Chinese television makers face a sharp cut in margins with a
requirement to pay a ten-US dollar digital TV patent fee for each
box exported to the United States, said an industry
association.
According to the US digital TV switching timetable, all sets
sold from March 1 this year must conform to the technical
requirements of the US Advanced Television Systems Committee, or
ATSC standard.
The China Chamber of Commerce for Import and Export of Machinery
and Electronic Products said in a report that five of the more than
170 patent holders of the ATSC standard, including Sony, Thomson
and Tri-Vision, have demanded Chinese producers pay ten US dollars
per set sold in the US.
The patent fee could amount to US$160 million as Chinese
manufacturers were estimated to have exported 16 million color TV
sets to the US last year, according to China's Ministry of
Information.
The fee may rise with more members of the standard demanding a
patent fee in the future, Guangzhou-based Southern Metropolis
News quoted the chamber as saying. An earlier report said it
could be as high as US$23 per unit.
"Our South Korean peers are being charged US$20 to 30 for each
box exported to the US. It could possibly to be the case in China
too," said an intellectual property consultant at China's leading
home appliance maker Changhong Electric Appliance, who refused to
gave his name.
The fees will deal a heavy blow to China's TV industry as its
profit margin is very thin, Bai Weimin, of the products bureau of
the Ministry of Information, was quoted by the China Securities
Journal as saying.
Chinese manufacturers priced CRT sets at an average US$61.2 and
LCD TVs at an average US$320.39. The gross profits only accounted
for 10 percent of the price, and the patent fee would mean no
profits for Chinese producers, Bai said.
"As a result, some firms may have to retreat from the US
market."
Since the early 1990s, China's color TV producers have paid five
to seven US dollars in patent fees to foreign appliance makers like
Thomson, Sony and Tri-Vision for each TV set they sold.
Analysts said TCL, China's biggest TV maker, and Xiamen Overseas
Chinese Electronic Co., Ltd. (Xoceco) were expected to be hit
hardest as they had the largest share of TV exports to the US.
However, the ATSC standard offered no guarantee of the patent
fee value from May 1. Analysts said the exact amount would only be
agreed after a series of negotiations and even lengthy lawsuits,
which could last years.
Bai said the China Video Industry Association (CVIA) had
employed lawyers to negotiate with Canada's Tri-Vision and work
with the High-Definition Multimedia Interface founded by electronic
multinationals, including Sony Corporation, Thomson and Hitachi, to
slash the patent fee.
The CVIA said 13 Chinese producers, including TCL, Changhong,
Haier, and Xoceco, would open a joint venture in Shenzhen at the
end of this month to negotiate the digital TV patent fee with
foreign patent holders.
Company officials said negotiations would help in solving some,
but not all, of the struggling TV industry's problems.
Xoceco spokesman Wei Zili said: "Domestic TV producers should
accelerate the development of core technologies. This is the
ultimate solution."
Wei said the 13 major home appliance makers had started work on
their joint digital TV patent pool.
(Xinhua News Agency January 17, 2007)