Shanghai tuning into TV home shopping
By Chen Qide (China Daily)
Updated: 2004-03-20 09:35

China's first South Korea-funded TV home shopping joint venture is expected to hit Shanghai's airwaves on April 1.

The venture, the product of more than one year of commercial negotiations, is worth US$20 million, with the Shanghai Media Group (SMG) taking a 51 per cent share and CJ (Cheil Jedang) Home Shopping of South Korea taking 49 per cent.

"Our purpose is to extend our business into the East China market by gaining a firm foothold first in Shanghai," said Kim Heung-soo, president of the Shanghai SMG-CJ Home Shopping Co Ltd.

"East China has potential in the TV home shopping business since it contributed to 36 per cent of the nation's total retail sales last year," said Kim.

SMG will use its Theatre Channel through Oriental TV to broadcast home shopping programmes for five hours every day in the initial phase.

"As the market expands, we will televise the programmes for 24 hours daily," said Li Ruigang, President of SMG.

SMG earned an annual revenue of 2.5 billion yuan (US$300 million) last year, a result of five years of operations, 90 per cent of which, however, relied on advertisement.

"The ad market fluctuates," said Li. "The media group will run a great risk if it relies heavily on advertising rather than balancing its income sources by developing multiple industries."

TV home shopping has become popular in Western countries with consumers looking to buy goods from the comfort of their homes. The trend started in Europe and the United States in the 1980s and spread to Japan and South Korea.

The world's largest TV home shopping company QVC (Quality, Value and Convenience) in the United States raked in sales of US$4.38 billion in 2002, ranking top in the world. CJ ranked third in the world with revenues of US$1.2 billion earned in 2002.

SMG began to consider the home shopping industry in 2002 when it conducted market research in the United States and some Asian countries.

"We were surprised to see that a home shopping TV channel in South Korea can bring about annual revenues of 10 billion yuan (US$1.2 billion)," Li said.

He said SMG won't be able to attain that figure by simply relying on advertisement. Seven out of its 11 channels failed to earn money for the media group last year.

"Home shopping will become our new industry, which is expected to earn profits for the group," Li said.



Close