I know, I know, you’ve heard that “sleeping giant” stuff too much lately. China’s economy is becoming inexorably tied to that of the U.S., but there may be some ways that you haven’t considered yet. For example, thanks to cheap manufacturing costs, many of our consumer electronics products are priced at just a fraction of what they were a few years ago, including HDTVs. Okay, maybe that’s not news either.
But I just received a presentation that was made by Lia Fang, President of Corning Display Technologies China, at the DisplaySearch China 2010 conference. It was full of fascinating information, but this was the slide that caused me to pause.
China nearly matches the U.S. in terms of the availability of electricity, which as we saw in this country in the last century, can be a driving force for building a middle class. As they acquire labor-saving devices, people have more time to be more productive. This increases their earning power, and they can start acquiring more consumer goods.
But look at the signs of middle class in China now. They outnumber us in terms of Internet users by 68 million. They have 45% more televisions in use than in the U.S. but only about half as many LCD TVs. They already buy more TVs per year than we do in the U.S. What will happen as they start to replace those existing TVs with LCDs? And what happens when the remaining 0.9 billion people decide that they want and can afford a TV?
One thing that will happen is that we are likely to shift from a surplus to a shortage for LCD and plasma TVs. And when the market faces a shortage instead of a surplus, prices are likely to stop dropping. There is always the hope that increased production will lead to greater efficiencies which will help drive down costs, but this presumes that all the supply chains for materials and other resources are able to keep pace.
The U.S. has been in the enviable position of being in the driver’s seat, with our demand defining the features and functions of consumer electronics, especially HDTVs. The picture presented by Corning has me wondering how much longer that will remain true.