The Blu-ray versus HD-DVD war may be over, but industry experts warn that a dual-format battle might kick off again in China.

Blu-ray kit will hit the shelves in China this year, but high prices and disk shortages are still restricting Blu-ray development.

Chinese research firm CCID Consulting said that the country's independently developed Red-ray high-definition DVD has made great progress in terms of resolution and capacity, and has a price advantage over Blu-ray.

However, Red-ray lacks content provider support so the biggest test will be building up an industrial supply chain, including optical head, chip, whole machine, disk and content.

Nevertheless, CCID believes that Red-ray and Blu-ray are now the two major camps in China's high-definition DVD market.

The research firm said that 94 per cent of global DVD players are made in China, although the export volume of players shrank in 2007 to 143 million sets.

High patent fees were the major factor restricting exports, offering a potential contributor to the future success of Red-ray.

But CCID said that China can extend itself from a producer to a creator only by breakthoughs in core technology and innovations in technical standards.

Pressure on profits have forced some enterprises to give up DVD player manufacturing altogether. The number of enterprises engaged in DVD manufacturing and trades in 2006 was 830, but the number fell to 460 in 2007.