Abstract

Although the Korean TV vendors got off to a later start than the leading Japanese brands in developing the Chinese LCD TV market, their sales have grown more rapidly.

Both Samsung and LG have adopted a vertical integration model to guarantee the supply of LCD panel for LCD TV production. Samsung already has its own 5G and 7G panel factories producing large-sized panel for use in LCD TVs, and is collaborating with Sony on the establishment of an 8G panel plant. The 7.5G panel factory that LG established in collaboration with Philips has already begun to ramp up production, ensuring that LG too will enjoy a stable supply of panel in the future. In terms of product technology, both Samsung and LG are world leaders in the LCD TV market.

With mature technology, steady panel supply, and freedom from the restrictions of other international companies operating in China, both Samsung and LG have been able to target the high-end segment of the Chinese LCD TV market. However, with leading Japanese vendors such as Sharp and Sony - which have very strong brands - now working to strengthen their LCD TV operations in China, Samsung's and LG's shares of the high-end market segment are beginning to be eroded.

The main source of panel for the Chinese domestic LCD TV vendors is Taiwanese panel manufacturers. In addition, combined with low LCD TV manufacturing costs and powerful distribution networks, the Chinese vendors have been able to adopt a low-price strategy. In the price-sensitive Chinese market, this strategy has proved to be highly effective. In terms of product positioning, Samsung and LG now find themselves in an uncomfortable position mid-way between the Japanese LCD TV vendors and the Chinese vendors.

Appendix

Glossary of Terms

List of Companies