Shinco.....................................
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Chinese revolution
As DVD goes mass-market, China is preparing to produce yet more players at budget prices. Bob Tomalski travels to Hong Kong to interview the marketeers at Shinco - one of Asia's largest DVD manufacturers
Regular readers of HCC will recall that, in 1999, I discovered a DVD player with a difference. When holidaying in Hong Kong I unearthed the Shinco 8320, a deck that not only plays all region code DVDs and regular CDs, but MP3 discs too.
At that time it was revolutionary. No one envisaged a DVD deck that did anything more than play regular discs. Discovering that it came from mainland China was something of a bombshell, as that region has garnered a reputation for copycat electronics rather than self-styled innovation.
In that feature I contemplated the future of DVD technology, warning mainstream Japanese manufacturers that they faced huge competition from China, the sleeping tiger of Asia.
I made the point that if Hong Kong retailers could sell a Shinco at half the price of a Sony - and make a good profit - then the same could probably happen in Britain.
I wasn't wrong. Within a month of the article appearing, various small-scale importers contacted HCC to announce the sale of the Shinco 8320 at prices of £250 or less.
Since then we have seen even more affordable DVD players from China, Taiwan and Singapore. Many carry well-known UK marques including Wharfedale, Ariston, Proline and Matsui, following deals between key retail chains such as Tesco, Richer Sounds, Comet and Dixons.
In some cases these budget decks actually out-perform or equal products from Japan, yet cost a fraction of the price. The mechanisms are generally well-made, the decoding good and the connectivity no worse than an entry-level Japanese product.
HCC is a magazine that sells copies far and wide. Eventually, our feature landed on the desk of Shinco's management in Hong Kong and we were invited for an informal discussion about the company's future plans for new technology.
The interview makes interesting reading - especially if you're thinking of a buying a portable DVD player or have interest in the internet. As you'll see, the Chinese have even bigger and better things hidden up their oriental sleeves...
MAD DOGS AND JOURNALISTS
As Noel Coward once wrote of Hong Kong, at 12pm they fire a gun - yet mad dogs and Englishman enjoy the midday sun.
It was around midday that I arrived in Ngau Tau Kok. An industrial part of Kowloon, far from the glitz of tourist trap Tsim Sha Tsui, the dusty road ends at a commercial building.
Pots and pans gleam in its windows. The Kinox Centre, like many high-rise offices in Hong Kong, is home to a mass of companies who have headquarters on different levels. Hence Kinox Enterprises - which makes stainless steel utensils - has a display on the ground floor, yet on the 15th floor there's a service centre dedicated to DVD.
This is the international export department of Jiangsu Shinco Electronics Group - or Shinco as we know them in the UK. I met with marketing manager Dennis Kwong and Helen Tong, his assistant.
Surrounded by an assortment of DVD players, Kwong and Tong told me about Shinco's past and it's future plans for introducing a gamut of new DVD technology.
'Our company was reorganised in 1994 having previously been known as the Changzhou Number 5 Radio Factory says Kwong. In the early days we made low cost radios, cassette players and mini compo hi-fi.
'Then in 1995 we started making Video CD players. Nowadays we are more up-market and concentrate on SVCD (Super Video CD) and DVD players.'
CLIMATE OF VIDEO CD
Kwong's reference to Video CD underpins a cultural difference between Europe and Asia. In the UK we enjoy VHS as the mass-market carrier of movies. Yet in China and the Pacific rim, the climate is such that tapes do not last very long because temperatures regularly exceed 300c with 90 per cent humidity for much of the year.
'Video CD is highly popular in China,' says Kwong. 'As a format it's low-cost and rivals VHS tape in terms of picture quality.' Since 1996, Shinco has always been the leader in terms of VCD player sales in the Chinese market.
From VCD, Shinco lead development into SVCD. Super Video CD bears a similarity to DVD in that it uses the same MPEG2 compression and variable bit rate encoding, delivering pictures of around 350 lines horizontal resolution.
