'Ecosystem' spawns cheaper TVs

Competition in the Chinese smart-television segment, which heated up last year, is expected to further intensify this year.

Beijing Funshion Online Technology Co Ltd, which was established in 2005 and specializes in the distribution of streaming media, fired the first salvo by releasing its smart TV on Dec 10.

Funshion's competitors could get worried over its low prices: 1,799 yuan ($275; 250 euros) for a 43-inch screen, 2,299 yuan for a 49-inch, and 2,799 yuan for a 55-inch. What's more, Funshion's three models use 4K, the latest in ultra-high-definition technology. Most smart TVs in China are priced around 5,000 yuan.

Luo Jiangchun, the company's chief executive, said the secret to such competitive prices lies in the ecosystem it has built up with partners like Shanghai Oriental Pearl Media Co Ltd, digital products manufacturer Shenzhen MTC Co Ltd, home appliance maker Haier, TV maker Panda Electronics Group Co Ltd, and retailer Gome Electrical Appliances Holding Ltd.

In this ecosystem, Oriental Pearl is responsible for licensing, content and operation of Internet TV. Starting this year, the company will invest at least 1.5 billion yuan in copyrights to build up a large content platform. It aims to reach 30 million active family users in three years.

Shenzhen MTC and Panda Electronics will play to their strengths in manufacturing while upgrading their technologies and integrating them with the Internet.

According to All View Cloud, a home appliances market consulting company based in Beijing, three-fourths of the 37.6 million TV sets sold in the first 10 months of 2015 were distributed via brick-and-mortar stores. It means offline distribution is key to smart TV sales.

This is where Gome and Haier become integral to the ecosystem, which also includes the online sales channels of Funshion and discount e-retailer vip.com.

"The complete industry chain has been integrated under this ecosystem. We will enjoy the advantages of lower costs and better product quality this way. We won't rely on higher sales of TV sets for profits. This way, consumers benefit the most. They will be able to enjoy better 4K smart TVs at lower prices," Luo says.

Funshion has set an ambitious goal: reach sales of at least 12 million smart TVs in three years. It is confident enough to promise buyers of its products that any TV requiring repairs within six months of purchase will be replaced with a new one.

Luo believes smart TVs are the next growth point for the home appliances industry and the next big opportunity for online content providers.

According to statistics from All View Cloud, the penetration rate of 4K TVs was only 14 percent in 2014, when their sales amounted to 6.26 million sets. In the first 10 months of 2015, that rate surged to 32 percent, with sales of 14.84 million. It is expected the rate will reach 80 percent by 2020.

shijing@chinadaily.com.cn

(China Daily Africa Weekly 01/15/2016 page27)