China TV Standard



China has a population (1.3 billion) that is double that of the US
(300m) and EU (350m) combined. Chinese have an insatiable appetite
for modern technology provided they are cheap and of course reasonably
dependable. In three years no name DVD and MVD units out of China
have practically massacared all other manufacturers in this market
segnment. No mobile phone manufaturer dares to put out any model or
standard that does not incorporate design features demanded by the
China market. There is the "China Price" that is hollowing out
manufacturing in G7 countries. The fly in the ointment is that Chinese
manufacturers actually get very little out of all that volume. A DVD
player that retails for $50 costs $30 landed. Out of that $20 for the
upstream end $10 goes to royalty fees. Less materials and
manufacturing costs and the accepted wisdom is that the manufacturer
sees only $1 in profits.

The article below points to the strategy the Chinese government is
adopting to get better value for all the effort Chinese manufacturing
is benefitting everyone else except China. I think China has a very
good chance of succeeding. The only strategy direction I can add to
this scenario is that the China standard can become the HDdigitalTV
standard for the rest of the world. Other than the G7 countries, the
other countries do not have any stake in one digital standard or
another as they move from legacy analog (NTSC, PAL or SECAM) to
digital. Thus the Chinese hardware (TV, DVD, MVD, cellphones,
handheld uprocessor devices, etc) should find early adoption in South
America, Russia and Central Asia, Africa, the Middle East, more(?).
Price sensitivity is the primary consideration in these markets. The
rest of the developed world will then find it pointless to adopt their
own and likely incompatible standards for the market size just isn't
there. China's timing is just right for an early market presence
results in "The first past the post takes the whole market."


Government announces digital TV transmission standard
By Liu Baijia (China Daily)
Updated: 2006-08-31 08:55
http://www.chinadaily.com.cn/bizchina/2006-08/31/content_678252.htm

The Chinese Government finally released the nation's digital TV
terrestrial transmission standard yesterday, but it will take some
time before digital terrestrial broadcasting becomes a significant
business in the world's largest TV market.

The Standardization Administration of China said yesterday on its
website that the proposal for the transmission standard was approved
on August 18 as the compulsory national standard, and will be
effective from August 1 next year.

Along with 3G mobile communications, the digitalization of China's
broadcasting is regarded as a lucrative market, which could be worth
over 1 trillion yuan (US$125 billion). Therefore, it will become a key
area in which China wants to have its own standard in order to cut
royalty payments and assume an advantageous position in the global
industry.

Digital TV broadcasting takes place in three ways cable, satellite
and terrestrial, with China mainly following international standards
in the first two areas.

Cable broadcasting is the only major transmission format currently in
use in China, as the terrestrial standard was not decided until August
18 and satellites for direct broadcasting have yet to be launched.

At the end of last year, only four million households across the
nation had access to digital cable TV broadcasting, with the number
expected to reach 10 million this year.

But the country has more than 400 million households with TV sets and
only 128 million had access to cable TV at the end of last year,
meaning that the majority of digital TV transmission is expected to
rely on the terrestrial method.
China began to develop its own terrestrial transmission standard in
2001. Proposals made by Tsinghua University and Shanghai Jiaotong
University were later merged into a final draft proposal.

The Shanghai version borrowed some principles from the US standard and
is suitable for transmission in sparsely populated remote areas, while
the Tsinghua proposal is based on the same modulation method as
current and future mobile communication standards and has its own
patents, which will cut royalty costs.

Zeng Huiming, editor of the Radio and TV Information magazine, said
the standard came out late, because of the process of reaching a
compromise, but it may not be a big problem for the industry, as China
has just started to promote the terrestrial transmission model.

He believed that an essentially Chinese version of the standard would
not pose a serious threat to foreign equipment manufacturers, as many
of them were already involved in the Chinese proposals and plenty of
time remains for them to adapt the new standard.

Sun Min, vice-president and board secretary of Tsinghua Tongfang Co
Ltd, agreed: "This is just a beginning with this standard. The real
commercial benefits still depend on future development."

Sun's company, a flagship enterprise of Tsinghua University, is
believed to be a major beneficiary of the Tsinghua standard.

He said his firm had been working on some transmission and network
construction trials, but these remain in their infancy.


.

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