Hisense, the Chinese electronics giant has rapidly ascended to become the world’s second-largest TV manufacturer, yet many consumers wonder how Hisense can sell TVs with comparable features to premium brands at substantially lower prices.
From vertical integration to strategic partnerships, Hisense employs multiple approaches that allow it to undercut competitors while maintaining acceptable quality standards for budget-conscious consumers.
Hisense Manufacturing Advantage
Hisense’s ability to offer lower-priced televisions begins with its manufacturing capabilities and approach. Unlike many competitors, the company has developed significant advantages in its production process.
Vertical Integration
Hisense maintains tight control over its supply chain through vertical integration, manufacturing many components in-house rather than sourcing them from third-party suppliers. This approach eliminates middleman markups that often inflate costs for other brands.
The company produces its own panels, processors, and other critical components at its factories in China, reducing dependency on external suppliers and allowing for better cost control.
According to industry analysts, this vertical integration strategy gives Hisense a 15-20% cost advantage over competitors who must source components from multiple vendors.
Manufacturing Scale and Efficiency
With production facilities across China and strategic locations worldwide, Hisense benefits enormously from economies of scale. Its Qingdao headquarters houses one of the world’s largest and most efficient television manufacturing complexes.
“Our factory automation and production scale allow us to produce more units at a lower cost per unit than many of our competitors,” David Gold, a Hisense executive.
Hisense has invested heavily in automating its manufacturing processes, reducing labor costs while maintaining consistent quality standards. These automated production lines can operate around the clock with minimal human intervention.
Lower Labor and Operational Costs
Despite automation, manufacturing still requires human workers, and Hisense benefits from China’s relatively lower labor costs compared to companies with significant manufacturing operations in countries with higher wages.
Beyond labor, Hisense also enjoys lower operational expenses due to government incentives designed to boost Chinese manufacturing exports. These incentives include tax breaks, subsidized utilities, and favorable loan terms for expansion.
While labor cost advantages have diminished somewhat as Chinese wages have increased, Hisense has compensated by establishing strategic manufacturing facilities in countries like South Africa, Mexico, and Eastern Europe to maintain its cost advantages.
Component and Features Strategy
Hisense’s approach to components and features represents a careful balancing act between cost-saving measures and maintaining competitive specifications.
Strategic Component Selection
Hisense engineers carefully select which components deliver the most noticeable value to consumers while identifying areas where cost savings won’t significantly impact the user experience.
For example, Hisense often uses VA (Vertical Alignment) LCD panels instead of the more expensive IPS (In-Plane Switching) panels in many models. VA panels offer better contrast ratios but narrower viewing angles—a tradeoff that many casual viewers might not notice but results in significant cost savings.
Similarly, Hisense might use less expensive processing chips in entry-level models, prioritizing core functions over sophisticated upscaling or motion processing that casual viewers might not fully appreciate.
Panel Sourcing Strategy
While Hisense produces many panels in-house, it also strategically sources panels from manufacturers like BOE and CSOT, Chinese panel makers that offer competitive pricing compared to Korean or Taiwanese suppliers like LG Display or AUO.
Industry insider reports suggest Hisense often purchases what are classified as “A-” grade panels. These panels meet most quality specifications but might have minor uniformity issues or slight color variations that aren’t immediately apparent to the average viewer but cost significantly less than “A+” grade panels used in premium TVs.
Streamlined Feature Implementation
Hisense has become adept at implementing popular features like HDR (High Dynamic Range) and smart TV capabilities at a lower cost than competitors.
Rather than developing proprietary smart TV platforms like Samsung’s Tizen or LG’s webOS, many Hisense models use Android TV, VIDAA, or Roku operating systems—established platforms that require less R&D investment while offering familiar user experiences.
“We focus on delivering the features consumers actually use most frequently, rather than loading up our TVs with sophisticated technologies that look good on a spec sheet but rarely impact day-to-day viewing,” Hisense product development manager.
Business Model and Market Positioning
Hisense’s business approach extends beyond manufacturing efficiencies and component choices to encompass broader strategic decisions about how it positions itself in the global market.
Lower Profit Margins
Unlike premium brands that maintain higher profit margins per unit sold, Hisense operates on thinner margins, prioritizing volume over per-unit profit. This approach allows the company to price its products more aggressively while still generating sustainable overall profits.
