 
August 2004
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Table of Contents
Executive Summary
Executive Summary
Strong economic performance underlies consumer electronics growth
With strong GDP growth averaging 8% per annum since late 2001, Chinese consumers feel much more secure about long-term economic conditions than they have previously. Rising household incomes resulted in an increase in entire consumer electronics industry of more than 3% in current value terms in 2003 over the previous year. Audio products saw growth in current value terms of almost 6%, and of 2% in volume terms. Video’s double-digit volume growth of nearly 13% did not readily translate into equally positive value growth due to the falling prices, and as a result video products saw an increase of only 1.5% in current value terms during 2003.
Consumer electronics largely unscathed by SARS epidemic
In hindsight, the market emerged relatively unscathed from the SARS epidemic, which swept the cities of North, East and South China, and peaked in April/May 2003. The limited dampening effect of the SARS outbreak on the performance of the consumer electronics market was due to the fact that the second quarter of each year makes the lowest contribution to total annual Chinese sales of consumer electronics. As soon as the country was officially declared SARS free, crowds reappeared in marketplaces, drawn by the drastic price cuts implemented by retailers anxious to stimulate turnover. Soaring sales, starting from National Day Holiday in October until Chinese New Year, more than enough compensated for the sales lost to SARS in the second quarter.
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Digital is the buzzword
‘Digital’ is the best selling point for many video and audio products. In colour TVs, even though none can strictly be classified as digital TV (DTV), high definition CRT TVs, projection TVs, Plasma TVs, and LCD TVs have all been selling rapidly on the pitch of being ‘digital’ or ‘digital-ready’. The grand plan laid out by the government to broadcast the 2008 Olympics digitally, and to set up a national digital broadcasting system by 2010, promises huge potential for private demand for digital TV sets and related products. Seeing the digital TV as the next growth source, foreign brands and leading domestic manufacturers have invested heavily in setting up production lines.
For audio device manufacturers, being digital means incorporating multiple channel digital sound processing technologies such as Dolby Digital and THX into their in-home audio systems.
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The progress in digital technology has also led to digital cameras, digital camcorders, MP3 players and other digital devices becoming smaller in size, increasing storage capacity, lowering prices, and improving functions. As they provide more advanced functions to consumers, these devices are quickly making their way to the consumer market, replacing previous generation models.
Technological advancement shortens product cycle
As cameras, camcorders and video cassette recorders (VCRs) only recently started to be accepted by Chinese consumers, the new generation of imaging products, in the form of digital cameras, digital camcorders, and VCD/DVD players, entered Chinese consumers’ scope around the same time. This created a unique market evolution pattern in the vast Chinese market. For example, it took six years for VCD player sales to grow in China, yet only three years for DVD players to reach a similar level.
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Table of Contents
1. INTRODUCTION
2. EXECUTIVE SUMMARY
3. CONSUMER ELECTRONICS
3.1 Market Performance
Table 1 Retail Sales of Consumer Electronics: Value 1998-2003
Table 2 Retail Sales of Consumer Electronics: Volume 1998-2003
Table 3 Retail Sales of Consumer Electronics: % Value Growth 1998-2003
Table 4 Retail Sales of Consumer Electronics: % Volume Growth 1998-2003
Table 5 Consumer Electronics Company Shares 2002-2003
Table 6 Consumer Electronics Brand Shares 2002-2003
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4. VIDEO PRODUCTS
4.1 Sector Performance
Table 7 Retail Sales of Colour Televisions by Screen Size: % Volume 2001-2003
Table 8 Retail Sales of High-End Colour Televisions by Screen Size: Volume & Value 1998-2003
Table 9 Retail Sales of VCD and SVCD Players: Volume & Value: 1998- 2003
Table 10 Retail Sales of Video Products: Value 1998-2003
Table 11 Retail Sales of Video Products: Volume 1998-2003
Table 12 Retail Sales of Video Products: % Value Growth 1998-2003
Table 13 Retail Sales of Video Products: % Volume Growth 1998-2003
Table 14 Video Products Company Shares 2002-2003
Table 15 Video Products Brand Shares 2002-2003
4.2 New Product Developments
Summary 1 Video Products New Product Developments 2002-2003
4.3 Retail Distribution
Table 16 Retail Sales of Leading Electronic Chain Stores: 2002-2003
Table 17 Leading Electronic Chain Stores Number of Outlets: 2002-2003
Table 18 Retail Sales of Video Products by Distribution Format: % Analysis 1998/2003
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5. AUDIO PRODUCTS
5.1 Sector Performance
Table 19 Retail Sales of Home Cinema/Theatre
System/HTIB: Product Structure: 2001-2003
Table 20 Retail Sales of Portable MP3 Players by Manufacturers: % Volume: 2002/2003
Table 21 Retail Sales of Audio Products: Value 1998-2003
Table 22 Retail Sales of Audio Products: Volume 1998-2003
Table 23 Retail Sales of Audio Products: % Value Growth 1998-2003
Table 24 Retail Sales of Audio Products: % Volume Growth 1998-2003
Table 25 Audio Products Company Shares 2002-2003
Table 26 Audio Products Brand Shares 2002-2003
5.2 New Product Developments
Summary 2 Audio Products New Product Developments 2002-2003
5.3 Retail Distribution
Table 27 Retail Sales of Audio Products by Distribution Format: % Analysis 1998/2003
6. FORECAST MARKET PERFORMANCE
Table 28 Forecast Retail Sales of Consumer Electronics: Value 2003-2008
Table 29 Forecast Retail Sales of Consumer Electronics: Volume 2003-2008
Table 30 Forecast Retail Sales of Consumer Electronics: % Value Growth 2003-2008
Table 31 Forecast Retail Sales of Consumer Electronics: % Volume Growth 2003-2008
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