Low-cost Strategy Winning Out
Domestic TV manufacturers such as Samsung Electronics and LG Electronics have been holding a dominant position in the global market but are now showing signs of unease. This is because Chinese companies like TCL and Hisense have been aggressively competing with lower-priced offerings, rapidly eroding their market share.
According to global market TV data released by market research firm Omdia on Aug. 21, the market share of Chinese-made TVs in terms of shipments increased by 2.7 percentage points compared to the same period last year, reaching 39.1 percent in the first half of this year. This means that four out of every ten TVs sold worldwide belong to Chinese brands.
Hisense Overtakes LG Electronics to Secure Third Place for First Time
Notably, TCL, Hisense, and Xiaomi have shown impressive growth. In terms of shipment data for the first half of this year, TCL secured the second position in the TV market with a market share of 12.4 percent, while Hisense at 11.7 percent and Xiaomi at 6.0 percent also maintained positions within the top five. Particularly noteworthy is Hisense’s remarkable increase in market share, which grew by 2.2 percentage points compared to the first half of the previous year at 9.5 percent, solidifying its third-place position ahead of LG Electronics at 11.3 percent.
The market share of Korean-made TVs reached 30.6 percent, securing the second position. This represents a decrease of 2.7 percentage points compared to the first half of the previous year, and it seems that the share of Korean manufacturers has been eroded by Chinese counterparts. Samsung Electronics, with a market share of 19.3 percent, maintained its top position. However, its market share plummeted by 1.7 percentage points compared to last year. Additionally, TCL, ranking second, rose its market share by 1.3 percentage points, posing a gradually growing threat to Samsung’s top position. The gap between the two companies has reduced from 9.9 percentage points to 6.9 percentage points within a year.
As a result, the market share gap between Chinese-made TVs and Korean-made TVs, which was only 0.97 percentage points in 2019, has been steadily widening, reaching 0.99 percentage points in 2020, 2.78 percentage points in 2021, and 6.68 percentage points in 2022. In the first half of this year, it showed a significant gap of 8.5 percentage points, indicating a sense of crisis.
While the market share of Chinese-made TVs is rapidly increasing, TVs made by Japan, once known as a TV powerhouse, are experiencing challenges. The market share of Japanese-made TVs was 12.08 percent in 2019 but has gradually declined, reaching 9.5 percent in the first half of last year and dropping further to 7.9 percent in the first half of this year. Sony and Sharp both had market shares of 2.5 percent and 2.0 percent in the first quarter of this year, respectively. This marks the first time Sony’s TV market share has dropped to the 2 percent range in the first half of the year.
European and American-made TVs have also seen a decline in market share due to the momentum of Chinese-made TVs. European products went from 2.76 percent in 2019 to 2.3 percent in the first half of this year, while American-made TVs saw a slight decrease in market share from 3 percent to 2.3 percent during the same period. The market share of Taiwanese-made TVs also declined from 1.36 percent in 2019 to 0.7 percent in the first half of this year. The global TV shipment volume in the first half of this year reached 97.2066 million units, a level similar to the previous year.
Chinese TVs Gaining Market Share through Low-cost Strategies in Emerging Markets
The reason Chinese brands have been able to rapidly capture the global TV market is due to their low-cost strategies, chiefly in emerging markets, including their own country. While sales in major markets such as the United States and Europe have been declining due to the global economic slowdown, the TV market is expanding primarily in emerging markets like China, Latin America, and Africa. Consequently, Chinese-made low and mid-range products are gaining popularity.
Furthermore, the influence has been significant not only in China, where a preference for domestic brands is strong, but also in the Russian market, where Chinese companies have been gaining ground. It is particularly painful to note that Chinese companies have been filling the void left by Korean companies like Samsung and LG since the start of the Russia-Ukraine conflict early last year. Samsung Electronics, which was the leading player in the TV market until March last year, saw a significant reduction in market share, while LG Electronics, which was second, experienced a more than 50 percent decline in its market share in the Russian TV market from 21.6 percent in the first quarter of last year to this year.
This was mainly due to Samsung Electronics and LG Electronics ceasing production and sales at their local subsidiaries in Russia after the war. In March of last year, Samsung Electronics halted operations at its TV and monitor factory in Kaluga, near Moscow, while LG Electronics discontinued production at its home appliance and TV manufacturing plant located in the Luza region on the outskirts of Moscow in August of the same year. Neither company has made a definite decision regarding the resumption of factory operations to date.
Therefore, only Chinese companies that filled the void left by Korean companies have prospered. Especially, Hisense is expected to rise to the second position in terms of shipments this year for the first time, surpassing not only LG Electronics but also TCL. In the view of Omdia’s estimates for this year’s shipment volume, the rankings of TV manufacturers are as follows: Samsung Electronics at the top with 18.8 percent, followed by Hisense at 12.6 percent, TCL at 11.9 percent, LG Electronics at 9.2 percent, and Xiaomi at 6 percent. Sony, a Japan-based company, managed to enter the top five rankings in terms of value last year, but it has long been pushed out of the top five in terms of quantity, with Xiaomi from China taking its place. This year, it is also anticipated that Sony will not make it to the top ranks and will be categorized as “other.”
