Korean giant looking to expand TV operations with Taiwanese partner

LG Electronics Co, the Korean consumer electronics giant, is considering expanding its manufacturing partnership with Taiwanese television makers in a bid to further trim costs, a high-ranking official said in Taipei this week.

LG's current partnership with Taiwanese TV maker Ya Hsin Industrial Co (雅新實業) has helped the Korean company get around the 10 percent import tariff and 13 percent commodity tax on its 32-inch liquid-crystal-display (LCD) TVs sold in Taiwan.

"It's a trend to manufacture the sleek TVs locally to fend off the intensive competition by saving costs," said Sam Park, an assistant general-manager of LG Electronics' Taiwan branch, during an interview with the Taipei Times on Wednesday.

Competition in the Taiwanese market in particular is heating up this year after a group of other local brands mushroomed, he said, as companies here get easier access to LCD panel supplies from AU Optornics Corp (友達光電) and Chi Mei Optoelectronics Corp (奇美電子).

Besides, there are a lot of good TV makers in Taiwan, he continued.

After launching the mainstream 32-inch models through such a partnership, "It's worth thinking about extending the partnership to the manufacture of 37-inch models in the future," Park said. But, no final decision has been made by LG's headquarters yet, he added.

LG has already stopped shipping 32-inch models into Taiwan from Korea, although it still imports flat panels made by its slim-screen manufacturing affiliate, LG Philips LCD Co, as well as other components, Park said.

The company started introducing its LCD-TVs in the middle of this year to Taiwan, after grabbing a significant share of the plasma-display-panel (PDP) TV market.

An LG 32-inch LCD-TV is now priced at NT$59,990 (US$1,800), the same as Sony's new Bravia flat TV series with a similar specification.

With the new series, Sony aims to reclaim top position in the world's TV market, wooing price-sensitive consumers. Sony has targeted a 30-percent share of the worldwide market.

Sony's move could trigger a new price war in Taiwan's LCD-TV market, currently led by Matsushita Electric Industrial Co, which makes the well-known Panasonic brand.

Though Taiwan is a small market it provides a miniature overview of the world's major LCD markets, Park said.

To counter Sony's relatively low-priced models, Tatung Co (大同), a household name for local consumers, launched a new 32-inch model priced only at NT$29,900 last Wednesday, when Sony debuted its new models in Taiwan, a Chinese-language newspaper said.

Other local TV vendors including Sampo Corp (聲寶) and Taiwan Kolin Co (歌林) also followed suit, the report said. Teco Electrics and Machinery Co (東元) is also considering slashing prices to safeguard its market position, it said.

LG, however, is not rushing to join the price war.

"We haven't seen a sales setback since Sony launched the Bravia series. But we are concerned about Sony's ambition to regain market share and we are closely monitoring its impact on the market," Park said.

Park admitted that Sony's new series has already received a positive response from local consumers, just days after the launch, mostly because of its strong brand name.

"But, we don't plan to cut prices as a countermeasure yet," he said, adding that LG would not rule out the possibility of slashing prices to vie for a bigger share.