The "2017 China TV Market Semi-Annual Summary Report," released during the first half of CRC's 2017 color TV industry research, provides a detailed analysis of the domestic TV market's performance. In the first half of 2017, China’s domestic color TV retail volume stood at 21.81 million units, marking a year-on-year decrease of 7.3%. Meanwhile, retail sales reached 74 billion yuan, representing a year-on-year increase of 4.3%. According to Weng Zhenhua, General Manager of AVC's Black Power Division, the challenges facing China's color TV market in H1 2017 can be summarized in four key areas:
Firstly, the prolonged price hikes in upstream panels were unprecedented. Starting in April 2016, the rising cost of panels became a major concern for the TV industry. This surge persisted until May 2017, making it the longest price increase cycle in panel history. Small and medium-sized panels, particularly 40-inch and 43-inch FHD models, were the most affected, with respective price hikes of 20% and 18% in June 2017.
Secondly, the difficulty of maintaining profitability in the TV industry, which dipped below 1% in H1 2017, posed significant operational challenges. With slim profit margins, companies faced mounting financial pressures and personnel turnover. To counteract these challenges, major players resorted to cost-cutting measures and scaled back their front-line operations.
Thirdly, the diminishing Internet红利 (dividend) was evident. By the end of 2017, China’s Internet penetration rate had reached 53.2%, a year-on-year increase of 2.9%, but the total user base had stabilized. The average weekly Internet usage time dropped slightly to 26.4 hours. Consequently, the online retail volume of color TVs fell to 7.68 million units, accounting for 35% of total sales, a 1 percentage point decrease from the previous year.
Fourthly, the aggressive pricing wars in 2016, which included 18 promotions across various scales, backfired. These promotions, leveraging low prices as a competitive strategy, successfully lowered consumer price expectations but left manufacturers grappling with reduced profit margins.
Despite these challenges,亮点 (highlights) emerged. First, foreign brands staged a comeback. Domestic traditional brands' market share dropped slightly to 69.1%, while Internet brands fell to 12.0%, a 4.0 percentage point decrease. Conversely, foreign brands saw their share rise to 18.9%, a 4.3 percentage point increase. Notably, Sharp posted impressive growth, with its retail volume reaching 1.26 million units, a 93.5% year-on-year increase.
In terms of display technology, OLEDs, quantum dots, and laser TVs continued to evolve. OLED TV penetration reached 0.2%, up 0.1% year-on-year, with six brands now active in the Chinese market. Laser projectors also gained traction, with a penetration rate of 0.1%, up 0.07 percentage points. Artificial intelligence TVs marked a new frontier, with many brands launching AI-powered sets in H1 2017.
Smart TVs continue to dominate, with a penetration rate of 85% in H1 2017. Applications like video, gaming, education, and shopping enriched user experiences. Additionally, the growing preference for larger screens, especially 55-inch and above, highlighted consumer demand for premium products.
Looking ahead to H2 2017, panel prices are expected to stabilize and potentially decline in Q4, easing manufacturing costs and fueling end-of-year promotions. AVC predicts a total market size of 47.92 million units, a 5.8% year-on-year decline. While challenges remain, the second half of the year is poised to show improvement, with a projected market size of 26.12 million units, a 4.6% year-on-year decrease.
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