With the dawn of the 21st century, the customer electronics industry is viewed as one of the most lucrative businesses. With a population of around 30 million, increase in disposable income in both rural and urban sector and also easy accessibility of finance; the use and purchase of electronic products like Television has seen a dramatic progress.

Since time immemorial, Television was the chief medium of visual entertainment. With proliferation in internet connectivity and speed, demand for online content and streaming video services such as Netflix, Hulu and Amazon Prime have grown exponentially.

To cater to this emergent demand, companies dealing with the TV are offering smart TVs which enable viewers to stream online programs directly to their television, surf the web, consume social media as well as play games. Over the years, TVs have endured colossal transformation in their size, shape, design and the way it is viewed. The viewing resolution have also improved profoundly as the TVs made progression from CRT to Ultra HD (UHD) or 4K.

According to Saurav Bikram Panta, marketing manager at Nepa Hima Trade Link, authorized distributor of Sony TV in Nepal, the LED and Smart TV market has been growing by 25 to 30% annually. The size of Nepal’s TV market is estimated to be round Rs 7 billion a year.

Market Overview

As per the manufacturing sector profile of Investment Board Nepal (IBN), the electronics sector contributes 1.28% to the overall value of Nepal’s GDP with around 38 companies trading electronics and employing around 2,718 workforces.

Nepal is also no exception to changing technology dimension and aggressive players in the television industry as the rest of the world. The competitive landscape of Television in Nepal is mostly dominated by Asian countries: South Korea, Singapore, Japan, China.

Today, customers of TV face a lot of dilemma choosing a TV because a number of alternatives are available in the market. As a result, companies dealing with TV needs to respond to the needs of the customers in order to contend and survive competition. When it comes to the purchase decision of the TV customers, it depends on various product differentiation attributes such as price, brand, features, after sales service, reference groups, warranty, power efficiency, financial incentives (free gifts, discounts and instalments etc.), easy availability to name a few.

Market Trends

The fierce competition makes the urban market of Television highly mature and saturated. On the other hand, the rural market promises a huge growth potential. The market in the rural areas of Nepal are mostly dominated by brands of TV on the basis of availability in the market rather than other whys and wherefores.

APAC had the largest television market share in 2019, and the region will offer several growth opportunities to market vendors in the future. In global comparison, approximately $162,038 million revenue will be generated in China in 2021 alone.

The presence of many leading manufacturers headquartered in the region would significantly influence television market growth in this region. 42% of the market’s growth shall originate from APAC during 2020-2024. Therefore, China, India, and South Korea are the important markets for televisions in APAC region.

In context of Nepal, the availability of smart televisions on par with normal televisions has fuelled smart TVs popularity in cities as well as in small towns in Nepal.

Recent times have made consumer increasingly discerning regarding brand and product they use. Also, easy increasing accessibility and technology advancements makes television a lucrative commodity for marketers. In addition to this, untapped rural market and rising disposable income level holds immense opportunity for the growth of the television industry in Nepal.

Market Drivers

Technological developments and the growing disposable income amongst the working population are driving the considerable adoption of Television. Also, the rapid-paced industrialization and urbanization has led to the massive development of the residential sector. The rising residential sector is proving to be beneficial for the increasing adoption of Television in the future.

Besides this, the process of assembling the TV sets are increasingly getting automated. For instance, domestic TV traders such as CG ties up with different companies from China and imports different parts of TV sets and assembles them If the company imports SKD units then they save these TV sets from transit damage, less custom duty, cost, tax advantage and have to face only partial charges. Since, the cost comes down so does the price for the customers. The company has to incur 30% custom duty on finished items, however, if imported in the form of SKD units it has to incur only 15% custom duty.

Industry Challenges

In 2020, Technavio has described that the television market size has the potential to grow by USD 45.87 billion during 2020-2024. However, as the business impact of COVID-19 spread, the Television market in Nepal as the rest of the world, is expected to have Negative & Inferior growth due to disruption in production and supply of key components of TV which are mostly imported from China.

The customer discretionary market will have indirect impact due to the spread. Even if the virus spread is controlled, it may take a considerable amount of time, of more than two quarters to reach a normal state of economic activity. In the short term, the market demand will show inferior growth due to the increase in infections and reduced economic activity.

Technology Trends

The coming years will witness a rise in demand for smart TVs due to the improvements in display with OLED and QLED technologies leading to a significant reduction in thickness and overall weight of TVs with large display screens. Moreover, customers highly prefer to purchase a UHD/4K television instead of an HD version screens as it provides better experience than the smaller screen television. The growing popularity of large displays will drive the growth of the television market.

The shift in customer preferences to a self-sustaining demand for built-in Internet streaming capabilities is increasing the demand for smart televisions. Considering this, the vendors are integrating operating systems and media streamers such as Android TV, Apple TV, Google Cast, Amazon TV, and Roku to increase the user experience for smart TVs.

