China’s 13 top TV set makers are expected to form an industry alliance to handle standardization and intellectual property right issues as early as this month, as they strive to gain a bigger say in the global market place.
Lin Yuanfang, executive vice-president of the China Video Industry Association (CVIA), which includes almost all Chinese TV makers, said on Friday that the 13 companies are also already going through the registration process and the body’s membership may be announced as early as this month.
It will be the first time that domestic manufacturers in China, the world’s biggest TV maker, have formed such an organization.
The move comes as domestic companies face mounting challenges in terms of intellectual property rights as they play a greater global role, as well as from the shift from analogue to digital TV and the transformation from traditional cathode ray tube TVs to flat-panel products.
"No single maker can afford royalty demands from foreign organizations, so setting up a mutual entity to handle these issues will greatly increase their bargaining power," said Lin.
The 13 founders include almost all major TV makers such as TCL, Changhong, Hisense, Skyworth and Haier, which have a combined market share of about 60 per cent.
A pressing challenge for domestic manufacturers is the US decision to stop analogue TV transmissions next March. This means that virtually every new set in that market must meet technical standards and manufacturers need to pay royalties to get relevant patents, such as those in the US digital TV standard Advanced Television Systems Committee (ATSC).
It is estimated that to get all necessary ATSC patents, a Chinese firm needs to pay about US$30 per TV set.
Lin said as many as nine foreign patent holders and organizations have demanded royalties from Chinese manufacturers and a weak bargaining position has been a common problem for Chinese firms.
By forming alliance, domestic makers will be able to bargain for a fair price by taking advantage of their strong manufacturing capability and a significant market share in China and other parts of the world.
According to the latest statistics from the Ministry of Information Industry, the country produced 63.43 million colour TV sets in the first three quarters of this year, with half of them exported to markets such as Europe and the United States.
In September, at a CVIA summit, Li Dongsheng, chairman of the alliance and also chief of TCL, China’s largest TV maker, proposed that the nation’s TV manufacturers should work together in terms of intellectual property rights.
"The competition before is not as intense as this time, so many of the firms have realized the weakness of working alone," said Sun Xinguo, director of the research department of CVIA.
Guo Wei, a spokeswoman for TCL, also said that although her firm got a good patent portfolio from the partnership with French firm Thomson to trade off patents with foreign holders, adding that it is necessary for all the firms to work together, not only to defend, but also attack with their own patents.
The country, the largest consumer and maker of TV sets, has issued or been working on its own standards for digital, high-definition and flat-panel TVs, as well as audio and visual coding and decoding technologies.
Many Chinese TV makers have also participated in various kinds of standardization groups and contributed their patents to get a share in future patent licensing and cross-licensing.