According to the annual report released by Skyworth Group recently, the sales revenue of Skyworth TV products this year was 20.163 billion Hong Kong dollars. What is the reason for Skyworth to achieve this profit? What adjustments will be made in the future in the direction of the business? The color TV industry is facing a critical period of transition to LED and 3D TV. How does Skyworth consider and layout in this field?
The following is an excerpt from the interview with Zhang Xuebin, Chairman of Skyworth Group, from Face to Face.
Zhang Xuebin: Play 60 points, pass the test. Although we look at the main financial indicators, it is still good in the industry, but from our own point of view, we do have many problems. For example, our sales growth rate has slowed down significantly. Last year, our overall gross profit margin was a little down. Our efficiency in the use of funds is not obvious, and so on. According to this, it should be said that we are improving.
Moderator: This year's domestic color TV industry profits have an overall downward trend. What do you think is the reason?
Zhang Xuebin: The first one is because the transformation and upgrading of technology is too fast. It is a good thing to upgrade. After upgrading the new product, it will come out, but if the whole industry is not efficient enough, then all the enterprises in the upgrade process will be one. Enormous pressure. Because the upgrade is faster means that the original product should be processed quickly, then the original product has to be sacrificed at the price, and the gross profit will be sacrificed. This is the first major.
The second reason is still a pattern of industry competition, because the overall demand last year was not as good as everyone expected at the beginning of the year. In fact, this is the case. At the beginning of the year, everyone had very high expectations. All the companies made high estimates and made sufficient preparations. As a result, the market was not as good as expected, and everyone’s inventory would be more, so it would also result in sacrificing gross profit for the market. This is the second one.
Of course, the deeper reason, or the whole industry, I think that has not yet completed the transformation in essence. The real transformation of enterprises must shift from the traditional industry to the new flat-panel TV industry featuring semiconductor IT. This has a very complete transformation of the system requirements, and this system transformation is not in place, so there is such a situation. I feel that I am at a loss.
Moderator: Which kind of Skyworth belongs to?
Zhang Xuebin: Skyworth is a relatively fast transition, but I should say that it has not really reached the ideal state.
Moderator: Just now you mentioned the annual report. We also saw that the sales revenue of Skyworth TV products this year was HK$20.163 billion, and the revenue of set-top boxes reached HK$3.696 billion. In general, this profit is in the TV industry, in the entire industry. It should be pretty good inside. So why are you able to achieve this profit? What adjustments will be made in the future in the direction of the business?
Zhang Xuebin: The reason why we can have such a good market performance is that the main reason is that the technology transformation is still good. In this case, if the product can keep up, the entire operation project can keep up, so that our overall business quality has a basic guarantee.
Moderator: Is this TV market currently in a red sea that has killed each other in price wars?
Zhang Xuebin: If it is true from the appearance, because the overall industry gross margin of TV is very low, and the overall gross margin of the set-top box industry is still good. But this is just a simple judgment from the appearance of the image. In fact, we see that there are profits in the enterprise in the TV industry, and there is a blue sea in the Red Sea. Like you do high-end products, do some technology leading, or some differentiated products, the gross margin is still very high.
Moderator: When it comes to the industry chain of the entire color TV industry, we find that domestic manufacturers are not dominant, and may be due to some upstream, core components and key technologies missing. Now we see some domestic manufacturers, and also began to work on color TVs in the entire industry chain. For example, TCL will make huge investments to build an industry-wide production line. What do you think of this?
Zhang Xuebin: Each company can choose different development routes according to different situations of the company, or we can talk about strategies. TCL has created a model of the whole industry chain. This is our most ideal. I hope that this conversion can be completely realized. It can be done from the front end, just like the Samsung in South Korea. Skyworth has some of Skyworth's own considerations, mainly based on our own resources.
The first is to see our technology in Skyworth itself. We have a lot of technical accumulation on the LED screen. It is frank that we think we are not enough. The reason is that the technology of LED screen has been invented for half a century. In the 60 years of the last century, the real commercial application has been in existence for 20 to 30 years. In the course of the 20 or 30 years, enterprises in Japan, South Korea and Taiwan have been in the past ten years. They started mass production twenty years ago, and they have done it from the lower four generations to the fourth generation, and they have better professional protection.
The second is that it is difficult for us to form a large-scale competitive advantage, because you make a line of more than 200 million yuan, and then make a line of tens of billions, which is also a huge financial pressure for us. If you only make one line, then obviously there is no advantage, because the size of a line itself is affected. Coupled with the same line of people, people have been doing it for many years, no depreciation, equipment depreciation is gone, the cost will be very low. So we see that this year's price is very powerful, this is also a huge pressure for us, so we choose to strategically build to meet our own needs.
In fact, what do we need? If we say from the whole machine manufacturer, from the actual situation of Skyworth, we need a stable process, leading technology, low cost, and if we need this, we can actually choose a strategic approach, that is, The way we invest in shares is what we need. We don't have to take a bigger investment risk to run one or run one of these factories. Instead, we will have the next generation of display technology, and we will have the opportunity, and we will focus on OLED.
