Domestic brands challenge high-end foreign brands

As the overall growth rate of the color TV industry slowed down, and the market share of the Japanese brand market dropped drastically, Skyworth Digital, a domestic color TV industry leader listed on the Hong Kong Stock Exchange, surrendered the best semi-annual report in 12 years of listing. This is obviously related to the fact that Skyworth Digital’s long-standing strategy of launching new products prior to its peers and the proportion of sales of high-end and middle-end products has gradually increased.

According to Yang Dongwen, president of Skyworth Group, “The reason why high-end brand strategy is proposed is to promote the transformation and upgrading of traditional manufacturing industries. Second, with the accumulation of domestic brands in technology and other areas, certain domestic brands such as Skyworth have already faced challenges. Foreign brands have long been able to control the high-end product market."

For Skyworth Digital, which has a net profit of more than 1 billion Hong Kong dollars for three consecutive years, and long-term gross margin in the domestic color TV industry, it is undoubtedly the color TV giant that has the most impact on high-end products in the domestic color TV industry.

According to the semiannual report just released by Skyworth Digital, its gross profit margin for the first half of 2012-2013 fiscal year remained at a high of 20.1%, of which the gross profit margin of domestic color TV business reached 22% of the industry's highest level.

At the same time, as the sales volume achieved has clearly exceeded the Group's forecast at the beginning of the year, the Group raised its sales target for color TV products in the domestic market in FY2012 from 7.6 million units to 8.1 million units, which will increase by 15% from the previous year. . Among them, 4.2 million units of 3D LED LCD TVs and cloud TVs will account for 52% of the total, which will increase by 212% from the previous year, while the annual domestic and international TV sales target will be increased to 10.5 million units (an increase of 14% year-on-year).

Skyworth Digital Financial reported that TV sales in the domestic market rose by 20.4% from the same period of the previous year to HK$12.342 billion in April-September 2012. The latest research report from Ovid, a market research organization, showed that as of September 30, 2012, In 12 months, the cumulative sales of LCD TVs and 3D LCD TVs ranked first in the Chinese mainland market, with market share of 16.7% and 26.7% respectively.

Although the overall shipments of Skyworth Digital TV and overseas markets are not among the highest in the industry, they are clearly leading in the mid-to-high end product category. Because of this, the average price of domestic color TV sales has fallen by more than 10% in the past six months. Next, the average sales price of Skyworth TV products has increased by an average of 500 yuan per unit.

Liu Yaoping, general manager of Skyworth-RGB China Marketing Center, told the reporter: “When other domestic brands’ shipments accounted for 60% of entry-level products such as 32-inch, Skyworth’s dominant product size has increased to 42-inch, 46-inch, and 55-inch, which guarantees an improvement in the average price of Skyworth's products."

Yang Dongwen stated that in the past, high-end products with a high average price of 42 inches or more had Japanese and Korean brands occupying a lot of advantages. Especially in the 55-inch or above field, foreign brands accounted for more than 70% of the total, which was domestically produced. For years, the brand could not rely on market share gained from price advantage.

However, with the improvement of domestic brands’ brand, technology and supply chain capabilities, especially the decline in market share of Japanese brands in recent years, the decline in brand value, application technology and other areas have fallen behind domestic brands, domestic brands have Has the ability to advance to the high-end market.

At the same time, Yang Dongwen said: "The domestic color TV market, especially the urban market began to burst into alternative growth in 2005, and now it is starting a new round of upgrading again. Large-size LCD TVs with a size of over 42 inches are the first choice for consumers. It also provides opportunities for domestic color TV brands to enter the high-end market.”

According to Zhang Xuebin, the executive chairman of Skyworth Digital, “In fact, Skyworth has been promoting the Group's successful transformation into a 'consumer-oriented' sales strategy and changing its previous competitor-oriented strategy.”

This reporter learned that, in addition to the 42-inch, 46-inch and 55-inch brand leader in the Chinese and foreign brands, Skyworth began to impact the market share of foreign brands in the field of 60 inches or more in 2012, its market share has steadily improved, even Introduced an ultra high-definition 84-inch LCD TV with a clear price/performance ratio.

According to the plan of Skyworth Digital Management, with the gradual implementation of the high-end brand strategy, the overall gross profit margin and net profit of Skyworth Digital in the second half of the year are expected to continue to increase. This is a key step in the manufacturing transformation proposed by Skyworth Group.

In addition to the consolidation of the absolute leading position in the domestic color TV market, Skyworth’s overseas market with a short board over the years has also seen major breakthroughs in the first half of 2012. The semi-annual report of Skyworth Digital indicated that sales in its overseas TV market increased by 34.8% to HK$996 million, and its sales volume reached 1.12 million units, of which sales volume of flat-panel TVs increased 131.6% from the same period last year to 880,000 units.

In the middle of this, the most important thing is that in addition to the growth of the traditional strategic OEM business, Skyworth's own-brand TV has made great breakthroughs in emerging markets such as India, Southeast Asia and Australia. Liu Weizhi, general manager of Skyworth-RGB, told reporters: “Chuangwei own-brand relies on high price competitiveness and seizes the opportunity of upgrading overseas brands to replace the decline of Chinese and Japanese brands, and has achieved substantial revenue growth with stable gross margins.”

According to the plan of Skyworth Group, the income of overseas TV market will exceed 10 billion yuan by 2015, which of course also includes the increase of 89.2% in the first half of the year to 1.339 billion Hong Kong dollars in set-top box business.

It is worth noting that the dramatic increase in the domestic and foreign markets of color TVs is a key step in the development of the “core industries” proposed by Skyworth Group in 2007. In accordance with the target of 30 billion yuan in domestic TV revenue for 2015, as planned by Skyworth Group, Skyworth is getting closer and closer to this goal.

However, Skyworth Digital’s semi-annual report also shows that this strategy is being gradually implemented. Except that the domestic sales of set-top boxes and LCD modules have been slightly affected by the industry, new industries such as white power and LED lighting, including the new layout of Skyworth Group in 2010, have shown rapid growth.

Yang Dongwen told the reporter: “In the past, the profitability point of Skyworth Digital was too single, mainly concentrated on the domestic sales of color TV. Today, nearly 10 business centers such as overseas TV sets, set-top boxes, LCD modules, and white power have become Skyworth’s new profit centers. This means the initial success of Skyworth's related diversification strategy."