Color TV industry is frozen, foreign brands' market share has achieved "three consecutive jumps"

The color TV industry not only had a cold start this year, but its "frozen period" also continued until the end of May. The "Color TV Market Analysis in May 2017" report released by Aowei Cloud Network on June 22 showed that although the color TV market had slowly recovered in May, the situation was still not optimistic. In contrast to the overall sluggish trend, after the "resurrection" in the first quarter, foreign brands experienced strong growth in May and during the 6.18 period, and achieved a "three-time jump" in market share. In addition, the color TV industry, which suffered a market slump in the first half of the year, has become the focus of attention in the industry on how it will perform in the second half of the year.

The reasons for the cold reception of the color TV industry in the first five months of the review are revealed

Compared with the bumper harvest in 2016, my country's color TV market showed signs of fatigue from the start in 2017.

According to the data from China Market Research Group, in the first quarter of 2017, although the average price of color TVs reached 3,219 yuan, an increase of 6.1% over the same period last year, the market retail volume was only 11.38 million units, a decrease of 12.5%; the retail sales amounted to 36.6 billion yuan, a decrease of 7.3% over the same period last year. At the same time, according to data from Aowei Cloud Network, in the first quarter of 2017, the sales of domestic traditional TV brands accounted for 73.0%, a decrease of 1.6% over the same period last year; the sales of Internet TV brands accounted for 10.8%, a decrease of 4.1% over the same period last year; and the sales of foreign brands accounted for 16.2%, an increase of 5.8% over the same period last year. In the first quarter, except for the "resurrection" of foreign brands, the entire color TV market was in a state of "misery".

However, the "lament" is not over yet, and the downturn in the color TV industry continued into May. According to data released by Aowei Cloud Network, the sales volume of color TV market in May 2017 was 3.11 million units, down 10.2% year-on-year and 7.1% month-on-month; the sales revenue was 11 billion yuan, up 8.1% year-on-year and down 10.0% month-on-month. In terms of brand camp share, domestic brands accounted for 69%, up 2.4% year-on-year; Internet brands accounted for 10%, down 8.1% year-on-year; foreign brands accounted for 21%, and their share continued to rise.

The high-end trend of the industry has raised the average market price, resulting in a significant year-on-year increase in sales in May, but the month-on-month sales volume and Internet TV brand share continued to decline. Why did the color TV industry experience a "frozen period" of nearly half a year in 2017?

Dong Min, vice president of AVC, believes that since the second half of 2016, the price increase trend of various industries and civilian goods has intensified. The cost pressure of home appliance companies has been fully manifested in the first half of 2017. The prices of the three major home appliances, refrigerators, washing machines and color TVs, have all rebounded to varying degrees and the sales volume has declined. The price increase of color TV panels has continued for three quarters, with a long period and a high amplitude, which is the highest in history. In addition, the concentration of color TV brands is low and there are many new brands, so the risks and impacts brought by cost growth are more severe. In addition, the multiple regulatory policies for real estate have also exacerbated the instability of the color TV consumer market.

Philips TV's relevant person in charge said that from a macro perspective, my country's economic development has entered a new normal, and the economic downturn has affected the growth of TV consumption. From the perspective of the color TV industry itself, the increase in panel prices has increased the unit price of TVs, and it will take time for the market, which has been accustomed to low prices, to accept high prices. These two factors have prevented TV sales in the first half of 2017 from replicating the high growth trend of previous years.

The head of a traditional TV brand told reporters that the growth of color TV performance in the past two years is related to the wild growth of the industry. Under the stimulation of the new operating model of Internet TV brands, consumers are prone to impulse consumption, thus digesting market demand in advance. At the same time, the record high sales of color TVs in 2016 also overdrew this year's sales scale to a certain extent.

Under multiple pressures, domestic traditional TV brands that have advantages in the upstream and downstream industrial chains are still struggling, and Internet TV brands that use low prices as their entry point will find it even more difficult to get out of the situation unscathed.

Industry insiders pointed out that Internet TV brands have no control over the parts and assembly of the whole machine. Due to the rising costs in the first half of the year, they have no choice but to raise prices to survive, but this has made them lose their biggest magic weapon, price advantage. At the same time, facing the traditional TV brands with more advantages in technology, manufacturing foundation and supply chain management, they have supplemented content resources, online channels and gradually built user operation systems, and Internet TV brands have fallen into a more unfavorable situation.

In fact, in order to gain more living space, many Internet brands are also developing high-end fields, focusing on offline channels, and moving their operation strategies closer to traditional TV brands. The complementary integration between brand camps in the color TV industry is unfolding in both directions.

Sharp and Philips drive the revival of foreign brands

In sharp contrast to the almost unanimous trend of continuous decline, foreign brands all achieved good results in the first half of the year.

Dong Min told reporters that the growth in the share of foreign brands was mainly driven by Sharp and Philips.

