Figure 1: LCD TV Sales During the Lunar New Year Holiday
Based on recent supply chain checks, LCD TV sales recovered during the three weeks of the Chinese New Year holiday, from Feb. 2 to Feb. 22, 2015, unlike the weakness we saw during the same period in 2014. Our preliminary estimate is that LCD TV sales volume totaled 3.7 million units, a 4 percent increase Y/Y. The positive results were basically in line with most TV makers’ expectations. As a result, LCD TV inventories were back to normal, around six to seven weeks after the holiday.
Because of the growing share of online sales during non-sale periods, traditional holiday periods have become less important in recent years. The comparatively stronger performance this year was the result of a weaker comparison base in 2014 after the end of a government energy-saving subsidy program at that time.
During the Chinese New Year holiday, TV sales were mainly driven by tier 3-4 markets in rural areas, where those that work in the urban coastal cities buy TVs before returning to their rural homes. Because rural customers have lower incomes, we saw entry-level smaller-size LCD TVs sell well, while major local Chinese brands gained share, especially in rural markets.
There was not an aggressive price war for TVs in either traditional channels or online channels due to firm panel prices and tough financial performance from major TV brands. New featured LCD TVs, including those with curved and high color gamut displays, did not attract attention during the holiday. Fewer people selected these premium TVs because the major local brands have not promoted curved or high color gamut LCD TVs in the domestic market, and imported models are quite expensive.
It seems that the drive to refill panel inventory levels after the holiday has not been strong. The panel purchasing approach by major local TV manufacturers is to be more conservative, while panel prices are getting soft and TV exports are weak in early 2015. We believe the major TV vendors will not restock panels aggressively until the upcoming promotional period in May or the launch of the next round of government subsidies, the so-called energy-efficiency pacemakers plan, which may launch in the coming months.