Flat panel display makers form alliance

Move aimed at raising global competitiveness of domestic firms

Chinese flat panel display makers formed an alliance over the weekend in a bid to raise their competitiveness in the global market, the Xinhua News Agency reported.

Experts welcomed the move and said more efforts were needed to support this strategically important high-tech industry, which makes raw materials for flat panel televisions (TVs), smartphones and electronic devices featuring a display.

China designated seven industries as strategic emerging industries in May 2012 and the flat panel display sector was listed under the category of the Information Technology Industry together with other emerging sectors such as ultra-high speed optical fiber and wireless communication.

The alliance was launched during a forum Saturday where officials, company representatives and experts held discussion on mergers between domestic and overseas players, and establishment of industrial clusters and national laboratories.

The value of the sector hit 107 billion yuan ($17.45 billion) in 2013, up 44.6 percent year-on-year and accounting for 11.4 percent of the global value, according to Qiao Yueshan, an official with the Ministry of Industry and Information Technology (MIIT) attending the event.

BOE Technology Group Co, a major domestic display provider, was unavailable for immediate comment on Sunday.

Beijing-based Tunghsu Group, which reportedly owns the country's first assembly line producing 5th generation liquid crystal display (LCD) glass substrates with fully homegrown technologies, could not be reached for comment on Sunday.

Wang Jun, an industry analyst at Beijing-based consultancy Analysys International, said Chinese flat panel display makers, currently perched on the mid-level and low-end echelons of the market, do not compete with world's leading panel display makers such as Samsung Display and LG Display.

But they face growing pressure from emerging competitors such as those from India and Malaysia.

"The setting up of the alliance will allow more discussion and result in the establishment of industry standards, creating a fairer and more orderly environment for domestic companies to thrive," Wang told the Global Times Sunday.

"Without an industry alliance, the regulations may not fully and adequately reflect the inherent trends of specific industries, and may even restrict growth," Wang said.

Despite the growth of the sector, experts said that most of the high-end display panels still have to be imported from overseas.

China imported LCD panel displays worth $28.67 billion during the first eight months of 2014, down 15 percent from the same period of 2013, the latest figure from the General Administration of Customs indicated.

Lu Renbo, director of Consumer Electronic Product Survey Office at the China Electronic Chamber of Commerce, said China now lags behind due to neglect of this sector in the last round of industry transformation years ago and lack of industry talents.

"China excels in low-end assembling of the final products, thanks to the country's low labor cost. Five to 10 years ago, foreign panel makers monopolized the market and only sold outdated products to Chinese companies which assembled TVs," Lu told the Global Times Sunday.

To date, roughly over 70 percent of the equipment used for producing flat panel displays, as well as accessories and materials still need to be imported, Qiao from the MIIT said.

To move up the value chain, Lu suggested the government should lend more support to the sector with favorable industrial policies, such as increased input in research and development, higher taxes on foreign products and tax cuts for domestic firms.

Experts said the emergence of industrial clusters around the country is also productive in terms of attracting talents, and providing logistics services.

To have companies positioned in the upper and lower reaches of the supply chain in the vicinity also helps to boost the efficiency and brings down costs for panel display manufacturers, Wang said.

As for localities, they like to see such high-tech clusters to be based in their jurisdictions, because the investments serve as endorsements to the locality's economic strength, and provide fiscal income and jobs, Wang noted.