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Revitalization Plan for Industries
Special> Revitalization Plan for Industries
UPDATED: March 3, 2009 NO. 9 MAR. 5, 2009
Overdue for Innovation
China strives to rev up technological and service innovations in its electronics and information industry

On the technology front, more global television makers are producing a variety of flat liquid-crystal display (LCD) screens, while China mainly continues to produce outdated cathode-ray tube (CRT) screens. The CRT color TV screens that the country produces account for 80 percent of the world's total. LCD television manufacturing in China is largely processing and assembling in nature, and makers import large-size LCD screens for most of their production work. According to data from the Ministry of Industry and Information, China imported 1.9 billion LCD screens totaling $44.1 billion last year, the second largest imported product in this industry behind integrated circuit imports.

As a solution, both the Central Govern-ment and local governments are encouraging color TV makers to upgrade their technologies and products to consolidate their market share worldwide.

"The government wants to reduce their reliance on imports and foreign investments by offering more policy support to the LCD screen production and enhance the industry's competitiveness," Zhu Lijun, a TV industry analyst at China Galaxy Securities Co. Ltd., told Nanfang Daily.

China's LCD TV makers have to invest more in LCD screen research and development, because LCD screen accounts for 70 percent of the cost of an LCD set and otherwise they will remain in a disadvantaged position when it comes to negotiating prices for their products, Zhu said.

Guangdong Province, China's largest manufacturing base and home to TV maker Konka Group Co. Ltd. and TCL Multimedia Technology Holdings, has already felt the pinch. The provincial government last year designated a special fund to encourage the research and production of flat-screen technologies. The province will import the latest 7.5-generation LCD screen production lines and nibble into the more lucrative upmarket, according to the Nanfang Daily report.

Foshan is one step ahead of other cities in Guangdong in developing flat-panel screens. The city has established three world-class display production lines based on different technologies and holds independent intellectual property rights for them.

Shenzhen-based Konka last year spent around 900 million yuan ($131.8 million) on an LCD module production line in Kunshan, Jiangsu Province, which is expected to produce 2.4 million panels a year when it goes into operation later this year.

The Qingdao-based Hisense Group, the first of China's TV makers to switch to producing upmarket products, started producing its first LCD products in September 2007. It expects its four production lines to produce 3 million screens this year.

Ripple effect

The electronics and information industry, which is labor-, capital- and technology-intensive, has long and complicated industrial chains and plays a crucial role in boosting employment and promoting the transition of China's economic growth model, Wang said.

When China's telecommunication sector finally received 3G licenses in January, it sparked wide speculation that an investment peak in 3G networks would benefit not only telecom operators and telecommunication equipment providers, but also related companies. It has created a ripple effect in subsectors involving cell phone makers, network integration service providers and chip makers.

From 2009 to 2010, the Chinese Government will inject total investments worth about 600 billion yuan ($87.8 billion) in the sector to promote the integration of 3G mobile networks, the next generation Internet, Web 2.0 and the digital television network to provide multi-media services on different platforms. It is expected to mitigate the effects of shrinking overseas orders for China's telecommunications equipment.

The State Council has announced 10 measures to boost domestic demand since the end of last year and will spend 15 billion yuan ($219.6 million) on technology upgrades in various industries. It wants the software industry, for instance, to promote information services in rural areas and IT applications in traditional industries, as well as network infrastructure design and maintenance services.

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