The following is an excerpt from the interview with Zhang Xuebin, Chairman of Skyworth Group, from Face to Face.
Zhang Xuebin, Chairman of Skyworth Group
Moderator: We have seen the annual report just published by Skyworth this year. How many points do you score for the results of the annual report, and which ones are more satisfactory for you? What are you not satisfied with?Zhang Xuebin: Play 60 points, pass the test. Although we look at the main financial indicators, it is still good in the industry, but from our own point of view, we do have many problems. For example, our sales growth rate has slowed down significantly. Last year, our overall gross profit margin was a little down. Our efficiency in the use of funds is not obvious, and so on. According to this, it should be said that we are improving.
Moderator: This year's domestic color TV industry profits have an overall downward trend. What do you think is the reason?
Zhang Xuebin: The first one is because the transformation and upgrading of technology is too fast. It is a good thing to upgrade. After upgrading the new product, it will come out, but if the whole industry is not efficient enough, then all the enterprises in the upgrade process will be one. Enormous pressure. Because the upgrade is faster means that the original product should be processed quickly, then the original product has to be sacrificed at the price, and the gross profit will be sacrificed. This is the first major.
The second reason is still a pattern of industry competition, because the overall demand last year was not as good as everyone expected at the beginning of the year. In fact, this is the case. At the beginning of the year, everyone had very high expectations. All the companies made high estimates and made sufficient preparations. As a result, the market was not as good as expected, and everyone’s inventory would be more, so it would also result in sacrificing gross profit for the market. This is the second one.
Of course, the deeper reason, or the whole industry, I think that has not yet completed the transformation in essence. The real transformation of enterprises must shift from the traditional industry to the new flat-panel TV industry featuring semiconductor IT. This has a very complete transformation of the system requirements, and this system transformation is not in place, so there is such a situation. I feel that I am at a loss.
Moderator: Which kind of Skyworth belongs to?
Zhang Xuebin: Skyworth is a relatively fast transition, but I should say that it has not really reached the ideal state.
Moderator: Just now you mentioned the annual report. We also saw that the sales revenue of Skyworth TV products this year was HK$20.163 billion, and the revenue of set-top boxes reached HK$3.696 billion. In general, this profit is in the TV industry, in the entire industry. It should be pretty good inside. So why are you able to achieve this profit? What adjustments will be made in the future in the direction of the business?
Zhang Xuebin: The reason why we can have such a good market performance is that the main reason is that the technology transformation is still good. In this case, if the product can keep up, the entire operation project can keep up, so that our overall business quality has a basic guarantee.
Moderator: Is this TV market currently in a red sea that has killed each other in price wars?
Zhang Xuebin: If it is true from the appearance, because the overall industry gross margin of TV is very low, and the overall gross margin of the set-top box industry is still good. But this is just a simple judgment from the appearance of the image. In fact, we see that there are profits in the enterprise in the TV industry, and there is a blue sea in the Red Sea. Like you do high-end products, do some technology leading, or some differentiated products, the gross margin is still very high.
Moderator: When it comes to the industry chain of the entire color TV industry, we find that domestic manufacturers are not dominant, and may be due to some upstream, core components and key technologies missing. Now we see some domestic manufacturers, and also began to work on color TVs in the entire industry chain. For example, TCL will make huge investments to build an industry-wide production line. What do you think of this?
Zhang Xuebin: Each company can choose different development routes according to different situations of the company, or we can talk about strategies. TCL has created a model of the whole industry chain. This is our most ideal. I hope that this conversion can be completely realized. It can be done from the front end, just like the Samsung in South Korea. Skyworth has some of Skyworth's own considerations, mainly based on our own resources.
The first is to see our technology in Skyworth itself. We have a lot of technical accumulation on the LED screen. It is frank that we think we are not enough. The reason is that the technology of LED screen has been invented for half a century. In the 60 years of the last century, the real commercial application has been in existence for 20 to 30 years. In the course of the 20 or 30 years, enterprises in Japan, South Korea and Taiwan have been in the past ten years. They started mass production twenty years ago, and they have done it from the lower four generations to the fourth generation, and they have better professional protection.
The second is that it is difficult for us to form a large-scale competitive advantage, because you make a line of more than 200 million yuan, and then make a line of tens of billions, which is also a huge financial pressure for us. If you only make one line, then obviously there is no advantage, because the size of a line itself is affected. Coupled with the same line of people, people have been doing it for many years, no depreciation, equipment depreciation is gone, the cost will be very low. So we see that this year's price is very powerful, this is also a huge pressure for us, so we choose to strategically build to meet our own needs.
In fact, what do we need? If we say from the whole machine manufacturer, from the actual situation of Skyworth, we need a stable process, leading technology, low cost, and if we need this, we can actually choose a strategic approach, that is, The way we invest in shares is what we need. We don't have to take a bigger investment risk to run one or run one of these factories. Instead, we will have the next generation of display technology, and we will have the opportunity, and we will focus on OLED.
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