Text丨Sina Technology Zhou Wenmeng

As we approach Double Eleven, while many home appliance companies are busy with discounts and promotions, a new incident has occurred on Konka TV.

Recently, Black Cat Complaints, a consumer service platform owned by Sina, released the September corporate complaint handling red and black list. Konka TV ranked first on the black list. Among them, issues such as “Konka TV is broken three times a month, and the response rate for thousands of complaints on the platform is less than 50%” have attracted widespread attention.

In recent years, Konka Group's revenue and net profit have declined frequently. According to the company's semi-annual report for 2023 recently released, Konka Group's revenue for the first half of 2023 was 10.472 billion yuan, a sharp drop from 16.896 billion yuan for the same period in 2022; at the same time, the company's net profit also declined from 58.49 million yuan in revenue for the first half of 2022 to a loss of 328 million yuan in the first half of 2023.

As the former king of color TV in China, Konka once ranked among the top three domestic TV companies such as TCL and Skyworth. Unfortunately, after the storm, Konka has now gone downhill. Behind the apparent exhaustion, which step was actually wrong?

It breaks three times a month, who dares to buy it?

Recently, a consumer complained to Black Cat, saying, “The Konka TV purchased in May of last year had broken down three times by September of this year. First, I was taken away for maintenance by a technician due to damage to the motherboard. After the motherboard repair was completed, I was notified that the screen was also damaged. Once again, it was sent for repair. After the second repair was completed and received, the screen was broken again after three or five days.”

The consumer said there was no way to complain after the problem with the Konka TV product. When he asked the previous maintenance master, the master said, “It's just a part-time job, so let me complain about Konka.” However, when I called Konka's headquarters, the other party directly “didn't answer the phone.” In terms of black cat complaints, by the end of September, Konka had accumulated 1,070 complaints, yet the response rate was less than 50%. As a result, Konka Group, which has repeatedly ignored consumer complaints and feedback, “ranked” first in the September black list of household appliances.

In recent years, with the spread of consumer electronics products such as smartphones and computers, the operating rate of home TVs has continued to decline.

According to a report previously released by the State Administration of Radio, Film, and Television, the TV operating rate in Beijing had dropped to 30% by 2013, and the operating rate had dropped to a freezing point. Nationwide, the average TV operating rate in China has also dropped from around 70% in 2016 to around 30% in 2019.

In an online survey initiated by Sina Technology, out of 4,183 consumers who participated in the voting, there were 2,188 users who did not turn on the TV for several months, accounting for 52.3%; 820 people who watched with their families once in a while, accounting for 19.6%; 524 people started 1 to 3 times a week, accounting for 12.5%; and only 651 high-frequency users who started 1 to 2 hours a day, accounting for 15.6%.

As the TV operating rate continues to decline, TV brands that were once famous have also begun a path of transformation one after another.

For example, TCL, Hisense, Skyworth, etc. stick to their main business and continue to push the home appliance industry towards high-end and intelligent development; on the other hand, they are also beginning to expand into fields such as semiconductor displays, automotive screens, and photovoltaics.

However, as far as Konka is concerned, the business transformation that was too drastic has caused it to gradually lose its brand influence in the home appliance market — 2017, at this point in time, which is regarded as the “TV industry transformation year,” Konka began to suspend in-depth exploration of the home appliance business, and instead actively lay out popular investment areas such as real estate, the Internet, and finance.

According to Konka's financial data over the years, since 2017, the revenue share of Konka's color TV business has continued to decline year-on-year. In 2017, Konka's revenue share fell from over 40% in the previous year to 38.41%; in 2018, the color TV business accounted for only 21.45% of revenue, down 17.53% year on year; in 2019, color TV business revenue shrank further, with revenue falling 11.39% year on year, accounting for 15.90%; in 2020, color TV business revenue was 7.520 billion yuan, down 14.21% year on year... By 2022, Konka TV's annual revenue was about 5.023 billion yuan, accounting for only 16.97%.

“Konka TV,” which was once regarded as synonymous with Konka, has declined frequently in the company's overall revenue share.

