TV makers give Central Europe high ratings

Lately, Central Europe—specifically, the Czech Republic, Hungary, Poland and Slovakia—is becoming a leading producer of liquid crystal display (LCD) and plasma TV sets. Around 29 million sets are to be produced within the region in 2008, and 13 million of those will come from the Czech Republic.

The most famous producers of TV sets in Central Europe are Japan-based Matsushita Electric Industrial Co. (makers of Panasonic), Sony Corporation, and Hitachi; South Korea-based Samsung Group and LG Group; Taiwan-based Hon Hai Precision Industry Co. (the parent company of the Foxconn group); and Netherlands-based Royal Philips Electronics.


Most of the sets produced here are, according to numbers provided by U.S.-based market research company DisplaySearch, designed for export. DisplaySearch stated that 28.95 million TV sets will be produced in the Czech Republic, Hungary, Poland and Slovakia together next year, but the demand for such products will barely reach 12 million in all of Central and Eastern Europe, Russia and Turkey combined. According to estimates, TV set production in Central Europe will rise by 6 million units, to 35 million, by 2011. This increase is influenced by the plans of TV producers, like Sony and Foxconn. This month, Sony finished moving its production from Slovak city Trnava to another city in the country, Nitra, and announced that 3 million TV sets will be produced there by the end of 2008. But the Czech News Agency (ČTK) reported that the production capacity of Slovak branch of Sony—Sony Slovakia—should increase to 5 million a year. The factory in Nitra will produce LCD televisions and plans to employ around 3,000 people, according to company information.

“All international producers are here”

In the Czech Republic, Foxconn, which produces mainly personal computer components in the Czech Republic, is investing Kč 3.1 billion (¬ 122 million) into a new plant in Kutná Hora, Central Bohemia, that will concentrate on TV set production. It should start its operation in June 2008 and will employ 5,000 people. Foxconn will double the number of its employees with the opening of the new plant. The company had net income of Kč 665 million in 2006. In 2000, in Hranice, North Moravia, Royal Philips Electronics announced its plan to construct a plant for TV sets production. The plant was a joint project of Philips and LG Electronics, another manufacturer of electronic devices. However, in 2006, the mother company for the plant based in the Netherlands—LG Philips Displays Holding—went bankrupt, and the plant was renamed Multidisplay. “CTP Invest bought the Hranice plant in February 2007 for € 40 million from the trustee of the bankrupt mother company, LG Philips Display Holding,” Jiří Hořcica, consultant at PR agency Bison & Rose public relations and spokesman for Multidisplay, said. The plant terminated production of cathode ray tube (CRT) televisions and was reoriented to manufacturing LCDs. By the end of 2008, it will employ 520 people, and the amount of the investment into the plant has reached Kč 7 billion, according to their Web site. Other producers present in the Czech Republic are Panasonic AVC Networks Czech, Hitachi Europe Limited, IPS Alpha Technology Europe, and Changhong Europe Electric. Panasonic opened its plant in Plzeň, West Bohemia, in 1996, and began producing CRT televisions. But in 2004, due to a lack of interest in those kinds of TVs, it began producing LCD and plasma TVs instead. In 2007, Panasonic’s Czech branch increased its turnover by Kč 2.7 billion to Kč 46 billion. Hitachi started operation of its plant in 2007, investing Kč 2.5 billion and employing 2,000 people. The plant, located in the Žatec industrial zone, North Bohemia, aims to produce 180,000 TVs a month. In Slovakia, Sony is not the only TV set producer. In Galanta, another international player is present—Samsung. This plant makes more than 4 million LCD or plasma sets a year, according to Katarína Holecová, spokeswoman for Samsung Electronics Slovakia. “By the end of 2007, the total amount of investments [Samsung will make in Slovakia] will have reached € 183 million. Besides TVs, we produce PC monitors, DVD recorders, MP3 players,” she told CBW. Samsung’s Slovak plant is its biggest in Europe, according to Holecová, but it also has a production line for television sets in Hungary, run by Samsung Electronics Magyar. Other Central European countries are also important in the TV manufacturing industry. Royal Philips Electronics produces TVs in Hungary, and a number of companies have plants in Poland. “All international producers are here. When it comes to their plants, LG Electronics [Polska] is in Mława and Kobierzyce, and Sharp [Corporation] in Łysomice,” said Anna Pełka, a reporter at that Polish Press Agency (PAP).

CRT TVs have lost Europe

While demand for LCD and plasma television sets is rising, demand for CRT sets will fall rapidly, according to DisplaySearch numbers. In 2007, more than 6.3 million CRT sets were sold in Eastern Europe, but in 2012 the demand is estimated to almost reach 1.7 million. This had a hard impact on sole CRT TV producers. “CRT manufacturing is very capital intensive and the production lines are specialized for specific sizes. As LCD prices fell, CRT makers went bankrupt,” Paul Gray, director of Europe TV research department at DisplaySearch, told CBW, adding that the production moved to Eastern Asia, mainly to China. This affects the price of CRT sets because, for example, a 28-inch CRT television is large, therefore it is not very economical to ship it to Europe. Shipping costs then play a significant role in price of those sets, Gray explained. “Small sets are still just profitable, but this will not last. There are now component shortages of glass screens for making CRTs even in China, as their supply chain shrinks as producers go bankrupt,” he added.

For example, Samsung’s Slovak branch has also experimented with CRTs, but quickly gave up its production. “We produced CRTs in 2003 and 2004 but due to the changing needs of the market and the introduction of new technologies, we gave up on [CRT] production in 2004,” Holecová said.

CE region just the best for LCD and plasma

From the number of international producers of electronics present in the CE region it can be easily guessed that there are some advantages that draw producers here. The reasons could be divided into three categories: logistics, labor force and taxation. “The geographical placement of the Czech Republic is very advantageous from logistics point of view. The transportation infrastructure is developing here,” said Tomáš Bartovský, spokesman for the Ministry of Industry and Trade. “While moving production farther east would get lower labor costs, transport would be much higher,” Gray explained as the second reason for placing the production here. “It is still true that labor costs are still preferable,” Bartovský said, adding that at the time producers were deciding where to locate their plants, the labor supply in the Czech Republic was still high, contrary to the current situation.

In Slovakia, another aspect plays a role, namely, the country’s taxation rates. “When choosing a country, each multinational company takes into account more factors, like the availability of the labor force, logistics and infrastructure, and the financial aspects of returnability of the investment. In 2002 [when Samsung decided on placing its production line in Slovakia], Slovakia fulfilled all of those criteria among Central European countries,” Holecová explained as to why Samsung chose Slovakia. Her words could be applied across the region regarding the number of companies coming here. Alexandra Rudyšarová, the head of CzechInvest, the Czech governmental agency concentrating on bringing foreign investors to the Czech Republic, said that in last three years some five companies from the TV production sector have come to the Czech Republic.