What happened to the color TV industry? Is it really going to be left behind?

Judging from the first quarter performance of color TV enterprises, the profits of the five largest color TV manufacturers in my country all declined, making it the worst start for the color TV market in recent years. Bai Weimin, executive vice president of the China Electronic Video Industry Association, said in an interview with a reporter from China Electronics News that Chinese color TV enterprises have really worked very hard, continuously innovated products and technologies, and achieved differentiated development. However, factors such as the increasingly saturated color TV market and rising raw material prices have put complete machine manufacturers under tremendous pressure.

Profits of the five major color TV manufacturers declined

Since the end of April, my country's color TV manufacturers have successively released their performance reports for the first quarter of 2017. According to the statistics of the financial reports released by various manufacturers, the net profits of my country's five major color TV manufacturers have all shown a year-on-year decline, including Hisense and Skyworth, which have always had good profit levels in previous years, but this time they also saw a sharp decline, making it the worst start for the color TV market in recent years.

In terms of operating income and net profit in the first quarter, Sichuan Changhong's operating income was 16.629 billion yuan, up 7.93%; the net profit attributable to shareholders of the listed company was 32.9763 million yuan, down 84.75% year-on-year. Hisense Electric's operating income and profit both declined, with operating income of 6.703 billion yuan, down 5.98%; the net profit attributable to shareholders of the listed company was 269 million yuan, down 49.53% year-on-year.

Shenzhen Konka A's operating income was 4.686 billion yuan, up 15.08% year-on-year, but the main business suffered a certain amount of loss, and the company's non-recurring gains and losses had an impact of 45.02 million yuan on net profit; TCL Multimedia's turnover was 8.48 billion Hong Kong dollars, up 15.3%; gross profit fell 3.5% from the same period last year to 1.34 billion Hong Kong dollars, and gross profit margin fell from 18.8% in the same period last year to 15.7%. In addition, Skyworth Digital also issued a profit warning, saying that the preliminary review of Skyworth Group's unaudited comprehensive management accounts for the year ended March 31, 2017, expected a 40% drop in profits.

Faced with the bleak predicament of the color TV market, several color TV executives said in interviews with reporters that the color TV market is indeed under great pressure this year, especially the rising costs of raw materials and labor, which have put manufacturers' profit levels under severe test.

"The color TV market is very turbulent this year. In fact, the current decline in the color TV market is not a problem of a single brand, but the overall market conditions are not good. We have combined the sales data of all brands and found that the average sales volume of color TVs in the first quarter of this year fell by 13%. LeTV's decline was very severe. Only individual brands such as Sharp and Xiaomi saw an increase in sales." Peng Xiandong, general manager of the consumer electronics division of CMM, said in an interview with a reporter from China Electronics News.

He believes: "There are two reasons for the sharp decline in the color TV market this year. First, the scale of China's TV market is stable. Good sales in the previous year will inevitably overdraw the sales scale of the next year. We predicted in 2016 that the market would decline this year. Second, the average price of color TVs has increased, and the price of panels has continued to rise. The superposition effect has put greater pressure on manufacturers."

Upstream and downstream companies face "two different situations"

The reporter noticed that the financial reports released by major color TV manufacturers all mentioned that "the sharp increase in raw material prices has caused a decline in gross profit margins." In fact, the prices of LCD panels and memory chips have continued to rise since the second half of last year, which has greatly increased the costs of color TV manufacturers. Some manufacturers could not bear the pressure since the end of last year and began to increase the prices of TVs. However, for the color TV industry, which "only falls but never rises," price increases seem to be unacceptable to consumers, which puts manufacturers under greater pressure and causes a series of chain reactions in the market.