In the wake of an economic downturn, the premium TV market has been struggling, while the impact on the budget-friendly segment has been less severe. This factor has contributed to the popularity of Chinese-made TVs. In fact, shipments of premium TVs priced at over US$1,500 were only 9.12 million units in the last year, marking a significant 21.2 percent decrease compared to the previous year. In contrast, the supply of budget-friendly TVs decreased by a more modest 3.8 percent, indicating relatively steady demand in this segment.
Chinese Firms also Report Strong Performance in the Market for 80-inch and Larger TVs
The situation is not too optimistic even in the market for large-sized and premium TVs. This is due to the fact that Samsung Electronics and LG Electronics have seen their market share based on shipments sharply decline over the past year, driven by the aggressive pursuit by Chinese companies. In particular, Samsung Electronics, which recorded a market share of 48.6 percent in the 80-inch and larger TV market during the first half of last year, saw it plummet to 29.3 percent during the first half of this year, a whopping drop of 19.3 percentage points. LG Electronics also experienced a decrease in market share from 17.3 percent to 12.1 percent during the same period. Sony, a prominent player in the Japanese TV industry, also suffered a decline in market share within this market, dropping from 11.0 percent to 7.8 percent, entering single-digit territory.
On the other hand, Chinese companies are rapidly expanding their market share in the 80-inch and larger TV segment. Hisense, which had a market share of 8.5 percent in the first half of last year, surged to 15.9 percent in just one year, surpassing LG Electronics easily. Hisense also increased its market share from 5.7 percent to 11.8 percent, while Xiaomi saw a 4.7 percentage point increase from 6.1 percent to 10.8 percent. Skyworth also doubled its market share from 2.8 percent to 5.8 percent.
However, profitability remains overwhelmingly in favor of Korean companies in the market for 80-inch and larger TVs. In terms of value, Samsung Electronics maintained its top position with a market share of 41.6 percent in the first half of this year, a drop of 7 percentage points compared to last year’s 48.6 percent. LG Electronics also held onto its second-place position with a 14.1 percent market share, a slight slide of 1.3 percentage points from last year’s 15.4 percent.
Nevertheless, TCL, Hisense, Xiaomi, and other Chinese manufacturers have struggled to show a substantial revenue growth despite a significant rise in shipments in the market for 80-inch and larger TVs. TCL showed an increase of 3.6 percentage points to 10.7 percent compared to the same period last year. Also, other Chinese companies experienced modest increases as Hisense moved from 5.5 percent to 9.6 percent, Xiaomi from 3 percent to 5 percent, and Skyworth from 2.9 percent to 3.8 percent, respectively.
Japanese companies also struggled in the 80-inch and larger TV market in terms of revenue. The market share of Sony slid from 13.6 percent in the first half of last year to 9.8 percent in the first half of this year. Yet, Sharp has managed to maintain a meager market share of 0.2 percent for the past year.
An official from the industry said, “Recently, Chinese firms have been showing an increasingly threatening presence in the market for extra-large TVs, leveraging competitive prices and quantities compared to their competitors. Korean companies are now in a situation where they cannot be at ease even in the premium market.”
Korean TVs with High Premium Share Lead Chinese Companies in Terms of Price
However, in terms of price, Korean TVs still maintain a lead with a market share of 47.4 percent compared to China’s 29.7 percent. This can be attributed to the significantly higher proportion of large and premium products among Korean TVs. Nevertheless, the market share gap in terms of price is also narrowing each year. The gap between Korean and Chinese TVs decreased from 25.46 percentage points in 2020 to 18.14 percentage points last year. As of the first half of this year, Korean TVs have decreased by 1.5 percentage points over the past year while Chinese TVs have increased by 2.6 percentage points, ultimately reducing the gap to 17.7 percentage points.
Samsung Electronics has maintained its position as the leader in market share for both value and shipment, upholding the reputation of South Korean-made TVs. In the first half of this year, Samsung Electronics recorded a market share of 31.2 percent in terms of value and 19.3 percent in terms of quantity. Yet it is regrettable that the quantity-based market share has fallen below the 20 percent threshold.
LG Electronics is also grappling with challenges in its quantity-based market share, primarily due to competition from Chinese companies. While the company has secured the top spot in the organic light emitting diode (OLED) TV market with a market share of approximately 55.7 percent, its overall TV market share stands at 11.3 percent, dropping to fourth place, trailing behind Chinese companies TCL and Hisense. Until 2021, LG Electronics consistently held the second position annually, following Samsung Electronics. However, it slipped to fourth place last year behind TCL, and it was overtaken by Hisense in the first half of this year.
An industry insider said, “This is the first time LG Electronics has fallen to 4th place in terms of quantity-based rankings. However, it is important to note that shipment figures only represent the supply to the distribution market and do not reflect actual sales to consumers, or sell-out. In terms of revenue, which is the indicator of the actual market competitiveness, Korean-made TVs are significantly ahead. Nevertheless, Chinese companies are aggressively expanding their supply in the domestic market based on strong domestic demand, and the premium TV demand has not recovered.”