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Konka Looks Overseas, As TV Prices Spiral Downward
Konka Group, one of China's largest television manufacturers, is concentrating all its efforts and earning most of its profits from its export business.
Moreover, the firm based in Shenzhen on the border with Hong Kong, would be pushing ahead with an aggressive export strategy whether or not China's accession to the World Trade Organization (WTO) was imminent, explains Konka's vice-general manager Xie Youbao.
"It doesn't matter whether you consider WTO or not, Chinese TV makers will be forced to look abroad," he adds.
The domestic market is now so saturated with cheap televisions that even the largest and best run of China's TV-makers are hard-pushed to turn a profit, Xie said.
Many state-run firms have been producing television sets below cost in a futile bid to increase market share in recent months, prompting China's leading television manufacturers to band together to halt the fall in prices last month.
A group of nine top TV makers, including Konka, Changhong and Nanjing Panda Electronics formed a cartel to raise the prices of TV sets in a bid to end fierce discounting that eroded industry profits.
Konka's strategy for success is to build its brand overseas with a studied mix of low prices and a pointedly high-tech image.
Exports accounted for over 10 percent of the firms sales by volume in 1999 and that figure is expected to double over the next few years, said Xie.
Konka sold six million sets overseas last year and expects that to rise to between 12 and 15 million in 2000 and hit as many as 30 million by the end of 2001, Xie added.
Konka has had more success in developed markets than emerging ones, cornering six percent of the Australian market within just three years of entry, selling low-priced 14-inch screens aimed at teenagers and big-screen sets for older TV-buffs.
The firm aims to claw an eight to 10 percent share of the Australian market by the end of the year, Xie said.
In the United States, Konka is operating a two-pronged strategy selling low-cost sets to build awareness of the brand and trying to crack the country's budding market for high-definition sets priced at 3000 dollars, well below most competing models, he adds.
India has proved a tougher nut to crack. Both Konka and its rival TCL began assembling and selling TVs in the country last year but have yet to wean Indian consumers away from local, Japanese and Korean brands.
"It's difficult to crack that market because of cultural differences but we expect to make progress in the next couple of years," Xie said.
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