Customers in developing countries such as China, India, Thailand, Vietnam, and Hong Kong are increasing spending on Smart TVs. The rise in the number of OTT content subscriptions and the availability of a diverse range of technologically advanced smart TVs will further fuel the growth of the smart TV market. As per the Technavio market research, the global smart TV market will grow by 293.32 million units with market growth of 21% CAGR during the 2020-2024 forecast period.

Pricing Trends

The television segmentation is much simpler in Nepal. Regardless of the fact the television can be segmented in different ways, in Nepal it is marketed in a simply generalized as Normal TV, Smart TV and UHD/4K TV. The brands like Samsung, Sony, LG and others have effectively segmented the market by offering TV at various price points which has resulted faster market penetration and increased volumes.

The global UHD TV market segment has the potential to grow by over $256 billion during 2018-2022. The slump in display costs has triggered a substantial reduction in the average selling price of UHD TVs. Moreover, the strong competition in the global TV market has compelled TV manufacturers to offer UHD TVs in different models at a reduced price. To stay competitive in the market vendors are introducing 8K UHD TVs and curved UHD TVs.

Regulatory Trends

As per the department of customs, a flat rate 55% customs duty shall be levied (instead of customs duty, excise duty and VAT) on LCD, Plasma or LED TV imported by Nepali travellers under the provision set forth in the Baggage Rules published in Nepal Gazette.

However, full duties and taxes shall be exempted for any type of one-unit television up to 32 inch for one time keeping on record, if imported accompanied by Nepalese Citizen on their return from the foreign employment working at least twelve months continuously. However, such exemption shall not be provided for the television more than 32 inches.

Market Size and Forecast

Over 2019-2024, the volume CAGR for in-home consumer electronics is projected to reach 2%. Despite the category’s sluggish growth, many emerging markets are far from saturated due to low penetration rates of televisions and therefore hold immense potential.

Market Outlook

In-home consumer electronics category, Asia Pacific has the fastest global growth due to the region’s large population, India and Southeast Asian markets has growing demand for LCD, OLED and smart televisions and is predicted to lead the category’s growth. Although Asia Pacific’s per capita is the lowest among all the regions, its historic CAGR is the highest. The competitive landscape in the region is very dynamic, ranging from incumbent players to up-and-coming ones mainly coming from China vying for market share. Televisions is the strongest performing category of in-home consumer electronics in Asia.

Technology Roadmap

Amongst many technologies, Television is also the one that has evolved rapidly in the 20th century as a result of market competition. This evolution has come a way long from huge boxes to flat screens with high definition display. The Television has advanced from black and white, CRT, Plasma technology, LCD, LED, OLED, QLED and finally to Mini LED and QD-OLED which is likely to become viable alternatives to white OLED.

In 2021, the competition between display technologies is expected to rise in the high-end TV market. Led by Samsung, LCD TVs with Mini LED backlighting, is likely to lock horns with the white OLED. The Mini LED future appears favourable as it enables LCD TVs to have finer control over their backlight zones and therefore have deeper display contrast compared with current mainstream TVs. Additionally, given their superior cost-effectiveness, Mini LED is expected to emerge as a strong alternative to white OLED as a display technology.

Competitive Analysis

In case of Nepal, it is evident that incumbent players such as LG and Sony are witnessing an erosion of their shares as Chinese companies such as Hisense, TCL, Rowa, Wega are rapidly fortifying their presence based on competitive pricing. In 2021, TrendForce expects the high-end TV market to exhibit a fierce new competitive landscape.

Competitive Factors

The key factors on which companies compete in the market in Nepal are Price, Brand value, TV Features, After Sales Service, Warranty, Promotion as well as Location and Accessibility

Key Market Players

Samsung Electronics manufactures a wide range of consumer and industrial electronic equipment and products such as semiconductors, personal computers, peripherals, monitors, televisions, and home appliances including air conditioners and microwave ovens. The Company also produces Internet access network systems and telecommunications equipment including mobile phones.

In 2016, Samsung Visual Display released quantum dot TV and was globally recognized for its picture quality, and elevated its position as an industry leader. In 2017, there was rapid growth in UHD TVs and curved TVs due to an increasing consumer awareness of high resolution and high picture quality. With the launch of the world’s first and only QLED TV that delivers 100% colour volume, a newly emerging standard of picture quality measurement has strengthened its position in the premium TV market.

In 2021, Samsung is expected to be the first in the industry to release its active matrix Micro LED TVs, Samsung Display (SDC) is betting on its new QD OLED technology as a point of technological differentiation from its competitors, as SDC is ending its LCD manufacturing operations. SDC will look to set the new gold standard in TV specs with its QD OLED technology, which is superior to white OLED in terms of colour saturation.

