Fu Jiaozhi, an official from the China Household Electric Appliance Commercial Association, said the high-end TV sets market will be the focus for competition between rival manufacturers.

The market, which includes pure-flat, high-definition, plasma, liquefied crystal display and projection TV, will appear like a warfield, he said.

"Domestic makers have paid more attention to high-tech development and are approaching the standards of their foreign counterparts," he said.

"Foreign makers are clinging to this field as they have lost out in the low-end market."

Three large domestic TV set makers - Skyworth, Changhong and TCL - all cut the prices of their high-end TV sets last week.

The reduction was partly to cash in on the forthcoming week-long Labor Day holidays and reflected TV makers' growing awareness of China's high-end TV market, said Fu.

Sichuan Changhong Electric Co - China's largest color TV manufacturer - has cut the price of its projection TV products by 25 percent on average, with a largest drop of 40 percent.

A 43-inch projection TV set will now cost 8,000 yuan (US$966), compared with 10,500 yuan (US$1,270) previously.

Chnaghong spokesman Liu Haizhong said lower prices were the result of lower production costs following innovation and adoption of new technology.

"The adjustment in projection TV prices is aimed at helping the company expand the size of the high-end market," Liu said.

Fu said those moves reveal that domestic TV manufacturers are trying to strengthen their grip on this lucrative market, which is expected to become a new revenue engine.

CCID, a major IT industry consulting company in China, predicted sales of projection TVs will reach 1.2-1.5 million sets this year from 800,000 sets last year.

According to a survey among would-be TV buyers, 53.4 percent were planning to buy flat-screen TV sets, and 12 percent favored projection televisions. Liquefied crystal display TVs, ultra-thin TVs and digital TVs also were popular.

As a result, many domestic TV sets makers have decided to expand the output of high-end products this year, Fu said.

Changhong, which has captured 18.5 percent of the domestic projection TV market, plans to add four production lines and put out 500,000 projection TV sets this year.

Hisense has increased its production lines of high-definition and projection TVs by an annual capacity of 4 million units.

But foreign makers, who have shied away from the domestic low-end market because of the never-ending price wars, will not give up on the high-end market easily, Fu said.

Foreign TV makers have 70 percent market share for high-end TV sets in China.

Foreign giants such as Toshiba, Sony and Sharp have all pledged to increase their focus on high-tech products in China.

In reaction to the price reduction, Sony and Toshiba said they would not follow immediately.

But experts said the price gap between foreign and domestic brands of TV sets is shrinking as foreign manufacturers began to lower prices for high-end TV sets gradually since last year.

(China Daily April 14, 2003)