--- SEARCH ---
Film in China
War on Poverty
Learning Chinese
Learn to Cook Chinese Dishes
Exchange Rates
Hotel Service
China Calendar
Trade & Foreign Investment

Hot Links
China Development Gateway
Chinese Embassies

Prospects for Consumer Electronics

Chinese consumers feel increasingly confident about the economy's long-term growth prospects with gross domestic product (GDP) averaging 8 percent annual growth in recent years. Rising household incomes have resulted in the growth of the consumer electronics industry.

Consumer electronics in China will exhibit the following characteristics between 2005 and 2008, according to a forecast by Euromonitor International, a leading independent provider of strategic market research:

Audio products

Given the low levels ownership of most home video and audio products compared with more developed countries, and the fact that digital technologies accelerate product innovation, China's consumer electronics market is expected to grow by 48.5 percent in constant value terms until 2008, with an average annual increase of 8.2 percent.

Broadly speaking, two critical macro factors will underpin the expansion of the consumer electronics market:

1. Consumers' increasing purchasing power will be sustained by the country's strong economic growth. The consensus among economists is that China's annual GDP growth rate will remain around 8 percent until 2008. Furthermore, it is expected that the government will continue with its policy of boosting domestic consumption through a private home ownership programme in urban areas, and easier access to personal credit, while increasing household incomes. All of these factors will translate into solid demand for household products, including consumer electronics.

2. A new cycle of consumer electronics consumption is in the offing. The first consumption cycle began when China first opened up its market in the early 1980s, according to some academics, and lasted about 10 years. During that period most urban families bought their first colour TV, hi-fi system, and VCR/VCD/DVD unit. Yet most of their purchases are fast approaching the stage of upgrading, and renewal consumption demands are approaching as a result. A new generation of consumers is also coming of age. They are the result of the government's one-child policy introduced more than two decades ago. Between 2004 and 2008, around 80 million of these young consumers will start work, get married, and start their own families. Although the number of newlyweds will be smaller than in previous decades, unlike previous generations, this new generation will have a greater disposable income, and be more open to new technology and high-value products, which will be introduced rapidly in coming years.

Environmental concern

Energy conservation is likely to become an increasingly strong selling point in the next couple of years. Due to poor energy infrastructure planning, southern and eastern China have been badly hit by electricity shortages, and many areas have been hit by power cuts. In fact, power supplies took a turn for the worse in 2004 and this situation is not expected to improve until late 2005 at the earliest. Given this situation, consumer demand should increase for more energy efficient consumer electronics.


Large screen flat-panel CRT TVs will continue to be the mainstay of TV sales. Smaller TVs with screens at or below 29 inches will retreat from urban areas and mainly be sold in rural areas at lower prices. In the meantime, projection, LCD and PDP TVs will expand at the expense of CRT TVs.

The interchangeability of technology between consumer electronics and information technology products has paved the way for large players in the IT/PC industry to move into the manufacturing of LCD and PDP TVs. Leading brands such as Motorola, Dell, Legend and Founder have either already joined or plan take part in the production of LCD and PDP TVs.

It is still too early to assess the full impact of the entry of IT companies into TV manufacturing. The commonly held view among TV manufacturers surveyed for this study is that the average prices of LCD/PDP TV units will fall at a faster rate. As with any other high-tech and high-value item, a decline in prices will be the primary driver of the growth in sales of projection, LCD and PDP TVs.

Digital TV

Digital TVs, in the strict sense, will not register any notable sales before 2008.

According to the blueprint of the State Administration of Radio, Film and Television (SARFT), commercial DTV broadcasting will first be launched around 2005 in major cities, most probably through set-top box signal conversion.

The 2008 Beijing Olympics will be broadcast digitally nationwide. The whole process will only be completed by 2010, by which time digital TVs will have replaced analogue TVs in most homes. And there will be increased interest in consumers switching to large screen CRT, projection, PDP and LCD TVs, to enjoy better visual and audio quality of programmes, as the current broadcasting system is upgraded to a digital system.

Home audio products

The demand for home theatre systems will still be closely related to the sale of colour TVs and videodisk units. But the low existing ownership base will allow for the stronger growth of home theatre systems, which are estimated to see annual average growth of more than 15 percent in terms of constant value over the forecast period.

Digital products, including new-generation videodisk players (hard drive DVD players), digital cameras, digital camcorders and MP3 players (or next-generation digital audio players), will outperform all other sectors to 2008. Consumption of those digital products is related to the penetration of household computers and printers, and the expansion of Internet accessibility.

Products such as black and white TVs, VCRs, analogue camcorders and cassette tape-based audio devices are on the way out. It is almost certain that all of these products will become negligible or even non-existent by the end of 2008.

In-car products

The demand for in-car audio products will ride on the strong growth of private car sales in China, which is aiming for the complete removal of import quota on automobiles by 2005. Though many of these new cars will come equipped with sophisticated sound systems, the growth in the consumer automobile market still stands to benefit the after-sales market as well.

Established Japanese manufacturers have started to adjust their production and marketing strategies, including product development and brand positioning to directly cater to after-sales demands. Domestic car electronics companies previously engaged in original equipment manufacturing for overseas markets will see their domestic volume shares expand in coming years due to their indigenous advantages in terms of cost control and capital investment savings. But as Chinese car buyers become increasingly fond of more expensive models, their appetite for in-car audio products will increase, and foreign brands' prestige image and product and technology innovations will all come into play.

(China Daily January 26, 2005)

Sales of Information Products to Top US$240b
Sony Earns US$16 Million in Chinese Market
Electronics Sales Hit 1.88 Trillion Yuan in 2003
Electronics Industry Lures US$70 Billion of Foreign Capital
Print This Page
Email This Page
About Us SiteMap Feedback
Copyright © China Internet Information Center. All Rights Reserved
E-mail: webmaster@china.org.cn Tel: 86-10-68326688