Where it differs is disc density. Instead of using a multi-layer construction, it uses regular CD technology in terms of the pits encoded on the disc's surface. Hence the running time is shorter than DVD and VCD - typically only 45 minutes per disc, so although delivering near-broadcast quality, movies are spread across two or three single-sided discs.
'In 1998 Shinco became the first SVCD manufacturer in China. The total sales value reached 2.5 billion Chinese RMB and the export value was $5m,' says Kwong.
'We phased out all VCD production because the returns are so small. We are now building only Super VCD and DVD players.'
Kwong's explanation of the Shinco DVD factory and pictures supplied by his company describe a facility that rivals the best HCC has seen in Japan.
'Our factory is at Changzhou, near Shanghai. We have 2,800 employees and are currently China's largest DVD manufacturer. We have eight SMT (surface mount technology) lines and we perform our own modelling of players. There are 28 assembly lines all with the latest auto-insertion machines. The daily production capacity of disc players exceeds 20,000 units'.
Such figures explain why UK retailers are eager to forge relations with Chinese companies like Shinco. With this volume of production and the current growth of DVD sales in Europe - plus the keen prices from mass-production - everyone is happy.
Shinco exports containers of DVD decks, the retailer makes a good margin and the customer buys at a lower price than established Japanese companies like Sony, Panasonic or Toshiba.
TALKING TECHNOLOGY
A year back in my Hong Kong hotel room, I eagerly lifted the lid of my shiny new Shinco player. I wanted to find out how it could be that a hitherto-unknown company could deliver features such as MP3 playback.
I was greeted by tell-tale signs of Sony technology; ribbon cables with Sony signage, a chipset with Sony branding and a mechanism that I had surely seen before in a Sony player?
There was also reference to Supreming Labs, which I later discovered is a joint technology research centre at Sunnyvale in the heart of Silicon valley in the USA. I assumed Shinco's technology was not exactly home-grown.
'You're wrong in that assumption', cautioned Dennis Kwong. 'It is mainly our own work. Yes we have technology sharing with Sony and other Japanese companies - in fact our factory manager visits Japan some four times each year to discuss such issues - but the core design is our own.
'On the Model 8320 which you previewed in your magazine, the MP3 decoding is not related to the Sony technology. Sony supply the servo board IC and transport mechanism, but the MPEG decoding and other unique functions are a result of our research and development. If you come to Shanghai we will show you.'
Shinco's invitation to visit its Changzhou factory is one that HCC intends to take up in future. Meanwhile, we were intrigued to hear about Shinco's imminent plans for DVD technology.
'Currently there is much interest in DVD portables, especially in the Chinese domestic market. We think that we can compete with overseas brands and produce an affordable, yet high quality product. So we can tell you, exclusively that such a model is now under development.'
'The Model DVD-980 is planned for launch in China before the Summer and will feature a 6.8in TFT display. It will have Dolby Digital and DTS outputs, plus MP3 and CD/CD-RW playback. It will feature a slimline body and come complete with a remote control. All for between 30-50 per cent less than a typical Japanese product,' claimed Dennis Kwong. On that basis, it could sell in Britain for under £500.
'We expect to launch it China first with export models following Europe and the USA will come next by the autumn because we need to do extensive safety testing.'
As if to emphasise that Shinco's DVD portable is not merely vapour-ware, Kwong demonstrated an SVCD version of the proposed product. The SVD-951 sells for around £135 (yes!) in Hong Kong and plays MPEG-2 SVCDs, MPEG-1 VCDs, regular CDs plus recordable CD-R and CD-RW media.
It has a RAM chip for memo-recording, a TFT screen and long-life lithium ion battery pack. You can read a full review in our sister magazine - What MP3 - launch edition (available at all good newsagents £2.95 - Ed).
Looking around Shinco's marketing showroom, I spotted a couple of famous Japanese brands on the shelf and assumed they were there for comparison purposes.