Industry analysts estimate that while premium TV brands might target 30-40% gross margins, Hisense often operates with margins closer to 15-20%, particularly for its entry-level models designed to capture market share.
The company compensates for lower margins through higher sales volumes and by cross-subsidizing from its higher-margin appliance divisions, including air conditioners and refrigerators, where it enjoys stronger brand recognition and pricing power.
Marketing and Advertising Efficiency
Premium TV brands spend billions annually on marketing campaigns, celebrity endorsements, and elaborate retail displays. Hisense takes a more targeted approach to marketing, focusing on high-impact sponsorships like the FIFA World Cup and strategic retail partnerships rather than blanket advertising campaigns.
Until recently, Hisense spent significantly less on brand building than competitors like Samsung or LG, though this is changing as the company seeks to elevate its brand perception globally.
Strategic Market Entry and Growth
Hisense initially established itself in price-sensitive markets where consumers prioritize value over brand prestige. This allowed the company to build manufacturing scale and distribution networks before challenging established brands in more competitive markets.
The company’s approach typically involves entering a market with aggressively priced models, gradually expanding its product range to include mid-range and premium offerings as brand recognition grows.
“We’re willing to accept lower profits initially to establish market presence and build consumer trust through products that exceed expectations for their price point.” Hisense international marketing director.
Quality Control and Performance Trade-offs
While Hisense TVs offer impressive value, understanding their lower prices requires acknowledging certain trade-offs in quality control and performance compared to premium brands.
Quality Control Variations
Premium brands typically implement more rigorous quality control processes, with multiple inspection points throughout manufacturing and more extensive pre-shipping testing. Hisense employs efficient but somewhat less comprehensive quality control processes, which helps reduce costs but can result in more unit-to-unit variation.
This means that while one Hisense TV might perform exceptionally well, another unit of the exact same model might have minor issues like slight backlight bleeding or color uniformity variations.
Consumer reviews and professional testing often note this increased variation between individual units compared to more consistent performance from premium brands.
Performance Longevity
Premium TVs are typically engineered with components rated for longer operational lifespans and more extensive stress testing. While Hisense TVs generally meet industry standards for reliability, they may not be designed with the same longevity targets as more expensive models.
This doesn’t necessarily mean Hisense TVs fail more frequently, but rather that their components might show signs of degradation earlier in their lifecycle—such as gradually diminishing brightness or increasing input lag after several years of use.
Software Support Cycles
Premium TV brands typically provide longer software update cycles, sometimes supporting models with new features and security updates for 4-5 years. Hisense’s update cycles are generally shorter, with most models receiving major updates for 2-3 years.
While this difference might not impact immediate performance, it can affect the long-term usability of smart TV features as streaming services evolve and require updated software capabilities.
Global Manufacturing Footprint
Hisense’s international expansion has played a crucial role in its ability to offer competitive pricing while adapting to regional market conditions and avoiding import tariffs.
Strategic Factory Placement
Beyond its massive manufacturing base in China, Hisense has established production facilities in strategic locations worldwide, including:
- South Africa, where it produces TVs for the African market
- Mexico, serving the North American market
- Hungary, providing products for European consumers
- Egypt, its newest facility targeting Middle Eastern and North African markets
These regional factories help Hisense avoid import tariffs while reducing shipping costs and delivery times. They also allow the company to customize products for local preferences and regulatory requirements.
Localized Supply Chains
Each regional factory develops partnerships with local component suppliers when feasible, balancing cost efficiency with the advantages of locally sourced parts. This approach creates greater supply chain resilience while often qualifying for preferential treatment under various trade agreements.
For example, Hisense’s Mexican factory sources certain components locally to qualify for preferential status under North American trade agreements, avoiding tariffs that would otherwise apply to fully imported products.
Acquisition Strategy
Rather than building all international operations from scratch, Hisense has strategically acquired established brands and manufacturing facilities, including:
- Sharp’s Mexican TV factory and North American brand license
- Toshiba’s TV business in multiple regions
- Slovenia’s Gorenje appliance company, strengthening its European presence
These acquisitions provide Hisense with instant manufacturing capacity, established distribution networks, and brand recognition in new markets, often at a lower cost than building equivalent capabilities organically.
