BEIJING - Despite good sales driven by World Cup fervor, TV manufacturers' profits keep dropping, sales remain weak and the shadow of the Internet looms large.
Aggregate sales fell 9 percent year on year to 20.8 million in the first half, following last year's downward streak. Financial reports from leading manufacturers were disappointing. Sichuan Changhong Electric Co saw its profits fall over 90 percent in the first quarter, followed by Konka's 33 percent decline and 8 percent for Hisense.
The World Cup has helped sales, but the momentum is unlikely to continue and the influence is limited. China Securities Journal reports that the last two months are atypical, and the mini-boom will end with the sports event.
TV manufacturers profits have dawdled in recent years. Their profit ratio was estimated at 1.9 percent in 2013. Even during the good old days of 2011 and 2012, when government subsidies were strong, the ratio never surpassed three percent.
With the arrival in the market of the Internet firms led by Lenovo and Xiaomi, TVs are getting smarter and cheaper. They have rich video content: strong competition for the traditional TV sets. Content and consumer experience will soon overtake product quality as the main battleground for future competition.
The big,traditional laggards have started to respond, basically by copying the ideas of the competition, with smart sets similar to their tech savvy competitors, but market outlook for those products is pretty grim.
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