China's TV Industry: Policy Fuels Brand Expansion

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The global television market is undergoing a significant transformation, especially as Chinese brands such as Hisense and TCL continue to gain traction in overseas markets. These brands are strategically investing in marketing and expanding distribution channels, aiming to disrupt the dominance previously held by Korean companies, notably Samsung and LG. As the competitive landscape shifts, there lies a promising opportunity for Chinese companies to enhance both their market share and product offerings, particularly in the mid-to-high-end television segment.

The decline of Korean brands in the global television market is noteworthy. Historically, Samsung led the charge, cementing its position as the worldwide television market leader through advantageous access to LCD panel resources and substantial marketing investments. However, by 2022, both Samsung and LG have significantly reduced their production of LCD panels, which has led to decreased profitability, as their previously strong brand premiums no longer suffice to maintain market positions. In fact, by 2023, the market share of Hisense and TCL in total television shipments overseas has reached approximately 50% of Samsung's, signaling a ripe opportunity for growth.

In Europe and North America, the ability of Chinese brands to enhance their recognition and sales has initiated a positive feedback loop. Companies such as Hisense and TCL have emerged as leaders in the under $500 television segment across North America. Despite this, Korean brands still enjoy considerable shares in the mid-to-high-end markets. However, advancements in the domestic MiniLED supply chain and the superior price-performance ratio of Chinese MiniLED televisions make them formidable alternatives to Korean high-end brands. As these companies ramp up their brand marketing efforts and distribution in mid-to-high-end channels within Europe and North America, they are poised to create a similar feedback loop that could ultimately result in improved profitability and market presence.

Another area ripe for growth is Southeast Asia, which has rapidly become an important growth market for television manufacturers. The region has evolved rapidly, marked by increasing economic development and soaring demand for household electronics, including televisions. This burgeoning market has attracted intensive competition among global brands.

Southeast Asia's television market has historically been dominated by established Japanese and Korean brands, known for their advanced technology and solid market presence. Brands like Samsung, LG, and Sony have built extensive customer bases over years of operating in the region.

Despite their stronghold, Chinese brands are now making significant inroads. To counter the market stranglehold of Japanese and Korean manufacturers, Chinese brands are actively working to broaden their distribution in Southeast Asia. Collaborations with local distributors and retailers have become the hallmark of this strategy, allowing Chinese brands to establish dedicated stores and counters in key urban areas as well as in smaller cities. For instance, TCL has partnered with well-known local electronics chains to open flagship stores not only in large urban centers but also in smaller towns, expanding its reach.

Simultaneously, Chinese brands are emphasizing refined marketing and customer service as key components of their strategies. They are tailoring their marketing approaches based on deep research into local cultures, consumption habits, and demands, crafting targeted campaigns. Utilizing diverse channels—from social media platforms to traditional advertising and local events—these brands are launching themed marketing campaigns that resonate with local festivals and cultural nuances, thus drawing considerable consumer attention. For example, Hisense has rolled out various marketing initiatives in Southeast Asia that capitalize on the local cultural landscape, offering customized product packages during significant cultural events.

In terms of after-sales support, Chinese brands are establishing comprehensive service networks across Southeast Asia to provide timely and efficient customer service. They focus on training local service personnel to enhance service quality, thus fostering consumer trust and satisfaction with their products.

Moreover, Chinese brands are increasing their production capabilities in the region to better address local market demands and decrease production lead times. For example, Xiaomi's establishment of a factory in Indonesia allows for localized production of some of their television products, reducing costs and increasing supply efficiency.

With ongoing improvements in channel management, marketing, service, and production capacity, Chinese brands are poised to enhance their competitiveness in the Southeast Asian television market dramatically, progressively catching up to Japanese and Korean brands and reshaping the competitive dynamics of the television market in the region.

The anticipation surrounding the 2025 replacement policy for aging electronics reveals significant implications for the television industry. With government backing for trade-ins, manufacturers can expect a boost in domestic demand for televisions while stimulating interest in higher-end products like Mini LED televisions. For key players in the black box segment, their ability to innovate and upgrade their product lines can potentially liberate profit margins on domestic sales.

The television industry's landscape is steadily evolving in favor of leading enterprises, driven by economies of scale. Major companies, such as Hisense and TCL, are leveraging their supply chain and manufacturing advantages to maintain competitive pricing across their sub-brands. The focus on research and development, coupled with proactive marketing efforts, allows these companies to solidify their presence in the mid-to-high-end markets. With the old-for-new policy providing a further impetus for brand consolidation around stronger players, estimates suggest that by late 2024, the retail market share for Hisense and TCL could experience a year-on-year growth exceeding 3 percentage points, enhancing their market dominance.

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