Photo: Yang Haitao/ImagineChina

Plasma Push:: Sichuan Changhong Electric Co., which makes about 17 million television sets each year, is increasingly focusing on sophisticated devices like the plasma display panels on this assembly line.

On a bitterly cold January day this year, the countdown read 1289 days, 3 hours, 32 minutes, and 33 seconds on the gigantic clock that looms over Beijing's Tiananmen Square, blocking the view of the Museum of the Chinese Revolution. The clock, a short walk across the square's gray paving stones from the portrait of Chairman Mao that's hanging over the entrance to the Forbidden City, ticks off the seconds until the opening ceremony of the 2008 Beijing Olympic Games [see illustration, "Countdown"]. At that moment, in every corner of the world and all over China itself, Olympics fans will be watching events unfold in crisp high-definition television, thanks to a state-of-the-art digital TV infrastructure the Chinese government is now furiously assembling.

Throughout Beijing, an Olympics-related frisson is palpable, as rickety taxicabs are replaced with shiny new models, their drivers listen to English-language lessons on tape, and construction crews tear down block after block of crumbling brick buildings to make way for gleaming towers of glass and steel. But nowhere is the pressure of that ticking clock felt more intensely than in the television industry.

Elsewhere in the world, plans for the transition to digital TV are being thrashed out among telecommunications authorities, nudged along by politicians who want decisions to be made. In China, there are feuding ministries, too, striving to negotiate details of a local digital broadcasting standard. But those in the consumer electronics industry do not underestimate the government's power. Nobody doubts that the deadline will be met.

The stakes are huge. It's not just about showing China's high-tech face to the world—it's also about getting a piece of the local market for television receivers, already the world's largest, with some 40 million new TV sets sold to Chinese consumers annually. Most of China's 350 million households already have at least one TV set, generally a basic analog one made by a domestic manufacturer. It is an article of faith among TV makers that a sizable fraction of the country's big and burgeoning middle class will soon be buying more sophisticated receivers as fast as they can get them. And the high-end market, according to Anne Stevenson-Yang, managing director of the U.S. Information Technology Office in Beijing, "is bigger than most people would think," with sets being installed everywhere from karaoke bars to subway cars.

The competition for the hearts and minds of the Chinese consumer pits multinationals like Matsushita Electric Industrial Co., in Osaka, and LG Electronics Inc., in Seoul—by various measures Japan's and South Korea's leading or second-leading consumer electronics companies—against each other. But also in the fray are home-grown Chinese TV manufacturers such as Sichuan Changhong Electric Co., in Mianyang, and TCL International Holdings Ltd., in Hong Kong, which are big exporters as well [see photo, "On The Shelf"].

Matsushita, probably more than any other top consumer electronics company, has worked steadily for decades to build a formidable presence in China. LG Electronics, with big ambitions and the advantage of the cultural affinities many Chinese feel toward Korea, is a worthy challenger.

When Matsushita and LG aren't fending off each other, they'll have all they can do meeting the indigenous Chinese competition. Until the beginning of 2004, Sichuan Changhong, a maker of those ultracheap DVD players that line the shelves in Wal-Mart stores, was generally described as the world's largest television maker. But late in 2003, TCL bought the television operations of France's Thomson SA, in Boulogne—and with it the storied RCA brand that Thomson acquired from Fairfield, Conn.-based General Electric Co. 15 years ago.