TOKOY - Sony Corp's and Panasonic Corp's ambitions for higher earnings this year depend on convincing people like Yin Weiguang, a retired construction worker in Beijing, that he chose the wrong television.

"I don't really care about fancy features," said Yin, 55, who paid 2,799 yuan ($413) for a 32-inch set made by Skyworth Digital Holdings Ltd.

"I just use it for basic entertainment: watching news, weather forecasts and TV series."

Sony and Panasonic, the world's two largest makers of consumer electronics, are slashing some TV prices by a third in China after being outsold six-to-one by Shenzhen-based Skyworth Digital. Sony aims to double TV shipments in China this fiscal year, and Panasonic expects 50 percent growth in the world's second- largest market for flat-panel TVs.

"The price battle in China will likely intensify as local manufacturers, South Korean makers and Japanese companies all fight for market share," said Yoji Takeda, who heads the Asian equity management team at RBC Investment (Asia) Ltd, which oversees $1.1 billion.

"Prices will probably continue falling with increased market supply during the second half."

In December, Sony offered a 32-inch set for 3,000 yuan, or 33 percent off the previous price for that size, targeting customers in regional cities and rural districts, said Yuki Shima, a spokeswoman for the Tokyo-based company.

To help cut costs, Sony has increased outsourcing of TV production to Foxconn Technology Group, the world's largest contract manufacturer of electronics.

50 percent price cut

Panasonic, the world's biggest maker of plasma TVs, may cut the prices of some models in China as much as 50 percent this year, Hitoshi Otsuki, senior managing director of the Osaka-based company's overseas operations, said in an interview last week.

"The market is totally different from the US and others," Otsuki said. "In China, domestic manufacturers are very powerful, especially in low-end products. The smaller sets are the fastest-growing area and the most difficult for us."

Sony slipped 0.7 percent to close at 2,681 yen ($31) in Tokyo, narrowing its gain this year to 0.4 percent. Panasonic fell 1.2 percent, extending its loss in 2010 to 17 percent. Skyworth Digital dropped 0.4 percent at the midday break on the Hong Kong Stock Exchange.

Sales of liquid-crystal-display TVs in China will rise 15 percent to 45.5 million next year and overtake North American shipments, according to DisplaySearch estimates.

China will become the biggest flat-panel television market - including plasma sets - in 2012, according to the Austin, Texas-based researcher.

Skyworth Digital is the market leader in China with a 15 percent share, which is followed by domestic rivals Hisense Electric Company and TCL Corporation, according to AVC Consulting in Beijing.

Bloomberg News

(China Daily 08/11/2010 page15)