The sales result for the Labor Day holidays in China was weaker than previous projections, reaching a total of 3.738 million units and declining 10.2% YoY during the three weeks around Labor Day holidays, , according to WitsView, the display research division of TrendForce, and Σintell. Chinese brands’ inventory only rose slightly to 4.7 weeks. During Labor Day week, international brands’ sales performed well while Chinese top six brands showed a decline of 13%. From t2H2013, the ratio of 3D LCD TV has been dropping gradually with the penetration rate declining to below 30% during the Labor Day Holidays, while the UD LCD TV penetration rate surpassed 10% for the first time, with a sales volume of 42.2 million units.
“As the appliance-going-to-countryside policy and subsidy measures ended, the holiday sales in China start to see unpleasant drops,” (see graph 1.) WitsView Research Director Burrell Liu says. ” The lower-than-expected sales drop during Labor Day Holidays was due to last year’s final shipment peak bolstered by the subsidy policy. In addition, consumers hold a wait-and-see attitude on prices and promotions, compounded with the anticipation of Chinese National Day Holidays in October, resulting in lower Labor Day Holiday sales.”
Nonetheless, the average inventory remains healthy, and Chinese brands hold advantages to restock panels in the next few months. The upcoming FIFA World Cup Games boosted the top six brands’ oversea shipment to 7.59 million units in 1H2014, with the export taking up 30% of total shipment. The total export shipment is expected to increase by 12% for the entire year. Chinese top six brands’ domestic shipment in 1H2014 accounts for 38-40% of the entire-year sales, reaching 17.2 million units. Consequently, major Chinese brands are expected to be more aggressive in reaching the annual shipment goal in 2H 2014.
The Chinese LED TV market’s focus has shifted from LED and 3D to UD products this year. This is an indication that the 3D models have cooled down with a weakening penetration rate. Meanwhile, UD products enjoy a rising penetration rate with lowered set prices. The UD-product shipment in China is projected to reach 8.5 million in 2014 with only 19% penetration rate, while the curved TV models penetration rate is projected to drop below 1%.
Witsview indicates that the end inventory is very healthy, and the two Korean LCD TV brands actively distribute goods and propel the entire LCD TV market for full offense. Moreover, panel makers are agile in allocating the capacities and reshuffling the product spec, allowing most LCD TV panel prices to increase instead of decreasing. In addition, LCD TV demand has replaced some demand for PDP TV, and with the stronger-than-expected demand for medium and small-sized TVs, the overall demand for LCD TV panels and sets are expected to grow.
Despite of the weak Labor Day Holiday sales, the inventory remains healthy. Chinese brands will actively boost the domestic sales in 2H2014 and aggressively prepare for the inventory. The tight supply for some sizes will continue through Q3, and it is critical to observe global end sales and inventory along with the two Korean makers’ attitude in June and July.