The volume of china's color TV exports contracted sharply in the first nine months of 2007, reflecting weak technical and design capabilities, according to the latest customs report.

Exports in the January-September period fell 46.1 percent year-on-year to 32.05 million sets. These exports were valued at 5.79 billion U.S. dollars, down 3.4 percent from the same period last year.

Liquid crystal display (LCD) TV sets and plasma screen sets have been replacing traditional cathode ray tube (CRT) sets in the United States and the European Union, the biggest overseas markets for Chinese-made TV sets, said the report.

But China produces few LCD sets or plasma screens, with domestic manufacturers relying on imports for more than 90 percent of these items, which is a disadvantage in international competition.

"Many domestic TV makers are still assemblers, without much say in the display panels and modules, which are imported and constitute 70 percent to 80 percent of the production cost per set," said industry observer Liu Buchen, chief adviser with Kuafo Consulting.

The report also ascribed the decline in exports to a fee related to patent and technology issues in the United States. Since March, a fee of 15 to 30 U.S. dollars has been levied on each color TV set shipped to the United States.

As a result of the pending switch to digital TV in the United States, all sets sold from March 1 have had to meet the technical requirements of the U.S. Advanced Television Systems Committee, or ATSC, standard.

Many companies that hold patents for this standard, including Sony, Thomson and Tri-Vision, have charged Chinese producers for every set sold in the United States, according to the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

"The fees are a heavy burden for China's TV industry as its profit margin is very thin," said Bai Weimin, an official with the Ministry of Information.

Chinese manufacturers price CRT sets at 61 U.S. dollars on average and LCD TVs at 320 U.S. dollars. Gross profits are only 10 percent of the prices and the patent fee would wipe out the profits, he said. "As a result, some firms may have to retreat from the U.S. market."

The EU and Japan may also impose a similar patent fee on Chinese TV makers, said the report.

Domestic TV makers should develop and share proprietary core technology to improve the capability of the whole industry, it said. They could also jointly negotiate digital TV patent fees with foreign patent holders.

(Xinhua News Agency December 7, 2007)