Liquid crystal television architecture and the state of Chinese companies

Abstract

Chinese companies have experienced rapid growth after entering the liquid-crystal display (LCD) television market. This paper first clarifies the factors that fostered the rapid growth of Chinese companies, which did not have much accumulation of technology, by examining LCD television architecture and specialization structures. Advances in semiconductor technology were the driver for LCD televisions, which became a classic modular-type product. Although enabling new competitors to enter the market, modularization facilitated the entry of excessive numbers of companies and fierce price competition. Due to such market characteristics, Chinese companies fell prone to “cycles of decreasing returns from modular-type products” by repeated declines in profitability and entry into new product areas. The current state of Chinese companies is examined, along with their aim to extract themselves from the aforementioned cycle while still utilizing modularization.