Konka Aims At U.S. Market

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Can a Chinese-based consumer electronics manufacturer establish a new brand name in the U.S. for televisions, video products and cellular phones and seize a top-five market share position in less than 10 years? Konka thinks so.

The Shenzhen, China-based manufacturer staged a press conference in New York last week to unveil its U.S. lines of analog and digital televisions, DVD players, and an industry-first 13" TV/DVD combo unit. The firm also formally announced plans to deliver a fully integrated flat-screen 16:9 direct-view HDTV set at a retail price of about $3,000 in time for the Christmas buying season.

Konka, which in Chinese means "all good things will come to you," currently has 25% of the Chinese television market and plans to gain position in the U.S. by selling a mix of analog televisions, DVD players and cutting-edge digital televisions at very aggressive prices points. On the same day as the event in New York, Konka's parent company announced joint-marketing plans with Lucent to produce cellular phones for China. That deal could lead to U.S. products in the near future.

The company keeps its costs to a minimum by using low-cost labor in its factories in China, and soon in Mexico. In the past, the company has been an OEM resource for other vendors around the world, including Thomson. But it discontinued that portion of its business in 1995, company executives said, to focus on marketing products worldwide under its own brand.

Among the company's more remarkable achievements to date was the recent delivery of an entry-level DVD player (KD-1800U), which several retailers have started selling at prices ranging from $149-$199. Products on the horizon include two step-up DVD players and a 13" TV/DVD combo unit that should hit shelves in February at around $399.

Gary Whitney, Konka's sales and marketing VP, said his company has made great strides in establishing the brand by starting to putting in place a national service network. Additionally, he said Konka will offer a very liberal return policy, permitting consumers who are unhappy with the performance of a Konka product to return it to the place of purchase for a new replacement model any time within the first year of purchase.

Konka also intends to embrace Internet retailers, he said, but will select its partners very carefully to avoid conflicts with its brick & mortar customers.

Whitney said a national network of sales reps is in place and is already selling some product to a number of regional retail chains, including Fry's. He expects to have a national account or two by the end of the year.

Wendy Wu, Konka's executive VP, said that since a U.S. debut at CES last January sales have nearly reached a first-year goal of 250,000 units (mostly small-screen analog TVs). That growth cycle is expected to accelerate substantially over the next three years, fueled by value-priced digital breakthrough products.

In addition to the HD3298 fully integrated set (with 30W" viewable screen) that was on display, Konka showed a 30W" HDTV-ready model (K3298U) that will retail for around $2,000 when it ships late this year. The company also will carry a set-top DTV decoder box (HD-0001) that will sell for around $1,000. It will connect to the HDTV- and SDTV-ready monitors via a 15-pin D-Sub (VGA) connector.

Also shown were two flat-screen analog and SDTV-capable sets that are designed to compete with Sony's FD-Trinitron Wega line. Konka showed several tabletop SDTV-ready models with sleek modern cabinet designs to be marketed early next year under the "Art" series designation. One model, being tested for feedback, featured a lime-green metallic cabinet with a blond wood trim on the faceplate.

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