Him Electronics Pvt. Ltd. and Triveni Byapar Pvt. Ltd. are the authorized distributors and importers of Samsung products. These importers forecast demand and Samsung Nepal accepts Letter of Credit from them, coordinate with factory to make the order. The monitoring, supervision and marketing function of the products are overseen by Samsung Nepal.

Samsung has 14 exclusive outlets called as Samsung Digital Plaza all over Nepal. Inside Kathmandu, the outlets are located at Durbarmarg, Sundhara (Civil Mall), New Baneshwor, Chuchepati, Nayabazar, Bhaktapur, Kupondole and Kumaripati. Outside Kathmandu, Samsung has exclusive outlets primarily at Pokhara, Narayanghat, Butwal, Nepalgunj, Dharan and Birtamode. It has the largest dealer network than other brands. With 450 plus dealers and retailers all over Nepal; primarily sales are generated from this channel.

Distribution model of Samsung in Nepal

LG Electronics is a South Korean multinational electronics company headquartered in Seoul, South Korea. LG Electronics’ products include televisions, home theatre systems, refrigerators, washing machines, computer monitors, wearable devices, smart appliances, and smartphones. As of 2014, LG is using WebOS with a ribbon interface with some of its smart TVs. LG reported that in the first eight months after release, it had sold over 5 million webOS TVs.

The dealers contribute 30-35% in terms of sales. The preferred trade partner has more margin as they are only allowed to place a single brand at their store. The monitoring and entire branding, setups, VAT adjustments are handled by the company for them. They only have to order the products and sell it. The company is planning to expand its channel and distribution and open LG Shoppe in Biratnagar and in Kakarbhitta. Usually, this is handled by parent company and LG team.

Distribution model of LG in Nepal

CG Electronics assembles (CKD & SKC) and distributes consumer electronics like smartphones, refrigerators, washing machines, microwave ovens, TVs, vacuum cleaners, and various other products across Nepal. It imports and distributes other brands such as TCL, Intex, Godrej, and Kelvinator. The best-known brand that the group deals in is LG Corporation of South Korea. The company has given special focus on after sales service with robust service network all over Nepal and special initiatives like Toll Free No. and 211 SVC concepts.

CG Electronics Pvt. Ltd. is a company under the Electronics division of the Chaudhary Group dealing in Television sets. It assembles LG TVs and CG TVs and trades in Onida TVs and Toshiba TVs. These LG TVs and CG TVs are assembled in its factories at CUG, Nawalparasi and STARLEC (Steel and Electronics Complex), Satungal. Besides 6 Brand shop (CG Digital) inside Kathmandu valley, there are 2 more in Itahari and Narayanghat. Usually, CG digital is managed by management itself. Besides these, specific area sales in charge are appointed province wise to manage its sales.

Distribution model of CG in Nepal

Sony Electronics provides audio-visual products. The company offers a wide range of products such as televisions, digital cameras, camcorders, personal stereo, flash media products, home audio and video, digital photo frames, portable audio, and mobile entertainment products.

Sony Center in Jamal (Kantipath) is the flagship showroom. Beside this, there are 3 other Sony centres located in Pulchowk, Jawalakhel and Durbarmarg.

Distribution model of Sony in Nepal

Strategic Conclusion

As the economy recovers from the pandemic the companies dealing with television needs to bounce back. Ansoff Matrix can be used to analyse this industry more clearly.

In Nepal, the television industry can further penetrate the existing market by offering competitive prices and services without compromising on the quality, improve its distribution network or investing in free form of marketing by engaging with loyal customers in social medias. Also, the companies trading television should focus more on what customers’ value rather than just plainly offering televisions with added features and benefits.

Many urban customers in Nepal are more inclined to purchase television based on brand value and after sales service facilities. However, this urban market is getting increasing saturated because of the mounting competition especially from Chinese companies. While rural areas hold huge potential it is still untapped and can be anybody’s game in the region given the innumerable competition in the TV category.

Besides offering television other peripheral devices used with it such as speakers and home theatres also have promising opportunities.

References

• https://www.businesswire.com/news/home/20200210005467/en/Glob al-Television-Market-2020-2024-Rising-Popularity-of-Large-Display- Televisions-to-Boost-Market-Growth-Technavio
• https://www.ktm2day.com/2018/12/30/smart-tv-sales-growth-in- nepali-market/
• https://www.technavio.com/report/television-market-industry-analysis
• https://www.grandviewresearch.com/industry-analysis/4k-tv-market
• https://www.bloomberg.com/press-releases/2020-10-06/trendforce- announces-10-tech-industry-trends-for-2021
• https://blog.technavio.com/blog/largest-tv-manufacturers-by-market- share
• https://www.euromonitor.com/in-home-consumer-electronics-in-asia- pacific/report
• https://archive.customs.gov.np/upload/documents/Customs%20Tarrif %202019-20%20ads_2019-09-23-12-52-35.pdf

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