Peng Xiandong said: "According to the calculation of China Market Research, for every 100 yuan increase in the price of TV sets, sales volume will decrease by 2% to 3%. Last year, the average price of TV sets was 2,900 yuan, but this year the average price has reached 3,400 to 3,500 yuan. We found that from September last year to April this year, the price of the same model of TV has even increased by 20%. We predict that the market situation will not improve significantly before the third quarter of this year, and the market will improve from the fourth quarter to the first quarter of next year."

Unlike the difficulties faced by terminal manufacturers, panel manufacturers are doing well, with profit levels hitting a four-year high. This has created a "heaven and hell" situation in the upstream and downstream industries of color TVs.

TCL Group announced that the group's operating income and net profit both achieved significant growth in the first quarter of this year. One of the main reasons is that the production volume of CSOT increased significantly year-on-year, and the prices of major products increased year-on-year, which led to a significant year-on-year increase in net profit. During the reporting period, CSOT achieved sales revenue of 6.54 billion yuan, a year-on-year increase of 51.4%, and EBITDA of 2.59 billion yuan. According to the management of CSOT, CSOT's net profit in 2017 is expected to increase by more than 50% compared with 2016.

Similarly, BOE's first quarter 2017 performance forecast is also promising, with net profit attributable to shareholders of the listed company expected to be between 2.3 billion yuan and 2.5 billion yuan in the first quarter, more than 20 times that of the same period last year.

Li Yaqin, deputy general manager of Qunzhi Consulting, told China Electronics News that from the supply side, panel prices are still high, but we predict that TV panel prices will drop from the third quarter, which will drive down the cost of color TVs. However, whether color TV manufacturers can restore profitability depends on comprehensive assessment, not just panel prices.

What can save the color TV market?

As home appliance companies, the profits of color TV manufacturers are declining, while those of white appliance companies are thriving. In the first quarter of this year, Haier, Midea and Gree, the three major white appliance giants, all made huge profits. Qingdao Haier's net profit was 1.46 billion yuan, a significant increase of 51% year-on-year; Midea's net profit was 4.353 billion yuan, a year-on-year increase of 11.41%; and Gree's net profit was 4.015 billion yuan, a year-on-year increase of 27.06%. What is the reason behind this gap? How can color TV manufacturers save the market?

In order to alleviate the adverse effects of the increasingly saturated color TV market, rising raw material prices and fierce competition from Internet brands, color TV manufacturers have begun to make plans in both the domestic and overseas markets.

TCL Multimedia said that the color TV industry still faces great challenges. In the second half of the year, TCL will continue to implement the "two increases and two decreases" strategy, increasing the proportion of high-gross-profit products and low-cost channels, while reducing system costs and asset turnover days to improve profitability and achieve sustainable growth.

However, in reality, the domestic market is becoming increasingly saturated, and it is not easy for color TV manufacturers to achieve high profit levels like in previous years. In this regard, Bai Weimin suggested that the market share of 50 million color TVs in my country is indeed too low, and we need to find ways to promote the expansion of the market. Now there are many TVs that have been in safe use for more than 7 years and are still in "service". my country should strengthen consumers' safety awareness and speed up the replacement of TVs to relieve the pressure on manufacturers.

In addition to stabilizing the domestic market, my country's color TV manufacturers have also begun to accelerate their overseas market layout. Hu Jianyong, deputy general manager of Hisense Electric, believes that although the color TV market started weak in the first quarter of this year, there are also bright spots, with sales of mid-to-high-end TVs increasing significantly year-on-year. However, the domestic market has entered a period of stable development. In the future, Hisense's global market competition will rely on improving product technology on the one hand, and will continue to participate in the sponsorship of top international events on the other hand to enhance its influence in overseas markets, especially in the high-end market. Hisense hopes that its overseas sales will exceed its domestic sales throughout the year.

Regarding the current difficulties faced by my country's color TV manufacturers, Peng Xiandong suggested that for brand manufacturers, during this special period, on the one hand, they should do a good job in basic work and put product research and development first; on the other hand, manufacturers should also reasonably control inventory to avoid losses caused by panel price cuts.

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.