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To: John Rieman who wrote (27127)	12/28/1997 11:28:00 AM
From: John Rieman	Respond to of 50808

Hong Kong plays wait and see....................................... asiansources.com DVD players Hong Kong makers play wait-and-see, take cues from leaders AS MANUFACTURERS in Japan, the United States and Europe move into second-generation DVD, most of their Hong Kong counterparts still are playing a waiting game before developing their first products. Nonetheless, most sources say they do plan to offer DVD players in the future. One local firm is particularly bullish about the line, and believes China could be a major market for the products. According to Sam Ho, marketing director of Yanion Co. Ltd, there will be three main markets for DVD players. These are the United States, which has the greatest potential, Europe, and Asia, including Japan and China. Based on demand for VCD players in China, Ho estimates that the country could account for 10 to 15 percent of the DVD market, or about 1 million units, provided Chinese consumers are able to afford them. Ho believes prices of DVD players are going to drop this year as component prices experience a sharp fall. "I foresee the price of DVD diving. All the critical components will come down quite fast," he said. "It will follow the same trend as VCD." At present, Ho says most of the components are available from a variety of sources. However, one potential problem does exist. Japanese component suppliers still control the supply of the essential servo IC control mechanism. "This is the only component the Japanese can still ask a high price for. It depends on how Japanese manufacturers want to control it," Ho said. Software sourcing problems Ho, like the others interviewed, also cited the lack of suitable software as a potential problem. He explained that although DVD offers better quality, it is only possible when taken from a high-quality master. As a result, VCD publishers may not be able to make use of the higher quality of the new product. Still, Ho is confident that with the computer market driving demand, DVD players will become a more popular consumer product this year. By then Yanion should be ready to develop its own model. The company plans to price its product priced between $260 and $300, FOB Hong Kong, or 10 to 15 percent lower than most Japanese products. To ensure that its product is at the leading edge, Yanion has joined the SD Group, an organization originally formed by major Japanese and European manufacturers to work on setting a standard format for DVD. Ho explained that by being a member of the group, Yanion receives the latest technical information on DVD developments. The company is one of the few Hong Kong manufacturers to join the group, which Ho said is not known to many people. Although Ho would not give a precise schedule for the firm's move into DVD production he did say: "It depends on the price and the market. For instance, in the United States, once the retail price reaches $299, it will become a major consumer product."