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TCL & Hisense Aim to Challenge High-End TV Brands, Offer Cheap Ultra HD

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By Aparna Narayanan, dealnews contributor

At the Consumer Electronics Show 2013 in January, TV makers began to push ultra high-def gadgets that boggled the mind. Their 50" to 110" sets had screens and resolutions four times greater than today's HD models. But an even bigger surprise lay in store: The ultra HD televisions from the likes of Sony and Samsung shared the convention floor in Las Vegas with those from Hisense and TCL.

If the latter names sound unfamiliar, they shouldn't. American consumers have been buying TV sets built by these Chinese companies at big-box stores for the last decade, typically as the retailer's house brand. But now these third-tier TV manufacturers are reaching for the stars — offering luxe tech under their own brand name, a far cry from the low end products for which they are typically known.

Generic Brand TV Manufacturers Offer High-End HDTVs

Technology analyst Rob Enderle believes that these generic TV manufacturers are seeking to expand out of China more aggressively and want to enter the U.S. with complete lines. "They aren't just interested in the low margin stuff; they want access to the high margin sales as well," he said in an email.

In interviews, company representatives confirmed their ambitious plans for the lucrative American television scene. According to Product Manager Chris Porter, Hisense already ranks among the top five manufacturers in China, Australia, South Africa, and Malaysia. "To continue to stay at this position as a global player, the North American market is very, very important to us," he said.

After a decade in the OEM business on this soil, Hisense established an office in Atlanta for its own R&D, engineering, sales, repairs, and customer service staff. The company's decision two years ago to launch its own brand name here was a natural progression of this experience, Porter explained. "We're ready for the U.S. market now; the timing is right." Tom Heffernan, Director of Marketing, similarly described TCL as "much more of a tier-one brand" in China, Europe, and South America, even if it is seen as "budget" on these shores. "The U.S. is the next big market," he said, explaining TCL's promotional blitz at CES, including the launch of a 110" UHDTV with 3D capabilities (dubbed the "China Star") and its product placement deal in one of 2013's hottest action movies, Iron Man 3. Heffernan described this as "the first steps in building our name in the U.S."

Entry into the U.S. Market

Like Hisense, TCL has sold its products under other brand names until two years ago when the company decided to get its own name out in the United States. But even as these companies seek to build a broader brand awareness, they are alert to the flux in the consumer electronics industry. Established retailers such as Circuit City have disappeared or downsized, and tier-one brands like Sony are struggling financially. Hisense sees this as an opportunity to make inroads in North America, said Porter.

Hence the attention-grabbing fanfare with which the company launched its ultra HD sets in Las Vegas. "Our strategy for entering this market [under our own brand name] is to let people understand what Hisense's heritage is."

That heritage, he explained, includes ranking as China's number one TV maker; dominating 16 subsidiaries and 130 markets worldwide; and having an efficient vertically integrated business that makes its own components, from LCD modules to display panels. With such establishment, company officials deliberately sought not to position the brand as entry level in the U.S. In the mature American TV landscape, several budget brands failed in recent years and became "simply a brand label available for lease by any number of manufacturers" — a fate the company wishes to avoid, said Porter.

Instead, Hisense showcased its advanced technologies with 50", 58", 65", 84", and 110" ultra high-def sets at CES 2013. For now Porter sees stronger demand for entry-level sized sets, which will likely hit retail shelves late in the second quarter. He describes ultra HD as a "developing market," with 84" and 110" models representing "a smaller piece of an already small pie;" these sets have no release date as yet. TCL's Heffernan also said its 110" ultra HD television won't be sold in the States this year, although its 5500 series of UHDTVs is set to launch in June or July. "We're offering more higher technology options than we have in the past to show the strength and ability of our brand."

Big Screen TVs at Bigger Prices?

Both Porter and Heffernan highlighted the sleek industrial design and advanced features of their new TV sets — including ultra-thin frames, a brushed aluminum look, and OLED displays with a broad color gamut and blazing-fast response rates. This is a far cry from "the very ugly, black plastic design" of their competitors' offerings at the same price point, according to Porter. Enderle agreed that the entry of budget TV makers into the super-high end market will benefit budget-conscious consumers as Chinese companies are willing to lose money to gain market share initially, he said, "so we will see better consumer electronics products for lower prices at an increasing rate."

Overall, consumers need not worry that Hisense and TCL will exit the cheaper sector of consumer electronics altogether thereby leaving fewer budget options around. "We'll still have some entry level models that will be extremely aggressive on price," said Heffernan. But these TV makers want to bring the premium models that are already being sold in other countries to American consumers — and they plan to offer better value relative to the competition. "It will be a high-end product, a tier-one product, but offered at more of a tier-three price as we establish ourselves," said Heffernan.

Front page photo credit: BusinessWeek
Photo credits top to bottom: Wired,
PC Mag, and Display Search Blog



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1 comment
Jumpman
I feel like ultra hd / 4k tech is arriving a bit too soon. Content providers haven't really caught up to HD yet. Standard def video looks terrible on HD sets... how's it going to look on these 4k monsters?
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