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Day 4 - IFA International

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Exclusive Interview

Exclusive Interview Chinese Giant Changhong Gains Ground Interconnection, intercommunication, mutual control and synergy at heart of strategy The brand value of Chinese TV giant Changhong has been growing over the past few years. We asked Dexuan Guo, Chairman & General Manager of Changhong Multimedia Group what point it’s at now, and what his ambitions are for the future. Indeed, Changhong’s brand value has been rising in recent years. It was 82.758 billion RMB in 2013, broke 100 billion RMB in 2014, and grew sharply again in 2015 (113.518 billion RMB). The World Brand Laboratory deems that Changhong’s brand value growth is due to the successful marketing of domestic CHiQ series products and the transformation of embracing the internet. At present, we believe there is not much difference between “made in China” and “made in Germany” according to manufacturing capacity, technical levels and management ability. In the Chinese market, intelligent manufacture has been in a fast-growing phase. Since last year, Changhong has strengthened the application of automation and information technology, and has successfully built three intelligent platforms, namely intelligent research and development, intelligent manufacturing and intelligent trading. Our goal is to take personalised demand as guidance, implement intelligent strategy to set up intelligent manufacturing on the base of mass customisation, and positively enter into Big Data, Cloud platform and “Internet +” at the same time. As we know, Changhong set up factory in the Czech republic. How has this project been progressing? What does it mean for European buyers? Changhong’s factory in Czech republic was established in 2007, covering an area of 100,000 square meters and is the largest overseas production base for Changhong. The yield in 2014 was 800,000 sets. With the implementation of Changhong’s big supply chain strategy in 2015, it is predicted to break 1 million sets in 2015. The rapid development of the Czech factory mainly depends on implementing the policy of employee and equipment localisation effectively. By setting up a factory in Czech republic with the localisation of operation and management, it helps us to keep closer to the market, react faster, and produce a further reduction in production costs will directly benefit to European customers and consumers products that are more suitable for market demand. At the same time, a further reduction in production costs will directly benefit to European customers and consumers. What is the key differentiator for Changhong as a company? What makes you different? Changhong is a diversified enterprise, not a conventional one, but one of innovative technology. We have been building an entire industrial chain, including hardware, software and services, taking intelligent strategy as a guidance to innovate development. Through the intelligent use of the internet and the internet of things, Changhong will achieve the interconnection, intercommunication, mutual control and synergy among terminal devices of different brands, and will finally put the first totally synergic service mode of what we term “Smart Home under Smart community” into effect. What new products are you showing at IFA? At this IFA, our exhibits include new products such as Curved TV, 4K Smart TV, Quantum TV, Laser TV and so on. With respect to the innovative design, Changhong brand Peninsula refrigerator, Quanter and RANDOM will introduce a fresh feeling. In the area of Smart Home, you can find New ChiQ series Smart TV, Smart air conditioner, Smart fridge, Smart Kitchen and Smartphone. With connection to the internet, all these devices can realise interconnection, intercommunication and mutual control to create a perfect intelligent household environment. Here mainly I want to introduce our newest smart TV, which passed DCC agreement (Device Connection Control) as it includes the exclusive “M+ dual Chips” technology. In other words, this TV has synergetic ability of “Mobile chip and TV chip”, which improves the processing performance of the TV, but more importantly, users can directly operate some applications, like audio, video and especially games which were developed for the use on mobile devices. How important is IFA for you as a key marketing platform on a global scale? The IFA exhibition is one of the biggest international consumer electronics shows with its scale and influence, and also the main place for global consumer electronics manufacturers and traders to display new products and new technology. Changhong has always valued this platform, which is an important channel to show the enterprise’s strength and technology, and is also crucial for Changhong to expand in Europe and develop the international market. We will always support the IFA exhibition. Dexuan Guo Changhong Multimedia Group - Chairman & General Manager Sichuan Changhong Electric Co., Ltd. - Vice General Manager Changhong Digital Marketing Strategy Business Group - Chairman & General Manager 30