'Not so', explained Helen Tong. 'These are made by Shinco on an OEM basis. We have buyers from Europe, Japan and the USA who are confident in our quality and put their names on our product. 'That's an endorsement of our standards and our technology. We are not making cheap product but high quality at a reasonable price. As you can see, they include well-known names, but please don't mention them in your article because this would break a confidentiality clause.'
HCC respects Shinco's request. All we can say on this matter is that when consumers think they are buying a Japanese DVD player it's worth checking the 'Made In XXXX' label. If it says China, the chances are its a Shinco - or perhaps a Mico - one of Shinco's biggest rivals.
HIGH-TECH RESEARCH
Shinco's innovation of MP3-equipped DVD players is not all home grown. A technical development centre was set up in 1996 in Silicon Valley, USA with more than 120 engineers.
Eight AV specialists were invited as technical consultants to work alongside Japanese and American companies to develop MP3 and advanced MPEG chip design.
The company's newly developed DVD and Super VCD disc players have adopted designs that hail from the development centre. They are based upon a digital platform that uses micro-integration - a method of packing huge quantities of components into a single LSI chip. Hence MPEG decoding and MP3 audio compression can be delivered within the same silicon slice.
POLITICAL PROBLEMS?
Moving on, I touched on a subject dear to many HCC readers. That of regional coding and Chinese recognition (or lack of it) of DVD standards. According to Koji Hase, Chairman of the DVD Forum, who HCC interviewed recently, many Chinese companies are not respecting DVD licensing.
Dennis Kwong refuted such allegations: 'We are not producing region-free products for overseas sale. In Hong Kong it's different as there's a culture of code-free players, which all manufacturers accept. But if people employ loophole methods of enabling players, that is not our responsibility.
'As for Dolby Digital and DTS licensing we pay our dues to use these technologies. We have to, because as well as making DVD players we hope soon to be pressing DVD discs. Another division of Shinco manufacture software. Not DVD yet because we have yet to get licensing from Hollywood.
'At the current time it's difficult to discuss such business matters between China and US companies such as Time Warner or Columbia. It's all a matter of royalties and trust from film makers. So now we are concentrating on SVCD titles to support our current hardware in the Chinese market.'
I asked what the approximate value of the software market in China was. Kwong was somewhat vague in his reply: 'Honestly, no one really knows because of the illegal manufacture of VCD discs in the Asia region. As for growth of DVD hardware, all I can say is that in Hong Kong we have sold around 30,000 players in just two months. In China, DVD sales are rapidly growing because the price of players is falling. In the past, there was always a big gap in the price of VCD and DVD players. As that gap narrows more people are buying DVD players.
'I have to say that our own domestic market can be tough because people are used to buying poor-quality fake VCDs at low cost, rather than paying more for high-quality DVDs. But I feel that will change - partly as people begin to appreciate the better quality and partly due to clampdowns on illegal movie manufacture.'
NEXT UP EUROPE AND NET-DVD?
I asked whether Shinco would set up a subsidiary - such as Shinco UK - to handle marketing and servicing in Europe? Or would it appoint a large-scale distributor? I also asked about future technologies.
'We plan to set up different distributors in future, but you must realise that the export market for us is relatively new so we are operating via smaller importers rather than subsidiary companies. As for future-tech, we are planning to make a DVD player that accesses the internet. The concept is that the same convenient box gives web access and DVD playback.
'We see such a product as meeting need among the public who view the Web as a means of entertainment. Maybe newcomers won't have internet or DVD - so they can join the new high-tech era by buying both together. That's our concept.'
Finally, I asked about MP3 playback. It was the unique feature that first seized my attention a year back and remains unique to Chinese-made machines.
'When we came to look at what features to deliver to consumers we reacted to the market. MP3 compilation discs are popular here in China, and that's why we put this feature on our players.
'Only now are we realising that customers in the West want this feature too, but with the addition of CD-R and CD-RW compatibility. Please tell your readers that this is coming to our DVD players soon, at an affordable price.
Bob Tomalski, Home Cinema Choice, May 2000 |