Looking for a high-quality Hisense TV? The Hisense 55U8K ULED 4K Mini-LED Google Smart TV offers premium features like Mini-LED technology and Dolby Vision IQ at a significantly lower price than comparable models from Samsung or Sony.
Video Credit: HowToNinja / YouTube
Frequently Asked Questions
Does Hisense manufacture its own TV panels or source them from other companies?
Hisense employs a hybrid approach to panel sourcing. The company manufactures many of its own LCD panels through subsidiaries like Hisense Visual Technology, particularly for its mid-range models.
However, it also strategically sources panels from other Chinese manufacturers like BOE and CSOT for certain models, especially entry-level TVs. For its premium QLED and Mini-LED models, Hisense sometimes uses panels from larger manufacturers while adding its own backlighting and processing technologies.
How does Hisense’s warranty coverage compare to more expensive TV brands?
Hisense typically offers warranty periods similar to premium brands—usually one to two years of standard coverage depending on the region. However, where Hisense may differ is in the service delivery experience.
Premium brands often provide more comprehensive support options, including in-home service for larger models and more extensive service networks. Hisense has been investing in improving its service infrastructure, but coverage may still be less extensive in some regions compared to long-established competitors.
Are Hisense TVs as durable and long-lasting as more expensive brands?
While Hisense TVs generally meet industry durability standards, there are some differences in component selection that can affect longevity. Premium brands often use higher-grade capacitors, power supplies, and cooling systems designed for extended operational lifespans.
Hisense TVs typically use components that meet necessary specifications but may not be engineered for the same extended durability. With proper care, most Hisense TVs will provide satisfactory service for several years, though they might show signs of performance degradation earlier than premium models.
Does Hisense cut costs on environmental testing compared to premium brands?
Premium TV manufacturers often conduct more extensive environmental testing, subjecting products to extreme temperature variations, humidity conditions, and power fluctuation scenarios beyond basic requirements.
Hisense performs standard environmental testing to meet safety and operational requirements, but may not invest in the same level of extreme scenario testing as premium brands. This difference rarely affects normal operation but might become apparent in challenging environments or power supply conditions.
How does the picture processing in Hisense TVs compare to Sony, Samsung or LG?
Picture processing represents one area where premium brands maintain a technological edge. Companies like Sony (with X1/XR processors) and Samsung (with Neo Quantum processors) invest heavily in proprietary processing technology that handles motion, upscaling, and color management more effectively than most budget options.
While Hisense continues to improve its processing capabilities, particularly in its flagship models with its Hi-View Engine, the difference is still noticeable when displaying challenging content like fast sports action, complex upscaling scenarios, or low-bitrate streaming. For everyday viewing, however, many consumers find Hisense processing perfectly adequate.
Will a Hisense TV receive software updates for as long as premium brand TVs?
Software support is another area where premium brands typically offer advantages. Samsung and LG often provide major feature updates and security patches for 3-5 years for their TVs. Hisense has historically maintained shorter update cycles, typically 2-3 years of major updates followed by critical security patches only.
The company has been improving in this area, particularly for models using the Android TV/Google TV platform, which tend to receive updates for longer periods than Hisense’s proprietary VIDAA platform models.
Does Hisense offer all the same smart TV features as premium brands?
Hisense smart TVs offer most of the core functionality consumers expect, including popular streaming apps, voice control capabilities, and screen mirroring. However, premium brands often provide more refined user interfaces, smoother operation, and exclusive features.
Samsung TVs offer integration with their SmartThings ecosystem, while Sony provides tight PlayStation integration. Hisense focuses on delivering essential smart features at lower costs, either through its own VIDAA platform or by partnering with established platforms like Android TV, Roku, or Fire TV.
Is there a difference in the quality of materials used in Hisense TV construction?
Material quality represents another area where Hisense finds cost efficiencies. Premium brands typically use higher-grade plastics and metals in their construction, with more sophisticated finishing techniques. Hisense TVs use standard-grade materials that meet durability requirements but may feel less premium to the touch.
The difference is most noticeable in the TV stands, remote controls, and back panel construction, areas where consumers interact with the physical product but which don’t directly impact picture or sound quality.
Sources:
- Hisense USA: Company History and Strategy
- Which? TV Brand Comparison Guide
- PR Newswire: Hisense Global Market Position
- Paulson Institute: Hisense Manufacturing Case Study
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