LIVING ROOM LIFESTYLE STREAMING SOUND SYSTEMS AUDIO TELEVISIONS WELLNESS 234 MILLION THE NUMBER OF LCD TVS SOLD IN THE WORLD IN 2014 38 INCHES THE AVERAGE SIZE OF A TV SOLD IN EUROPE THIS YEAR (AS OPPOSED TO 31-INCHES IN 2010) 29% GROWTH IN DEMAND FOR SOUND BARS IN THE FIRST SIX MONTHS OF 2015 4K TV SHIPMENT FORECAST – IHS RESEARCH The Living Room Remains the Centre of the Home – and Its Entertainment IFA has in the past traditionally been centred around audiovisual products, and while AV now accounts for a smaller share of the overall technical consumer goods market, the TV is still the “centre of home entertainment”. Likewise, the onset of wireless audio solutions is a sweet spot that everyone in the industry is following extremely closely. With the market for consumer electronics still in upheaval due to consumers’ changing listening and viewing habits, sales value rose in the first six months of 2015. Innovative solutions, such as Ultra HD technology, sound bars or multi-room systems are the primary drivers of growth potential in the TV and audio segment. Positive momentum for the entire TV market is visible in all regions of the world except for Europe. These are GfK's findings on the global consumer electronics market, that were published to coincide with the IFA 2015 trade fair in Berlin. TV MARKET: ULTRA HD IS THE GROWTH SEGMENT The worldwide TV market is in a consolidation phase in 2015. In 2014, 234 million LCD TVs were sold; without a major event such as the FIFA World Cup this year, there will be approximately 4 million fewer sold. This represents a decrease of nearly 2 percent. However, the individual regions are developing differently. The strongest growth relates to the Middle East and Africa with 5 percent. But also in Asia as well as North and South America, positive impulses for the total TV market are visible. In 2015, a total of 35.3 million LCD TV sales are expected in Western Europe. That is approximately 6 percent less than in 2014. There is a significant sharp decline in the Eastern European market including Russia and Ukraine. It is expected that sales in this region will decline by 7 million LCD TV sets. In contrast, the Ultra HD TV segment is developing positively in all regions. Ultra HD makes it possible to display a razor sharp picture on an even larger diagonal screen size because it has a four times higher resolution than the previous full HD TV. Over 28 million Ultra HD TVs are expected to be sold in 2015, the largest portion of which will most likely be in China. 40 percent of households there already have such a TV. In Western Europe, GfK expects sales volume of nearly 4 million units. More than one in every ten TVs sold in Western Europe will be an Ultra HD set. In terms of value, Ultra HD is even more significant. Already 10 percent of all TVs sold in Germany in June 2015 were Ultra HD TVs, and these were responsible for a quarter of TV sales value. Meanwhile, the forecast released at IFA by IHS Research for 4K television shipments remains dominated by pushing from the supply chain. The analyst firm expects that this year will see the first tipping point with more than half of sets 55” and larger will be 4K resolution. By 2018 IHS forecasts that all televisions of 50” upwards will have a 4K panel. SOUND BARS AND SOUND BASES PROVIDE A CINEMA ATMOSPHERE AT HOME Regardless of whether they are placed under or in front of the television, sound bars currently provide an increasingly better sound experience and therefore a cinema atmosphere in the living room. Worldwide 11.5 million sound bars were sold in 2014. That was 64% more than in the previous year. The demand should rise again significantly in 2015. GfK expects global sales volume of 14.3 million units, which would represent an increase in sales value of 21% compared to the previous year. In particular, the regions of Latin America and Central and Eastern Europe are among the winners this year. But also in Western Europe, the demand for the popular alternative to the traditional home cinema solution is expected to remain unrestrained. In the first six months of 2015, the demand for sound bars in Western Europe clearly grew and recorded a sales growth of 29% with more than 1.3 million units sold. www.ifa-international.org IFA International • Monday 7 th September 2015 31

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