Abstract

Changes in TV Technologies and Production Locations

The differences in TV signals in various European nations as well as high import tariffs on TV sets due to the governments' intentions to promote local TV industries have helped create a market in which there are numerous international and regional TV brands.

The international TV brands initially entering Europe's market first needed to choose an appropriate production base. Of the potential locations, Britain's investment incentives and Barcelona's proximity to key markets and sea transport as well as its relatively cheap labor have attracted most of the international TV brands.

After Eastern Europe's gradual opening, inexpensive and plentiful labor, proximity to key markets, and the governments' efforts to attract foreign investment has made this region a strong magnet for foreign investment. Eastern Europe has become the new choice for international TV brands to set up production sites. In addition to the four Eastern European nations mentioned above, Russia has its attractions. The nation has levied a 20% import tariff on CRT TVs and recently has established a special economic zone near the European Continent in Kaliningrad, which is exempt from Russian import tariffs. As a result, many international TV brands are queuing up to enter the Russian TV market.

As international TV companies shift their production bases to Eastern Europe, their Western European plants have continued TV R&D and transfer of production know how; these plants have also been shifted to production of high-end LCD TVs. In Eastern Europe, companies are using the new plants for large-volume production of LCD TVs to boost their share of the European market.

The European market accounts for an increasingly important part of the global LCD TV business. As Europe levies a 14% import tariff on LCD TVs, those TV companies without EU production facilities will face cost pressure at the same time as competition intensifies.

Some international brands that still lack production facilities in Europe have for the time being placed LCD TV orders with local contract manufacturers. For example, Tatung has taken LCD TV orders from some Japanese companies, and FIC's Czech Republic plant is working together with Taiwan Sampo, Teco, and Nexgen for production. However, as Japanese companies have announced plans for setting up factories in Eastern Europe to expand their market share and control product quality of large LCD TVs, those which have established production bases in Europe will be losing their competitive advantages.

Appendix

List of Companies