Shinco DVD......
INTERVIEW-China's Shinco shines on VCD popularity
03:44 a.m. May 18, 1998 Eastern
By Bill Savadove
SHANGHAI, May 18 (Reuters) - China's biggest maker of video compact disc (VCD) players, Shinco Electronic Group Co, is riding a wave of popularity for the format and looking to new products to outshine competitors, general manager Qin Zhishang said.
''The VCD player industry has developed for three years in China,'' Qin said in a recent interview. ''In general, the market is extremely good.''
China has leap-frogged the video age with the support of a vast illegal industry which produces pirated VCDs allowing viewers to see foreign blockbusters for less than the cost of a cinema ticket.
The popularity of the format saw 250 producers churn out 15 million VCD players in 1997 with production expected to reach 50 million units this year -- around four times actual demand, official media have said.
Shinco towers over the competition with a reputation for making players that can accept poor quality discs and project them with clarity, company officials said.
But Qin said Beijing was taking measures to prevent violations of intellectual property rights.
''In three years, China has quickly started to produce its own genuine VCDs,'' he said.
Shinco, a former township enterprise based in Chanzhou city in eastern Jiangsu province, produced 2.45 million VCD players and registered pre-tax profits of 150 million yuan ($18.07 million) last year, officials said.
Fierce competition and a public chiding for the industry from Premier Zhu Rongji for over-capacity had caused Shinco to look to new products to stay on top, they said.
''Central government leaders think the VCD player industry is chaotic,'' Qin said.
''We think this view is right, but every industry has a lot of participants when it begins. After a period of time, some are superseded by competition,'' he said.
A fierce price war had caused the average profit margin of VCD player producers to shrink to eight percent in 1997 from 13 percent in 1996, official media have said.
Qin said Shinco's cooperation with foreign companies for technology, its big scope of production and diversification into the next generation of products -- digital video discs (DVD) -- gave the firm a competitive advantage.
''In the past three years of development, we have reserved some funds and put them into new equipment for the next generation of products, such as DVD,'' he said.
Although DVDs were relatively expensive, the higher picture quality would attract more discerning consumers, Qin said.
''VCD will quickly be replaced by DVD,'' he said. ''Shinco has put a lot of investment into the DVD product.''
The company plans to roll out a DVD player in the fourth quarter of this year priced between 2,000 yuan and 3,000 yuan ($241-$361).
Qin said Shinco was also planning to list on the Shanghai stock exchange within the next two years after restructuring into a shareholding company.
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