VCD in China. Sony and Philips sell CD-Loaders, not decoders, unless it is a kit We've hit the $150 US price, bring on the New Year..............................
asiansources.com
Asian Sources Electronics
October 1997
Manufacturers in China say: No contest with DVD
<Picture>CHINA'S VCD industry appeared almost overnight in 1995 and continued to boom in 1996. Experts estimate that there are 400 VCD makers in China, although one Taiwanese maker says 600 is near the mark. Their collective output will reach some 10 million units this year -- about half of production worldwide.
In theory, manufacturers in China should be worried about DVD products eating into their market. Though most suppliers admit that VCD image resolution and storage capacity are inferior to DVDs, they do not seem to fear DVDs making inroads into the VCD market.
"The technology required [in DVD players] is much more sophisticated and has not yet matured," said sales manager Liu Shu-qian of Fujian Fulai Electronic Co. Ltd. "At least for the next two years, VCD will dominate the popular market."
Dearth in DVD software
DVD prices are decreasing, but the players are still much more expensive than VCD models. Other suppliers say that DVD is only really shown to its best advantage on televisions with more than 800 lines, and say buying those TV sets would be a prohibitive expense for most consumers.
VCD manufacturers say they have another factor on their side: software. The rapid growth of the VCD player market was largely fueled by the huge amount of available video CDs. DVDs, on the other hand, are not popular in China, and no one will buy a machine without plenty of software, suppliers say.
The amount of available software is not likely to increase any time soon. DVD technology is now controlled by a few companies in the world. The price of a DVD is estimated at $20 to $40 during the early phase of release, much higher than a VCD.
"A new product must stay in the laboratory to undergo all kinds of quality checks before it can hit the market." said sales manager Guo Jian-min of Jinjiang Jinwei Electronic Co. Ltd. "The first VCD player in China appeared in 1993. Unfortunately, there were some technical problems in design, so it disappeared within a short time. Like launching a rocket, every procedure must be planned carefully. A new product must be proved to be stable in quality, or the reputation of the brand may be in danger."
Ease of producing VCD players
The astonishing increase in the number of makers can also be attributed to the huge profits of manufacturing VCD players, and although the price keeps decreasing, the line is still very profitable.
Suppliers have also found it easy to convert production facilities to accommodate VCDs. "It is especially easy for producers of CD players. Most work can be accomplished with their present production equipment, at almost needs no additional cost," said I/E manager Jin Cai of Zhongshan Subor Electronics Industry Co. Ltd.
Many makers now in this field have produced CD or computer technology. VCD players production is just a matter of extension. Most suppliers also mainly deal with consumer electronics, such as audio and video products, and are familiar with the target market of their newly-released models.
25 percent slump VCD quotes in June
Increasing competition in the VCD line is prompting prices to fall. In June, the prices of both single-disc models and three-disc models dropped by 25 percent, from $250 to $200 or $150.
The price war was triggered by Zhongshan Idall Electronic Co. Ltd, the second-largest VCD manufacturer in China.
"Our purpose is to force out small and unauthorized makers who do not pay attention to their own brands and just add chips and decoding cards to CD players," said sales manager Yi Shi. Zhongshang Idall's strategy is to restrict VCD production to large-scale factories. By bringing down its prices, the firm is putting the VCD player beyond the reach of suppliers that don_t have the economy of scale, Yi said.
Most suppliers predict that VCD prices will fall further in the next six months. Costs of chips and decoder cards, the main components of VCDs, are also expected to continue to fall.
Decoding chips, produced by Sony and Philips, are the most important components in VCD players. "Philips' chips feature more performance than Sony's," said sales manager Zhang Wei-xin of Wanlida Electronic Co. Ltd. "However, Philips' chips cost $10 to $15 more than Sony's. We choose different chips for different demands."
Many factories are now producing multidisc models, with prices generally $50 more than single-disc models. All models with this feature come with a full-functioned remote control. The IR controller can perform all the operations of the keys on the front panel, such as open/close, play/pause, numeric selection, fast search, programmed playing, remain time display and preset section repeat.
Karaoke function is common, usually a one-track vocal fader and two microphone input sockets with independent volume control. Many models also include digital echo and bass control.
VCD piracy catapults supply expansion
Software piracy has been perhaps the main catalyst for the rapid development of the VCD player supply base in China.
Piracy of audio CDs and computer CD-ROMs is infamous in China, but there are also vast amounts of pirated VCDs on the market -- mainly films and karaoke CDs. Several characteristics have nevertheless made VCD a good bridge between the analog video cassette and the expensive laser disc: the disc is cheaper, and picture quality, while less sharp than laser, is acceptable.
Pirated VCD movies typically sell for about $3 each, for two discs.
The equipment for manufacturing VCDs is simple and relatively cheap, making the cost of pirated VCDs low. In addition, pirates are producing better quality product.
To protect intellectual property rights, the Chinese government is finally taking measures to curb piracy. Some centers for manufacturing VCDs have been destroyed, and some individuals who produce and sell obscene VCDs are heavily fined or jailed. |