It is understood that Sharp and Philips not only achieved a bumper harvest in total sales, but also fought a good battle in the offline market, which has always been difficult to generate growth. According to offline monitoring data from CMM, in the first quarter of 2017, the year-on-year growth rates of Sharp and Philips in the offline color TV market reached 35.3% and 15.7% respectively, while during the same period, domestic color TV giants Hisense, Skyworth, TCL, Changhong, Konka, as well as foreign brands such as Samsung and Sony all showed negative growth of more than 10%.

Why have Sharp and Philips become the "inharmonious" color in the overall market? Industry analysts believe that their outstanding performance is due to their multi-dimensional strategic adjustment and reform.

As for Sharp, its performance growth is mainly due to the five major policies it launched in the Chinese market after being acquired by Foxconn: First, the Internetization of traditional televisions. On the basis of the emphasis on hardware in the past, it cooperates with content providers such as iQiyi and Youku to make up for the shortcomings in content; second, breaking the high-price barrier and implementing the "Tianhu Plan" of buying big and giving small away; third, using the industrial chain advantages of Foxconn and Sharp panels to control upstream panel costs; fourth, acquiring channel providers to expand offline third and fourth-level channels; fifth, combining with real estate to cater to the trend of consumption upgrading.

In addition, Sharp has also invested in advertising and marketing, sponsoring a number of comprehensive entertainment programs to renew its brand image. At the same time, in terms of product design, it has abandoned the traditional design by Japanese designers and localized the design to deeply explore the core needs of consumers.

The leap in Philips' performance is largely due to its two major strategies - "Three Good TVs" and "New Retail Model".

On the product side, Philips has launched the "Three Good TVs" strategy, aiming to achieve a combination of "good hardware", "good content" and "good brand" in TV products; in terms of channels, Philips has launched a "new retail model", and started a strategic partnership with Suning, using the "Internet +" experience store format to seize market share in first- and second-tier cities.

It is worth mentioning that, unlike the barbaric growth of offline stores in the past, Philips now "opens one store after another", with a more steady pace. At the same time, its offline experience stores are directly managed by the headquarters, so that it can carry out targeted promotion for each store and realize the concentrated blasting of central resources at a certain point.

"In general, Philips' entire strategic adjustment borrowed the Internet's operating model: first, the operating pace is faster; second, there are more popular products; third, the intermediate process of developing new products is shortened; fourth, marketing is adapted to the thinking of young people." said a relevant person in charge of Philips TV.

As the saying goes, "a tall tree attracts the wind." While the sales of Sharp and Philips have increased, many doubts have also emerged. Some believe that they are deviating from their original high-end positioning, engaging in a "price war" and moving towards "low-end".

In response, Philips said: "Philips has the most complete product line in the industry, ranging from small-size LED LCD TVs to large-size curved OLED TVs, with product prices ranging from a few hundred yuan to 30,000 yuan. There is no price war. Philips TV prices are relatively low because we have the advantage of large-scale factory procurement and shipment, which can minimize product costs and bring consumers low-priced but not low-quality products."

Will the ice of the color TV industry be broken or will it continue to be sluggish?

Recently, the "6.18" promotion, which was regarded as the last straw for the color TV industry in the first half of the year, came to an end. According to statistics from Aowei Cloud Network, during the 6.18 promotion period this year, my country's color TV market reversed the downturn since 2017. The online sales volume in the three weeks of the promotion period was 1.627 million units, a year-on-year increase of 9.0%, and the sales amount was 4.75 billion yuan, a year-on-year increase of 32.2%, showing the "most significant growth" in the first half of the year.

However, in terms of brand camp share, domestic traditional brands accounted for 50% during the 6.18 period, down 2% year-on-year; Internet brands accounted for 24%, down 11% year-on-year; foreign brands accounted for 26%, up 13% year-on-year, and their share rose again, and they were the only ones to achieve growth.

In this regard, industry analysts believe that the "triple jump" in market share and the increase in performance of foreign brands in the first half of this year is a "rebound from the bottom" and is temporary, and has not changed the "hopeless" situation in the Chinese market.

But at the same time, some industry observers also said that under the leadership of Sharp and Philips, the upward trend of foreign brands will be more obvious in the future.

In fact, not only do the industry hold different views on the resurgence of foreign brands, but there are also two voices on the trend of the entire color TV market in the second half of the year.

Some media have written that due to factors such as the loosening of upstream panel prices, the color TV market will break the ice and usher in a "Jedi rebound."

However, Hong Shibin, an observer of the home appliance industry, believes that whether the entire color TV market can recover depends on the performance of both the upstream and downstream ends. The upstream is the cost of components, and the downstream is consumer demand. "Whether the color TV market can recover in the second half of the year is unknown, but I tend to be pessimistic. Unless color TV companies take some actions to improve their performance in the second half of the year, I don't think demand will improve overall."

Dong Min said that in the long run, there are still factors supporting the positive development of my country's color TV industry. "Long-term low-price competition has caused corporate profits to decline and become quite exhausted. Cost growth has forced the improvement of product structure, which has brought short-term pain, but in the long run, it will boost the operation of the entire industry. In addition, the upstream raw material industry of color TVs is gradually leaning towards China, and the development of the Internet of Things has brought smart homes to the forefront, which are all positive factors for the development of China's color TV market."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.