Statistics show the country produced 64.59 million TVs in the first nine months of the year. CRT TV production dropped 8% to 34.5 million while flat panel TV output surged 42.3% to 30.09 million. It is expected China will produce 40 million flat panel TV sets over the full year, accounting for 40% of global production.
 
“Exports are of great significance to the TV making industry,” Sun said. “China exported 35.59 million, or 55.1%, of the TVs it produced during the first three quarters of the year; 19.8 million were flat panel TVs.”
 
Exports of LCD and PDP TVs chilled in the third quarter as the tumbling global economy undermined the purchasing power of consumers around the world, particularly in the hard-hit United States.
 
The flat panel TV making sector has become more consolidated this year. The combined output of the eight largest players climbed 60% in the eight months to August, well above the industrial average.
 
The latest report on the Chinese flat panel TV market released by AVC, a consultancy, shows Hisense Electric (600060.SH), Skyworth Digital Holdings (0751.HK), Samsung Electronics (005930.SEO), Sony Corporation (6758.TKO) and Sharp (6753.TKO) are the top five flat panel TV makers in the Chinese market by market share.
 
Suning Appliances (002024.SZ) predicts in its latest report on the outlook for China’s flat panel TV market that 20 million sets will be sold in 2009, up 50% on 2008.
 
Its report also reveals that flat panel TVs have already gained solid penetration in first-tier cities on the mainland; can expect rosy demand from second- and third-tier cities; that sales of 40 inch TVs or larger will remain steady; and that sales of 32-inch TVs or smaller will boom.

This article originally appeared in Chinese in the China Securities Journal on October 15, 2008. The China Perspective takes no responsibility for the accuracy of the original article.