Loss of upstream core technology, rising operating costs, weak external demand... Especially since April of this year, panel import tariffs have been raised. This has given Shenzhen TV companies a “cloudâ€.
The reporter learned yesterday (July 3rd) from the Shenzhen National Investigation Team of the National Bureau of Statistics that, despite difficulties, the Shenzhen TV manufacturers have taken various measures to respond to the difficulties and have achieved certain results.
Puzzle one
Lack of core technology LCD panels mostly rely on imports
For local color TV companies, the lack of upstream core technology in the industry chain has always been a common insurmountable barrier for domestic color TV brands. According to a recent survey conducted by the Shenzhen Investigation Team, LCD TVs are taken as an example. Each color TV manufacturer in the survey stated that the LCD panel, which is the core component that accounts for more than 60% of the material cost of the TV, is mostly dependent on imports. Even though many domestic color TV manufacturers have begun to fully involve themselves in the research and development of upstream core technologies, some liquid crystal modules and liquid crystal panel projects that have been jointly invested by color TV leading companies have also been mass-produced, but the key materials that make up liquid crystal panels are liquid crystals with the highest technological content and profitability. Glass substrates still cannot achieve local production.
The Shenzhen investigation team stated that the lack of core technologies not only hinders the color TV companies from increasing their cost control and enhances their integrated design and manufacturing capabilities, but also involves the interests of the company itself. "For example, at present, flat panel TV screensavers have been implemented in TV manufacturers for three years, but the warranty period for upstream display manufacturers is still only 18 months, which undoubtedly increases the cost of after-sales services for domestic companies."
Puzzle two
Import tariffs on panels increase corporate profits
Like other companies, Shenzhen TV companies are facing the pressure of rising costs for raw materials, labor, rent, and utilities, and their operating costs are rising. In particular, starting from April 1 this year, the tariff rates on the liquid crystal display panels with 32-inch or more backlight modules are not included, and the provisional tax rate of 3% will be abolished and the previous tax rate will be restored to 5%. This is a record for color TV companies. An important blow, so the total cost of LCD TVs will increase by about 1%.
Mr. Hua, the head of the production department of a color TV company, wrote an account to the reporter. “At present, color TV companies are a low-profit industry. The average net profit of local color TV companies is only about 2%, up to 3%, and the panel generally accounts for the entire machine. The cost is about 70%." Mr. Hua said, "If the panel cost increases by 2%, the overall cost will increase by more than 1 percentage point, which means that the average profit of color TV companies has dropped by half, leaving only one area. More than a percentage point is pitifully low."
Business response:
Raise the localization rate of the panel
However, fortunately, in the face of cost pressures, Shenzhen local color TV companies have also seen the key to mastering the cost of improving the localization rate of the panel. This reporter learned that in recent years, local companies such as TCL, Skyworth, and Konka have all been involved in the development of upstream technologies. They are manufacturing from low value-added back-end machines to high-value-added LCD modules, LED components, and LCD panels. Wait for the transfer of upstream core technology.
In order to reduce manufacturing costs, some companies began to switch to the procurement of domestic LCD panels, "the price of imported and domestic panels is no obvious difference, but there is no tariff, real estate sales, logistics costs correspondingly reduced." A color TV company's official told reporters . It is also known that some foreign-funded enterprises have also accelerated the speed of manufacturing LCD panels in China to offset the cost pressure brought about by the rise in tariffs. “At present, domestic color TV manufacturers and even foreign TV companies are evaluating and trying out the quality of domestic panels. With the improvement of the quality of domestic panels, the panel’s dependence on imports may be broken,†said the Shenzhen survey team.
The reporter learned yesterday (July 3rd) from the Shenzhen National Investigation Team of the National Bureau of Statistics that, despite difficulties, the Shenzhen TV manufacturers have taken various measures to respond to the difficulties and have achieved certain results.
Puzzle one
Lack of core technology LCD panels mostly rely on imports
For local color TV companies, the lack of upstream core technology in the industry chain has always been a common insurmountable barrier for domestic color TV brands. According to a recent survey conducted by the Shenzhen Investigation Team, LCD TVs are taken as an example. Each color TV manufacturer in the survey stated that the LCD panel, which is the core component that accounts for more than 60% of the material cost of the TV, is mostly dependent on imports. Even though many domestic color TV manufacturers have begun to fully involve themselves in the research and development of upstream core technologies, some liquid crystal modules and liquid crystal panel projects that have been jointly invested by color TV leading companies have also been mass-produced, but the key materials that make up liquid crystal panels are liquid crystals with the highest technological content and profitability. Glass substrates still cannot achieve local production.
The Shenzhen investigation team stated that the lack of core technologies not only hinders the color TV companies from increasing their cost control and enhances their integrated design and manufacturing capabilities, but also involves the interests of the company itself. "For example, at present, flat panel TV screensavers have been implemented in TV manufacturers for three years, but the warranty period for upstream display manufacturers is still only 18 months, which undoubtedly increases the cost of after-sales services for domestic companies."
Puzzle two
Import tariffs on panels increase corporate profits
Like other companies, Shenzhen TV companies are facing the pressure of rising costs for raw materials, labor, rent, and utilities, and their operating costs are rising. In particular, starting from April 1 this year, the tariff rates on the liquid crystal display panels with 32-inch or more backlight modules are not included, and the provisional tax rate of 3% will be abolished and the previous tax rate will be restored to 5%. This is a record for color TV companies. An important blow, so the total cost of LCD TVs will increase by about 1%.
Mr. Hua, the head of the production department of a color TV company, wrote an account to the reporter. “At present, color TV companies are a low-profit industry. The average net profit of local color TV companies is only about 2%, up to 3%, and the panel generally accounts for the entire machine. The cost is about 70%." Mr. Hua said, "If the panel cost increases by 2%, the overall cost will increase by more than 1 percentage point, which means that the average profit of color TV companies has dropped by half, leaving only one area. More than a percentage point is pitifully low."
Business response:
Raise the localization rate of the panel
However, fortunately, in the face of cost pressures, Shenzhen local color TV companies have also seen the key to mastering the cost of improving the localization rate of the panel. This reporter learned that in recent years, local companies such as TCL, Skyworth, and Konka have all been involved in the development of upstream technologies. They are manufacturing from low value-added back-end machines to high-value-added LCD modules, LED components, and LCD panels. Wait for the transfer of upstream core technology.
In order to reduce manufacturing costs, some companies began to switch to the procurement of domestic LCD panels, "the price of imported and domestic panels is no obvious difference, but there is no tariff, real estate sales, logistics costs correspondingly reduced." A color TV company's official told reporters . It is also known that some foreign-funded enterprises have also accelerated the speed of manufacturing LCD panels in China to offset the cost pressure brought about by the rise in tariffs. “At present, domestic color TV manufacturers and even foreign TV companies are evaluating and trying out the quality of domestic panels. With the improvement of the quality of domestic panels, the panel’s dependence on imports may be broken,†said the Shenzhen survey team.
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