Foreign TV brands account for only 1.9% of China’s market share

More than 49 million Samsung TVs are expected to be sold globally in 2020, up 11.2% from last year, according to data released by research firm Omdia. So far, Samsung TV sales have been the world’s largest for 15 consecutive years.

But in the Chinese TV market, the “global hegemon” has a market share of just 1.9 percent, compared with 27.9 percent worldwide.

In fact, not only Samsung, many foreign brands that once dominated the Chinese TV market, such as Sony, Sharp, Toshiba, etc., have either quit the market, or completely localized, or are in a dilemma.

Foreign TV Brands’ prices less competitive than Chinese TVs

The word TV has different meanings for people of different ages in China. For those born in the 60s and 70s, TV was a luxury item. It was the four indispensable items for marriage, and it was also a reflection of whether a family was well-off. For the post-80s and post-90s generation, TV was an important entertainment prop, although not cheap, but within the acceptable range; For the post-00s, TV is a consumable with an average price of around 2,800.

However, for foreign TV brands, their glorious period in the Chinese market stayed at the end of the last century and the beginning of this century. Statistics show that in the first quarter of 2010, Samsung Electronics Co. and Japan’s Sony Corp. took nearly 80 percent of China’s TV market share, leaving less than 20 percent for many small Chinese brands. Many Chinese TV brands relied on government promotions such as “home appliances to the countryside” and “old for new” to regain some face in sales.

However, with the improvement of TV production technology of Chinese color TV enterprises, the gap between Chinese TV and foreign TV brands is gradually narrowing, and more importantly, the advantage of domestic TV in price is gradually highlighted. Given that China imposes a 20% tariff on all types of televisions, TV recorders, TV recorders, video recorders and accessories, foreign brands can’t cut prices as fast as Chinese brands, even if they set up factories in China to cut costs.

Although Chinese brands are taking advantage of price cuts to compete with foreign brands in the TV market, the average price of TV sets has remained stable at around 4,000 yuan before 2012, and foreign brands and Chinese brands have been fighting back and forth.

What really saddens foreign TV brands is the invasion of Internet brands headed by LeTV, who use ultra-low-priced TVs to seize the market and rely on TV OTT content charges to recover profits. As a result, the Chinese TV market entered an era of vicious price wars, and many color TV manufacturers have been forced to downgrade their products to participate in low-end market competition at low prices. However, foreign TV brands are subject to many restrictions such as tariffs, shipping costs, and technology costs, and cannot compete in the way like Chinese manufacturers. Naturally, their market share was divided between Internet brands and domestic brands.

According to statistics from Ovid, during the Singles’ Day in 2020, 55-inch TVs priced at 2,580 yuan and 65-inch TVs priced at 3,811 yuan accounted for 47 percent of sales, while Samsung’s 55-inch TV sets are priced at 4,000 yuan and Sony’s 55-inch TV sets start at 3,950 yuan, without any price performance at all.

Foreign TV brands feel difficult to impress new Chinese consumers

In addition to the loss of cost-effective advantages, foreign TV brands’ marketing strategies are also outdated. With the rise of smart TV, Chinese TV manufacturers see TV as an information carrier and entertainment tool, focusing on giving full play to TV’s hidden advantages. Their user experience is better, and they can benefit through TV ads, entertainment apps and so on. This year, with the boom in video games, Hisense, Skyworth, TCL and others have even launched high-refresh TV sets specifically aimed at games, hoping to grab a share of the gaming display market.

Sony and Samsung, on the other hand, focus on the upgrading of TV hardware while ignoring the functionality, and their products are not in line with the appetite of Chinese people. Most Chinese consumers do not recognize Samsung TVs with fewer functions, which makes them gradually lose their competitive advantage in the Chinese market. Samsung TVs, for example, are built on their own software, which is less convenient to use than Android. After buying such a TV, Chinese consumers would have to buy a separate Android set-top box if they want to install an Android system. In addition, apps like Tencent Video, iQIYI and other video software can not directly project to the Samsung TV.

This is also one of the disadvantages brought by the globalization of foreign brands such as Samsung and Sony. when foreign brands plan to change product marketing, they often need to go through continuous research on a global scale by designers, and finally select the most suitable for globalization from all the designs. So it is difficult to for them come up with a targeted design for the Chinese market. Ultimately, the products produced by these brands would only become farther and farther away from local consumers.

In a bind

On September 4, 2020, Samsung publicly announced that it would close its only TV factory in China. Samsung said it was closing the TV factory to improve supply chain efficiency. However, industry insiders believe that the move may be closely related to Samsung TV’s declining market share in China.

Before Samsung closed its TV factory, more foreign-branded TVs had disappeared in the sight of Chinese consumers: in September 2009, Hitachi TV brand was represented by electrical appliances, and the contract manufacturer will be changed to TPV, a subsidiary of Fujian Guanjie; In August 2010, Pioneer LCD TV brand was handed over to the electrical appliance agency; In July 2010, Toshiba and TCL established a joint venture. Since then, all Toshiba color TV sets in the Chinese market have been manufactured by TCL. In November 2010, Guanjie acquired the TV business of Philips in China; In April 2011, the Sanyo TV brand was represented by Gome Electrical Appliances. In December 2013, Toshiba announced the closure of its factory in Dalian, China and the liquidation of Dalian Toshiba TV Co., Ltd…

As for whether Samsung will also give up the Chinese market, some industry insiders believe that although the Chinese market is not the main battlefield for Samsung, it has great potential for development. As one of the world’s top color TV markets, the Chinese market is difficult for foreign brands to give up.

In addition, the gradual departure of foreign brands from the Chinese market, in a sense, is also the result of the balance between human resources investment and revenue. Some manufacturers have adopted the way of brand leasing, and let local partners in China carry out the design, production and other management work, in order to promote localization.

Whether to stay or go, whether to advance or retreat, the Chinese color TV market will continue to make foreign TV brands worried for a good period of time.

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