"Defeated by smartphones" "Shrinking market" Chinese TV makers' too dangerous predicament

　Recently, when I go to a consumer electronics store or a camera store, I feel a little sad when I see the TV sales floor. In the past, the TV section was the star of the store, and it used to be on the 2nd floor, if not the 1st floor.

　With NEC, Pioneer, and Hitachi withdrawing, Toshiba's color TV business Hisense, and Sharp selling its entire business to Hon Hai, the once- prosperous Japanese TV manufacturers are disappearing .

　When it comes to the competition among home appliance makers, there is an impression that the winner is China . It seems that we are hit by a double punch of entry .

　Here is a commentary article that was published in China's "Phoenix Network Technology".

Index 

• 1 Severe earthquake running to the “champion” of TV makers
• 2 Violent headwinds against “television” itself
• 3 “Smartphones” rush into the declining color TV market
• 4 TV makers looking for a way to survive
• 5 Summary of commentary articles
• 6 General comments

Severe earthquake running to the "champion" of TV makers

　According to the 2021 earnings report released by Sichuan Changhong, net profit attributable to shareholders was only 285 million yuan, compared with operating revenue of 99.632 billion yuan in the same year. The operating profit margin also decreased by 2.32% year-on-year to 9.97%. Changhong is famous as a color TV manufacturer, but the share of operating revenue of color TV business was 14.12%, lower than that of air conditioners and refrigerators.

　In the 1980s and 1990s, TV was the most important home appliance, and with the ever-expanding demand, Changhong, Konka, and Sovi became the top brands of traditional home appliance manufacturers.　Among them, Sichuan Changhong is one of the representatives of traditional home appliance brands.

　Changhong Color TV, converted from a military arsenal, began development and production of TVs in 1970. Riding the wave of reforms since 1978 (when the Cultural Revolution was denied), we decided to form the Changhong brand .　Since 1989, Changhong has been the top TV manufacturer in the nation in various economic indicators for 20 years .

Violent headwinds against “television” itself

　Since around 2013, the widespread use of smartphones has had an impact on the entire color TV industry. Around 2016, China's TV audience rating was around 70%, but three years later it plummeted to less than 30% .

　TV ratings also affect sales of color TVs. In 2020, China's TV sales will reach 44.5 million units, down 9.1% year-on-year, with a sales value of RMB 120.9 billion, down 11.7% year-on-year. 38.35 million units will be sold in 2021, the lowest record in the last 12 years.

　With the widespread use of smartphones and PCs, the rhythm of life has accelerated, consumers' way of viewing video content has shifted from television to mobile devices, and entertainment methods and methods of obtaining information have become increasingly diversified, enabling content to be obtained anytime, anywhere. By the way, the era of "watching TV" has changed to "playing with smartphones" in a blink of an eye .

　From small displays to large displays, color TVs, which were once functional home appliances, have been transformed into "interiors", and many young people buy a TV and then turn it on once every month or two . At the same time, young people are increasingly favoring larger screens, more portable, and less space-saving alternatives, such as projectors.

"Smartphones" rush into the declining color TV market

　Not only is there no growth point in the color TV market, but new players are emerging due to the age of the Internet.　In September 2013, Xiaomi launched its first TV product , marking its entry into the color TV market.

　At that time, Xiaomi's first model, the 47-inch 3D smart TV, was positioned as "the first TV for young people to buy" and was priced at 2,999 yuan. At that time, traditional TV manufacturers could only buy 40 inches at this price. Armed with "best value for money", Xiaomi TV quickly won over consumers, especially among Xiaomi fans.

　In recent years, major smartphone manufacturers have been intensifying competition in the AIoT field, and not only Xiaomi, but also Honor, Huawei, and OPPO have entered the TV market. , and are competing in the direction of high-end products .

　Other well-established smartphone brands such as Realme, Yijia, Nokia and Motorola are also launching new smart TVs overseas (in China).　Compared to traditional TV makers such as Changhong, Konka, and Souwei, smartphone makers understand what appeals to consumers. It's been embraced by the TV industry, and at the same time it's set it apart from the traditional TV makers.

