China's DVD manufacturer's ready for global market by 2008
2008-08-11

The DVD has come to dominate video even more quickly than the CD conquered audio in the 1980s. Along with changing what we watch--discs rather than tapes--DVDs are changing how we watch. February 19, 2008 has historical significance to the global DVD industry. As there has been no compromise between the HD-DVD camp and the companies that sponsor Blue ray technology, HD DVD has lost its market finally, after years of competition between blue-ray DVD and HD DVD, with Toshiba giving up its support to HD DVD. The battle may be all but over, but China is determined to keep Western and Japanese manufacturers on their toes. As a big manufacturing nation, China is only a stander-by in this competition among foreign giants. Facing fierce competition, patent fee's compression, industrial profits' great slide, China's DVD industry faces challenges and changes its roles. The First Change: Transforming "Made in China" to "Innovate in China" China's DVD manufacturing position has further strengthened in 2007. Statistics show that 94% of global DVD players are made in China. DVD content providers are mainly from U.S and Japan; chip providers are mainly from U.S, Japan and China Taiwan; disk sheets' and whole machines' manufacturings centralize in China mainland. The export of DVD players faced winter in 2007, with 143 million sets, down 6.4% over 2006, which the export volume was 153 million sets. At present, competitive pattern is not only the product competition, but also technical and service competitions. Only by breakthoughs in core technology and innovations in technical standard, can China enhanced itself from a producer to a creator.. At such a critical point, one Chinese manufacturer announced recently it has completed the first production line for China Blue High-definition (CBHD) disc format. Experts said Volume production will begin in the fourth quarter of 2008 for the China market initially. The Second Change: Transforming Specialization to Diversification sales volume of DVD players in China was a slide in 2007. Data shows that the growth of sales volume of China's DVD player slowed down from 2003 to 2006. In 2007, the sales volume was 18.6 million sets, down 3.9% over 2006. This shows that after many years of rapid development, China's SD DVD market's saturation further increased, valid demands gradually decrease. Meanwhile, unfair competition result in the vicious competition in pricing of DVD players. Pressure in profits have forced some enterprises to give up DVD player manufacturing. Brand concentration further improves. The enterprises originally in the DVD player field is transferring their focus. BBK, Wanlida, Shinco and Amoi now pay more attention to LCD TV and mobile phone fields. China's DVD manufacturers transform from specialization to diversification. The Third Change: Replace and Coexist

CBHD obviously faces considerable challenges - namely Blu-Ray which enjoys a significant head start. Entry-level Blue-Ray players have also sharply declined in price as the format gained traction worldwide and HD-DVD became extinct. CBHD also doesn't have the backing of any major Hollywood studio. The advantage of CBHD is manufacturing price. Apparently, a production line of DVDs can be fitted to make CBHD discs for a mere $800,000, compared to the $3m needed to do the same for Blu-Ray. Vendors also pay a royalty of 55 yuan (about $8.10) to make a CBHD player, which beats Sony's Blu-Ray fee. According to datas, in terms of market status, Blu-ray only dominates its competitors at the standard level. In China's HD market, the market prospect of Blu-ray players and local producted drivers (CBHD) is still unclear.