By CBfeature
Fierce competition in China's consumer electronics (CE) market looks set to continue. Statistics just released for the first quarter of the year by one of the world's top market research firms identify the latest trends and predict what's to come. In its analysis, the German-based GFK Group focuses on the latest changes in pricing and brand-driven sales in China's LCD TV, mobile phone and laptop markets.
Higher Market Concentration
The polarization of market share by well-known brands is intensifying. Take the mobile phone market as an example: in the first quarter of this year, more brands entered the Chinese mobile phone market, yet powerful brands could still see their shares expanding. Twenty top brands account for 90% of total market share. And 80% of the mobile phone market belongs to only eight top brands, compared to 14 for the same period last year. In the laptop market, the ten bestselling models are made by only a handful of manufacturers, including Lenovo, HP, IBM and Sony.
Lower Prices, Higher Share for Low-end Models
Price is still a major stimulus fuelling consumption on the Chinese market: The prices of handsets, color TVs and laptops are all going down, thereby giving an impetus to market growth. In the first quarter of 2006, the average price of a mobile phone was RMB1,422 (US$178) - down by 9.2%, while mobile phone sales increased by 17.8% compared with the same period in 2005. The color TV market saw especially eye-catching price cuts, as the price of 38" LCD models dropped by 51%.
However, real opportunities are open for mainstream products. For instance, the year-on-year growth rate in laptop sales was 31%, much higher than the desktop market. Low-end mobile phones and laptops are proving to be the most successful in their respective categories, both contributing more than 40% to overall market sales. Another trend worth noting is that in terms of both sales volume and revenue, LCD TV sales account for almost half of the TV market, yet smaller models have experienced a big drop in market share. And in the large TV category, sales of traditional CRT color sets, especially rear-projection models, are decreasing drastically. Now, plasma TV is challenging the dominance of LCD technology in the market, and manufacturers are rushing to cash in on these developments.
Foreign versus Local Brands
International CE heavyweights are gradually realizing that changing the landscape of the Chinese CE market is not all that easy. Now, domestic CE manufacturers, after some consolidation and reorientation, are becoming just as aggressive as industry giants from Japan, Korea and Europe. In the latest bout of competition in the LCD TV market, sales of Japanese brands are dropping, while Korean brands are gaining stronger momentum. An increase in the sales volume for large, domestic-brand LCD TVs has also contributed to boosting overall sales revenue in the market. But the market share of domestic manufacturers is still being threatened by foreign brands, with more price wars in the pipeline.