EXCLUSIVE: TV house brands made by Chinese manufacturers, are destroying the Australian TV industry, to the point that big brands like LG could pull out of the market if costs keep falling and profitability is eroded a senior LG Australia executive has said.Meanwhile a former Sony executive has said that “Retailers are dispensable” and if they keep selling house brands at the expense of premium TV brands, that brands like Sony could easily move to direct selling their products using Smart TV’s as a marketing tool.
During an exclusive interview with ChannelNews Tim Barnes, Senior Marketing Manager – Home Entertainment at LG Australia said that retailers in Australia were looking to sell more “TV house” brands as a means to drive “short term profits”.
He claims this is a misguided strategy that over time will strip profitability out of the market while destroying the premium brands like LG, Panasonic and Samsung that are actually “innovating” the market with new technology and design.
Yesterday Scott Browning the Marketing Director at JB Hi Fi admitted that JB Hi Fi was looking to expand sales of their Soniq TV house brand. claiming that Soniq delivered a high quality product and that the introduction of new consumer laws in Australia had resulted in consumers having a lot more confidence in house brands which he admits are cheaper than known brands like Sony, Panasonic, LG and Samsung.
Barnes claims that “Chinese” brands do not spend money driving consumers into stores, “They don’t innovate. This is left to brands like LG and Samsung and if we cannot make money selling TV’s there is no point really in being in the market “.
Barnes who worked in the US and Canadian markets prior to coming to Australia last year said that the issue is not isolated to Australia. In the UK and the USA big TV brands are seeing their share of the market eroded to cheap Chinese brands that are selling on price “not technology, design or product innovation” he said.
“In Australia an unhealthy mix of brands is starting to emerge and we have spent the past few weeks educating retailers on the issues associated with selling cheap Chinese brands”.
“Retailers are stripping value out of the category and when this happens the whole category will implode” he said.
“Initially the Chinese were in the sub 40″ TV category they were strong in the 32″ category. Now we are seeing them move into the over 50″ market with products that are cheap but don’t match up to the quality or technology found in premium branded TV’s”.
“This issue is a challenge to the industry because if we (LG) or brands like Samsung or Panasonic cannot make a profit there is no point being in the TV market in Australia. It is us who are creating the marketing and product innovation that drives consumers into stores and retailers have to recognise this”.
“The Chinese brands are not doing this. What they are doing is delivering a TV slapping dollars down for retailers and their catalogues and then leaving the likes of LG to drive traffic to the stores”.
“Take away the likes of LG and Samsung from the market and the industry will have real problems, especially if the Chinese brands have the lion’s share of the market. Retailers have got to have the right mix and premium brands that critical if they6 want consumers to keep walking into their stores”. Barnes said.
A former Sony Australia executive who was one of several laid off recently as Sony struggles to hold onto share in the consumer electronics market, said “Tim Barnes is right. The retailers do have a major problem because if vendors like Sony, Samsung and LG cannot make a profit selling via retailers they will start selling direct. Sony has already looked at this” he said.
He claims that big TV vendors could easily move to setting up display stores in capital Cities where consumers could view a product and then order online.
“Retailers are dispensable in today’s market. Most Premium TV brands are now delivering, a new generation of Smart TV’s that allow brands like Sony to market a new product directly to a consumer, over an IPTV network, as opposed to paying for free to air TV commercials. We can link them into Sony web sites to buy direct or we can drive them to a Sony display store”. They said.
“A lot of margin and Co-op marketing dollars are paid to the likes of JB Hi Fi and Harvey Norman, strip this out and there is more than enough margin to sell a premium brand direct” they added.
Song Su, General Manager of Soniq in Australia said “We only sell via JB Hi Fi in Australia and we are looking to significantly increase our sales this year in both the sub 40″ market and over 40″ market, We are very competitive”.
The Chinese Company recently took over the old Pioneer Electronics head office in Victoria, in an effort to expand their operations in Australia which at this stage is centred on one retailer.
In the USA Soniq is a major supplier of TV’s to Wal Mart.
“We are certain that we can continue to deliver high quality TV’s into the Australian market including in the over 50″ category. We are a major Company in China”. Su, said.
At one point Su, said that he was confident that Soniq could help JB hi Fi undercut Kogan Technologies who has been bragging of late that Kogan Made in China TV’s are cheaper than TV’s offered by Harvey Norman or JB Hi Fi.