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Sony and Panasonic, the world’s two largest makers of consumer electronics, are slashing some TV prices by a third in China after being outsold 6-to-1 by Shenzhen-based Skyworth, according to a report carried by ChinaDaily.com.

Sony aims to double TV shipments in China this fiscal year, and Panasonic expects 50% growth in the world’s second- largest market for flat-panel TVs, the report said, quoting Agencies.

“The price battle in China will likely intensify as local manufacturers, South Korean makers and Japanese companies all fight for market share,” said Yoji Takeda, who heads the Asian equity management team at RBC Investment (Asia) Ltd. “Prices will probably continue falling with increased market supply during the second half.”

In December, Sony offered a 32-inch set for 3,000 yuan, (NZ$600) or 33% off the previous low price for that size, targeting customers in regional cities and rural districts, said Yuki Shima, a spokeswoman for the Tokyo-based company. To help cut costs, Sony has increased outsourcing of television production to Foxconn Technology Group, the world’s largest contract manufacturer of electronics.

Panasonic, the world’s biggest maker of plasma TVs, may cut prices of some models in China as much as 50% this year, Hitoshi Otsuki, senior managing director of the Osaka-based company’s overseas operations was quoted saying.

Sales of liquid-crystal-display (LCD) TVs in China will rise 15% to 45.5 million next year and overtake North America shipments, according to DisplaySearch estimates. China will become the biggest flat-panel TV market, including plasma sets, in 2012, according to the Austin, Texas-based researcher.

Skyworth leads China with a 15% share of the market, followed by domestic rivals Hisense Electric Co and TCL Corp, according to AVC Consulting in Beijing.

Japan’s Sharp Corp was the top non-Chinese vendor with 4.9%, followed by Samsung Electronics Co and LG Electronics Inc of Seoul.

Sony and Panasonic, the maker of Viera-brand TVs, each had 2.4%.

“Sony has started to take more serious actions in China,” Shima said, citing the December price cut. “We need to become sensitive about changes on products and business models for China.”

A price war may reverse the optimism sparked last month after the Japanese companies raised profit forecasts, said Yuuki Sakurai, chief executive officer of Tokyo-based Fukoku Capital Management Inc Sony and Panasonic on July 29 cited better-than expected sales of flat-panel TVs for raising their full-year forecasts, sending shares of both companies higher in Tokyo trading the following day.

Sony projects 60% growth worldwide and Panasonic 35%.

“There’s no way Sony and Panasonic can compete with Chinese producers in terms of prices,” Sakurai said. “Even the South Koreans are struggling. Chinese consumers aren’t very keen on top-quality products.”

Samsung, the world’s largest TV maker, said last month that falling set prices may erode profitability this quarter. The company intends to keep prices above those of Chinese producers.

Skyworth’s annual shipments in China rose 12% to 7 million units in the fiscal year ended March 31 from a year earlier, the company said April 19. Revenue from the business rose 55%.

Skyworth, whose shares trade in Hong Kong and Shenzhen, isn’t concerned about international competitors, said Shen Jian, a spokesman. Brands from abroad account for about a quarter of the TVs sold in China, according to DisplaySearch.

Cheaper prices for domestic models help. A 40-inch, international-brand TV sold for an average of about $902 in the second quarter, or about 33% more than Chinese brands, according to DisplaySearch.

“Our advantage is we are a local brand,” Shen said. “We don’t worry about the competition at all.”

Still, the price cuts may be helping overseas companies make inroads. Chinese producers’ combined market share fell to 76% in the first quarter from 83% the previous quarter, according to Hisakazu Torii, a Tokyo-based analyst at DisplaySearch.

Japanese television makers also face the hurdle of a stronger currency that’s giving them less room to cut prices than South Korean rivals. The yen has gained 7.7% against the yuan this year, while the Korean won has fallen 0.6%.

They may get a boost from the falling prices of flat panels, typically the costliest TV component. LG Display Co, the world’s second-largest LCD maker, last month forecast that panel prices would decline an unspecified amount through August.

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