Samsung is focused on the premium end of the TV market as its strategy to stem the torrent of Chinese companies eroding its market share.
Even though the Chinese makers are nibbling at South Korean market share, those Korean TV makers continue to enjoy dominance at the premium end of the global TV market.
South Korean TV makers are slowly losing ground in the global market in the face of Chinese rivals and faltering TV demand worldwide despite their strategy of keeping the tech edge over Chinese rivals by developing new innovative products.
Let’s look at some numbers. According to the a report in August by market tracker DisplaySearch, the combined share of Samsung Electronics and LG Electronics — the two big South Korean players — came to 34.8 percent in the first half of 2015. That’s a 4.3 percent drop from a year ago. Not much but the question is whether this is an irreversible trend.
In the meantime, Chinese makers saw their combined share soar 4.6 percentage points to 25.9 percent over the cited period.
Samsung’s share dipped to 20.8 percent, while LG’s retreated to 13.9 percent over the same period, the report said.
LG Electronics is mass-producing OLED TVs, first in the world, while Samsung Electronics is focusing on premium models such as LCD-based SUHD TVs. It is top-notch technology, but the jury is still out on whether that is innovative enough or if even out competing their Chinese rival on the premium end is the right strategy going forward.
TCL Corp.’s share increased to 5.7 percent from 5.1 percent, and its local rival Hisense Co. also bolstered its presence to 5.4 percent of the global share from 4.9 percent.
South Korean companies’ TV sales have slowed over the past year. Samsung sold 24.1 million units in the first six months of 2015, down 15.2 percent from the previous year. LG’s TV sales sank 16 percent on-year to 13.6 million units as of end-June.
In contrast, Chinese makers boosted their combined sales to 25.4 million units from 21.9 million units during that time.
While the financial media has reported that China weakening its currency by letting it float unhindered in currency markets make things harder for Korean makers, that seems a little exaggerated.
From May, the Chinese Yuan decreased in value in relation to the Korean won by about 5 percent to about 5.45 Yuan for 1,000 Korean won from about 5.71 Yuan.
China’s move may further hurt Korean companies that have already been struggling to vie with Japanese firms backed by a cheaper currency, market watchers here said, adding there is a need to draw up fresh strategies that will help tide over the slackening sales.
Sure, a weaker Yuan is a disadvantage for Korean exporters since it undermines their price competitiveness versus Chinese rivals in the global market. But a 5 percent difference over a four month period is not going to make a crucial difference. It is one factor among many at play here.