TV shipments in China plunged in the third quarter of this year. The reason is that the government subsidies for purchasing TVs and home appliances are running out. In response to the slump in domestic demand, Chinese TV makers such as Hisense, TCL, and Xiaomi are turning to Asia and Australia. They are seeking new markets to make up for declining demand for liquid crystal display (LCD) TVs in China. These corporations are also eyeing North America and Europe, but they have yet to post clear results there, as Samsung Electronics and LG Electronics lead the premium market with organic light-emitting diode (OLED) TVs.
According to a third-quarter market analysis report from research firm Omdia obtained by ChosunBiz on Dec. 2, TV shipments in China totaled 7,625,400 units during the period. That is down 12.2% from the same period a year earlier (8,680,700 units). Of that, shipments of OLED TVs, a premium category, accounted for just 0.3% (20,900 units).
Compared with the 0.6% decline in global TV shipments during the period, the Chinese market posted a much steeper drop. Global TV shipments in the third quarter came to 52.5 million units. Omdia said the rapid contraction of the Chinese TV market "shows how dependent the recent growth has been on demand that was artificially boosted through government subsidies."
The Chinese government implemented a domestic consumption stimulus policy called "trade-in of old for new" (以舊換新), which supports replacing old products with new ones. Under this policy, buyers of TVs and home appliances receive subsidies equal to 15%–20% of the sales price. This year, it increased the special Government Bonds fund to 3 trillion yuan (about 62 trillion won) from the previous 1.5 trillion yuan and broadened the range of products eligible for trade-in.
As a result, China's domestic market saw a temporary revival. According to China's Ministry of Commerce, sales under the trade-in program from January to May this year totaled 1.1 trillion yuan (about 228 trillion won). Nationwide retail sales from January to April also rose more than 4% from a year earlier.
However, around April to June, some regions such as Guangzhou, Chongqing, and Gansu Province began to halt subsidies. As the third quarter progressed, more regions suspended support due to exhausted subsidies, reducing TV demand and leading to declines in shipments by major Chinese brands, according to Omdia.
In the third quarter, shipments by major Chinese TV makers fell year over year by ▲Xiaomi 353,300 units (from 1,648,500 to 1,295,200) ▲TCL 194,000 (from 1,583,700 to 1,389,700) ▲Hisense 98,700 (from 1,838,800 to 1,740,100) ▲Skyworth 53,400 (from 1,472,100 to 1,418,700).
It is also analyzed that demand fell because many consumers had already replaced their TVs under the subsidy policy that has continued since last year. Omdia said, "TV demand in China increased last year as government subsidies were paid," but added, "With a large number of TVs already replaced and subsidies depleted, shipments in China are likely to remain constrained for the time being."
Chinese makers are targeting the Asia and Australia TV markets in response to the domestic slump. Omdia said TV shipments in these regions rose 7.7% year over year in the third quarter to 9,913,400 units on the back of aggressive marketing by Chinese corporations.
However, in North America and Europe, Chinese makers appear to be failing to notch notable results. In the premium TV market priced at $1,500 or more in North America and Europe, OLED TVs accounted for 65.9% of sales last year. In the third quarter, LCD TV shipments in Europe fell 5.6% year over year to 9,023,100 units. By contrast, OLED TVs rose 14.2% year over year during the period to 618,600 units.
Based on cumulative third-quarter shipments, Samsung Electronics led the global TV market with a 17.9% share. However, its share fell 0.2 percentage points from a year earlier. TCL (14.3%) and Hisense (12.4%) ranked second and third despite the domestic slump, tightening the chase. LG Electronics stayed in fourth at 10.6%.
Industry watchers see the technology gap in large OLEDs between Korea and China at about one year. A display technology expert who requested anonymity said, "The large TV market ultimately hinges on panel competitiveness, and while the gap between China and Korea is narrowing, there is still about a one-year difference," adding, "Chinese TV makers, which had been making research and development and facilities investments on the back of solid domestic demand, had been speeding up their pursuit of Korean corporations. But with growth recently slowing, it's a situation where domestic corporations have bought some time."