　In 2021, Xiaomi will continue to lead the Chinese TV market with shipments of nearly 9 million units. As major smartphone makers enter the color TV industry one after another, traditional home appliance brands are hit hard, and at the same time, new fierce competition and industry restructuring are about to begin.

TV makers looking for a way to survive

　Under the worsening market environment, if we do not have sufficient growth points for our development capabilities and sales and marketing capabilities to compete with the leading group, we have no choice but to shift. Changhong and others have long since realized this, and have embarked on a difficult path of transformation. However, the question is how to make the transition, and traditional TV makers have yet to come up with a clear answer.

　Changhong has been trying to open up a path of diversification since the 00s. Batteries, air conditioners, and in 2005, expanded into mobile phones and IT products. In 2008, the super-hot real estate industry was also attacked. In 2017, we proposed a smart home and developed five businesses: smart control, safety, media, energy, and healthcare.　However, Changhong's path to pluralism has been spectacularly frustrating .

　According to the financial report, in the first half of 2021, the operating income of Changhong ICT (information and communication technology) will be 187.64 yuan, which is the highest figure in Sichuan Changhong, but the operating profit margin will be the lowest among all segments, with only large media. to the numbers. In addition, the operating margins of traditional home appliances such as air conditioners, refrigerators, and televisions were also not very good, with real estate at 28.75%, special services at 31.34%, and system engineers at 31.93%.

　Like Changhong, Konka, the "fallen aristocrat", has been trying to break away from the "diversification" turnaround and single-handed approach to color TV products over the past ten years. There are a wide range of related businesses, including real estate, smart manufacturing, new energy, and healthcare.

　Founded in 2018, Kangxinwei started research and development of semiconductor chips. The price is not high, and it has not contributed much to income. In 2021, the operating income of the semiconductor business was 322 million yuan, less than 1% of the total.　Konka tried to make a shortcut with semiconductors without spending much on R&D, but this was unrealistic. Rates remain low.

　Not only Changhong and Konka, but also Souwei, who sees the situation in the color TV market as being in danger, seeks new sources of food, and has launched four segments: multimedia business, smart appliances, smart system technology, and modern service business. Among them, the combined income from smart appliances and the service industry is less than 20% of the operating income, so it is difficult to say that they are successful .

　The solar power supply chain, which belongs to the multimedia business, has always been the focus of the market. So, at this point, it's hard to say whether Soui will be able to succeed in transforming from here.

　Soi is also a point of attention for electric vehicles . It's not just a power point car that appears only in presentations, but it's actually made and listed. It's just that the number of sales in 2021 is 4088 units . The root cause of this disastrous figure is the product power, and whether it is the design or the cruising range, Soi's car was nothing to see.

Summary of commentary articles

　Of course, no one can deny the efforts of these former big players in the color TV industry to make changes, but how they will take a new course and form a new image in the path of diversified development will eventually become a question. Nonetheless, none of the cross-sectoral developments that many traditional manufacturers have sought in recent years have been successful, and to date there have been few successful examples. Former top runner Changhong and others seem unable to get out of the quagmire of conversion.

　In any case, each technological revolution is accompanied by an update of the industrial structure, and the companies that once shined are weeded out. “Longevity” companies must sustain innovation and change with the times.

Overall review

　At the same time as entering an era where TVs do not sell well , smartphone makers popular with young people have entered the market with high cost performance smart TVs, which is a scary development for long-established manufacturers. It may be a bit of a new discovery that the major TV manufacturers that were buzzing in the 80's and 90's are no good not only in Japan, but also in China.

However, it is a little interesting that smartphone manufacturers' smart TVs are taking over　, even if "the TV itself is useless" is unavoidable . I thought it would have been a little more interesting if there was such a trend in Japan, but when I think about it, TV manufacturers in Japan were making smartphones.