Sony, Toshiba Leaving PDP TV Market

[Gregg Lengling]

Market sources said Sony and Toshiba are retreating from China's PDP (Plasma Display Panel) TV market and turning to LCD (Liquid Crystal Display) products instead. Their withdrawal from the market, along with Sharp's mass production of 45-inch LCD TVs, signals the PDP industry seems to be on the decline.

"It is too early to say that PDP TVs will be become obsolete," said Lu Renbo, deputy director for Research Department of Market Economy, the Development Research Center of the State Council of China, "The enhancement of LCD technologies and the decline of prices are indicating the maturity of LCD products and the marke demand remains strong."

He reckoned the withdrawl of Sony and Toshiba stems from the absence of core technologies, not the market itself.

According to chairman of Pioneer Electronics (China) Investment Co., Ltd., there are only five companies in the world capable of manufacturing plasma screens, which are Panasonic, Pioneer, FUJITSU HITACHI, LG Electronics, and Samsung. Previously, Sony and Toshiba had to purchase plasma screens from these five companies. But as the key parts of PDP TVs, plasma screens account for about 60% of the cost of PDP TVs. Therefore, the two companies could not obtain cost advantages.

"Japanese brands have no competitive edges on distribution channel and production cost compared with their local rivals," Lu noted. "In 2004, homegrown players XOCECO and Hisense are best sellers in the Chinese market."

"This is similar to Chinese domestic brands' replacement of Japanese peers in black-and-white TV market in early years. The dropouts of Sony and Toshiba, in reverse, show the advent of Chinese domestic makers' dominance of flat panel TV market," remarked Yang Lei, an analyst from CCID Consultant, "Chinese domestic brands still lagged behind Japanese rivals in the year before last year. However, they have grown quickly since last year. According to preliminary statistics, they surpassed Japanese counterparts in terms of market share in the year."

To catch the opportunities to further expand their market shares, domestic companies have increased their investments in the production of PDP TV sets. IRICO, the largest color tube manufacturer, announced on December 20, 2004 that it would focus on designing 42-inch to 50-inch PDP screens and modules this year. Eight days later, SVT Group, who acquired Littleswan and Xiaoya's washing machine and refrigerator businesses in succession, injected USD 80 million into purchasing core technologies of PDP TVs from Southeast University. XOCECO, on the basis of the one PDP TV production line, made investments in building another production line last November.

A manager with Dalian Toshiba Television Co. Ltd. spiked up the rumor, saying in an interview that the company will keep its marketing strategy in China. Sony also denied it. From The Economic Observer, Page 1, Wednesday, January 19, 2005 info@SinoCast.com

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