In response, senior industrial economy observer Leung Chun-pang commented on Sina Technology, saying, “This is closely related to the company's lack of technological innovation, product development innovation, and channel layout, and at the same time, the group's lack of attention.” In his view, behind the continuous decline in sales, sales, and market share, Konka Group's TV business “has fallen out of the first-tier brand camp. It is far different from first-tier brands such as Hisense, TCL, Skyworth, and Xiaomi, and has become a second-tier brand.”

The decline is already here, can semiconductors become a “lifesaver”?

Since the pandemic, Konka Group's overall revenue and gross profit levels have also begun to deteriorate.

According to Konka's financial data, in 2021, Konka Group's revenue was 49.106 billion yuan, down 2.47% year on year, net profit loss of 3.251 billion yuan, down 37.30% year on year; in the past 2022, Konka Group achieved total revenue of more than 29.6 billion yuan, a year-on-year decline of 39.71%; net loss of 1,471 billion yuan; in the 2022 financial report released in March this year, the company's revenue for the first half of the year was 10.472 billion yuan, down 38.02% year on year.

Judging from the revenue structure, the consumer electronics business and industry and trade business, including the color TV business, are currently the main revenue components of Konka. However, as far as these two major businesses are concerned, the color TV business, which currently has a high influence in Konka's consumer electronics business, has also become a second-tier brand; the industry and trade business, which is the second largest source of revenue, not only has low gross profit, but it also does not have high synergy with the group's main business.

It is worth noting that in the first half of 2022, Konka's industrial and trade business had revenue of 10.171 billion yuan, accounting for 60.2% of revenue. It is still the business that accounts for the highest revenue share of Konka. However, a year later, in the first half of 2023, Konka's industrial and trade business revenue fell to 4.350 billion yuan, accounting for 41.56%, after the consumer electronics business, which accounted for 46.21% of revenue.

With such drastic revenue restructuring, Konka's explanation is, “Some industrial and trade businesses that 'do not have strong synergy with the main business and low gross profit level' have been actively optimized, which has led to a sharp decline in the scale of industrial and trade businesses.” However, the drastic reduction of more than 50% of the business volume has inevitably raised concerns in the outside world about Konka's subsequent development.

In the report for the first half of 2023, Konka designated the “consumer electronics+semiconductor” business as the main line of the company's development, and will focus on lengthening the industrial chain, broadening the product chain, and strengthening industrial collaboration. However, for Konka, the semiconductor business, which had revenue of about 5.85 million yuan in the first half of 2023 and decreased by about 4.57 million yuan compared to the same period in 2022, may not be able to bear the heavy responsibility of the company's transformation and development at this stage in the short term.

In response, some industry insiders commented on Sina Technology: “For Konka, the semiconductor business is currently more of an investment period, and I'm afraid it will be very difficult to make money through him.” The person further stated, “Currently, Konka is deploying both Micro LED and Mini LED chips, but for Micro LED, the entire industry in this field is still generally still in the investment period, and it is very difficult to rely on this to achieve large-scale revenue and profit growth.”

“Micro LED has never entered commercial use in the TV industry. Currently, the Micro LED TV on the market is just a laboratory developed product. This is related to its cost being too high, there are still some problems with image quality, and it cannot be commercialized and mass-produced on a large scale.” The person's review pointed out.

According to Leung Chun-pang, due to the fact that Konka Group did not pay enough attention to the TV business before, this caused Konka Group to discard or weaken color TV, a core product line that was established 20 years ago, in the diversified development process, and lacked a strong brand logo for consumers, which led to a gradual loss of focus and lack of core business in subsequent development.

“I think the current core business of the Konka Group should still be the home appliance business. Laying out the home appliance business such as color TV, air conditioning, refrigerators, and washing machines should be Konka's core business. He should strengthen the position of the core business. Only by getting the home appliance business done can other businesses develop as diversified matching businesses.” Leung Chun-pang said.

However, as far as Konka is concerned, in the current situation where the color TV business has fallen to second-tier brands, the company is developing white power businesses such as refrigerators, laundry, and kitchen appliances, and there must also be snipers from white power giants such as Midea, Haier, and Gree. If they want to make a big splash, it's bound not to be easy.