A case study

Let's have a look at the color television sector, which sits at the pinnacle of China's success story. In 1978, the output of color televisions was a mere 3,800 sets. But in 2010, its output reached 118 million sets, accounting for 50 percent of the world's total output. In the following years, even though the global economy was volatile and capricious, China's television industry kept forging ahead steadily, with its output climbing year by year. Even amidst the sharp fluctuations of emerging markets and an economic slowdown in the past two years, the television sector has maintained a good momentum, with both output growth and sales-output ratio at a high level. According to a report released by WitsView under Trend Force, an electronics market research institute, in 2015, global sales of liquid crystal display (LCD) televisions shrunk by 0.6 percent. Meanwhile, the output of color televisions in China reached 162.07 million sets the same year, up 7.1 percent year-on-year. Furthermore, in the first three quarters of 2015, the sales-output ratio of color televisions in China hit 100 percent, up 0.4 percentage points year-on-year. During the same period, the sales ratio of industrial products in China stood at 97.5 percent, down 0.1 percentage point year-on-year.

In any case, Chinese color television companies no longer serve as the foundries of foreign brands, and some of them have grown into world-class giants and have seen their status ascending in the global market. According to a report by Trend Force, the top five LCD television brands in 2015 were Samsung, LG, TCL, Hisense and Sony, of which, three Japanese and South Korean brands had seen a decrease in sales, while two Chinese brands were on the rise. Experts have predicted that one more Chinese manufacturer will nudge into the top five list in 2016.

Chinese manufacturers are not an assembly shop for their foreign counterparts any longer, since they are now capable of producing most of the components on their own, and related research and development have reached a high level as well. Without a doubt, China has become a manufacturing power for advanced generation LCD panels. TCL's China Star Optoelectronics Technology Co.'s (CSOT's) phase II project on the Gen 8.5 TV production line, which came into production in April 2015, is the largest and most lucrative in the world. By the end of June 2015, CSOT had maintained its global lead in operating profit ratio, product cycle and overall yield for nine quarters in a row. As the Economy, Trade and Information Commission of Shenzhen Municipality recently pointed out, CSOT's phase III on the Gen 11 TV line is going smoothly, and is the most advanced LCD panel production line in the world--as opposed to the fact that Chinese manufacturers were entirely dependent on TV imports several years ago.

Nonetheless, the color television industry was once severely impacted by the replacement of the kinescope with the modern digital flat panel. TCL, which is at present China's largest as well as the world's third largest LCD television brand, almost bit the dust because it had misread global trends in this regard. Taking a fancy to its sales network, market influence and technology accumulation, TCL acquired Thomson SA of France in 2004.

At that time, the rapid popularization of LCD technology weeded out the kinescope, plasma and micro display rear projection technologies within a few years, which made the kinescope obsolete. TCL and its boss Li Dongsheng went through a tough time dealing with the fallout. The man, who was cited as one of the 25 most influential global business leaders by CNN and Time magazine, and commended as the Annual Economic Character in Asia, 2003 by Fortune, was subsequently rated as one of the "worst bosses" of China's listed companies of 2006.

Despite all that, China's color television industry has managed to recover. TCL now ranks third in LCD television shipment and fifth in LCD panel output worldwide.

TCL is not alone in reemerging from market opening and technological improvement. The same is true of China's mobile phone and telecommunications industries. Therefore, it seems hasty to claim that Chinese brands will collapse in the face of Industry 4.0.

Of course, some Chinese companies will suffer losses and will be shut down during this round of restructuring. Wouldn't it be good to eliminate reckless market players to make room for strong and competitive ones?

The author is an op-ed contributor to Beijing Review and a researcher with the Chinese Academy of International Trade and Economic Cooperation