Abstract

The key components for LCD TVs are LCD panel and ICs. Currently, the panel supply chain concentrate in Japan, Korea, and Taiwan. Chinese LCD TV makers have heavily relied on panel makers in these three countries and IC suppliers in Europe and the United States. Since the difference in panel quality produced by Japanese, Korean, and Taiwanese manufacturers is very limited, and all of them have build up economies of scale; it is thus difficult for Chinese companies to break into LCD panel manufacturing. The second-tier Chinese LCD TV makers have therefore focused their attention on IC R&D, with the aim of improving the picture quality of their LCD TVs. Konka has adopted DSP technology, while Changhong has developed its TV signal processing chip based on quantum technology, and Haier has emphasized the development of digital home products.

In their LCD TV businesses, Konka, Changhong, and Haier still lag well behind the first-tier Chinese vendors and the big international vendors in terms of market share, technology, and ability to keep production costs down. They have tried to overcome these weaknesses by developing new distribution channels; examples include the establishment of online sales capabilities by Konka and Changhong.

All three of these second-tier vendors have begun to appreciate the importance of after-sales service. Although Haier's LCD TVs are relatively expensive, sales of these TVs have remained strong due to Haier's efforts to provide first-class after-sales service. Haier hopes its reputation for after-sales can help the company raise competitiveness.

Appendix

List of Companies