DVD in China. Mostly an export market for now. When it starts selling in China, The decoder market will be shared(SGS Thomson mention)...........................................
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DVD - Technology Update
CHINA - Makers drawn between allure of DVD and current lines
Although DVD products have already entered the China market, DVD remains a niche line for enthusiasts. Most existing and would-be DVD player manufacturers in China have also been successful makers of VCD players over the past few years and they still hold onto quite a considerable market share for these products.
Now these companies find themselves in something of a dilemma. If they promote DVD, they must reduce capital being funneled into VCD development. On the other hand, if makers do not start DVD production, they are likely to lose market position in the likely event that DVD prevails in the near future.
Although the current sluggish demand for DVD players in the domestic market does not guarantee profits, a brighter outlook is so alluring that no manufacturer can afford to ignore it.
Lack of local demand pushes export drive
Developing overseas markets seems to be a solution to current low domestic demand. Many DVD makers hope that exports to overseas markets will help them launch their mass-production schemes and qualify them for early membership in the DVD club.
Han Yongsheng, chief of the DVD division at Fujian Star Group Corp., a leading manufacturer of computing and digital products in China, said: "We held a press conference on February 15th this year in Beijing to introduce our new DVD player. Our most optimistic prediction for domestic sales is 10,000 a year, but we are expecting to export 50,000 to 100,000 DVD players to overseas markets in the first year. We are able to change the design to support CSS regional codes for different country's customers."
A spokesman for Thakral, headquartered in Singapore, admitted that the company's trial promotion of DVD players in the China market has not been very successful. However, China is a large market of great importance to the company, and Thakral will continue to pay close attention to the market trends there.
Qingdao HiSense has also developed its own DVD players, but the company has no plans for domestic promotion yet. An executive of the company's marketing department, said: "We will focus on the overseas market for the whole of 1998 and we have been negotiating contracts with several foreign customers. Our export-focused marketing policy will not change until next year."
At present, the major countries receiving DVD exports from China include Australia, Southeast Asia, North America and Europe. Demand in Southeast Asia is expected to fall due to the economic crisis.
Competition to grow in China's DVD decoder market
Another factor that is hampering domestic sales of DVD players is CSS decoding. Most DVD player makers have already acquired or are going to acquire a model that supports all the different CSS regional codes, but National Intellectual Property laws limit public awareness about this system.
Up to now, the biggest supplier of decoding chips to the China market has been C-Cube. However, more and more semiconductor giants are hoping to get involved in this business. SGS-Thomson has set up a joint venture with Shenzhen SEG Electronics to sell SGS-Thomson's state-of-the-art DVD decoding chips to the China market. Once DVD hits the mainstream, the stake in the DVD decoder market is likely to be shared.
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