The price of television sets in China will stabilise this year due to a reduction in stockpiles and limited room for further price cuts. This was chairman Tomson Li Dongsheng's message to yesterday's extraordinary meeting of top TV maker TCL International Holdings. The meeting agreed that the company should acquire all of TCL Computer Technology, a personal computer (PC) manufacturer, from its parent for HK$341.8 million. It is part of the company's drive to diversify into non-TV products after profits were squeezed by a mainland price war. Analysts estimated TCL's net margin was cut to 3 per cent last year from 10 per cent in 1999. 'TV prices should stabilise this year since there was not much room for the price to go further down . . . although the prices of high-end products could decrease a bit further,' Mr Li told the meeting. The country's inventory level of excess TV sets was reported to have been reduced to about six million units by the end of last year, down from the 12 million units at the middle of the year. The trend of falling inventory could offset some downwards pressure on prices if take-up continued this year. 'The price war was due more to the mismanagement and the wrong strategies of some industry players than to the lack of genuine demand, which grows at about 8 per cent a year,' Mr Li said. He said competition in the near future would centre on quality and innovation rather than price, and that middle to top-end product makers such as TCL should have an edge. During the past two years, TCL began diversifying into 'white goods' products - such as washing machines and refrigerators - as well as telecommunications and information technology products. The company plans to raise the proportion of non-TV products in its sales mix to 50 per cent over about three years. Analysts said it would take time for the non-TV business to grow big enough to help offset the impact on TCL's TV business, which last year comprised 79 per cent of total turnover. Mr Li said that the inclusion of the PC manufacturing business would reduce the proportion of TV set sales in the group's total turnover to 65 per cent this year. International Data Group forecast that the PC sales volume could increase by an annualised 30 per cent in the next four years. For the acquisition TCL International will pay HK$153.8 million cash to TCL Holdings and settle the balance by issuing about 105.62 million new shares at HK$1.78 each to TCL Industries.