China Consumer Electronics Market Surges due to exports but the country will remain the leading producer – The China consumer electronics industry surged in the second quarter, with booming domestic unit shipments of products including digital still cameras, cable Set-Top Boxes (STBs), Portable Media Players (PMPs) and air conditioners, according to different market research companies the world over.
Air conditioners led the growth, as total shipments reached nearly 29 million units in the second quarter of 2009, up 46 percent from the second quarter of 2009.
Meanwhile, the domestic cable STB market grew to 6.8 million units in the second quarter, recording a year-over-year growth of 33 percent.
PMP manufacturers shipped 16.2 million units during the second quarter of 2010, representing unit growth of 26 percent from 2009 and a growth of 18 percent from the first quarter of 2009. Unit shipments of digital cameras increased to 24 million in the second quarter of 2010, up 43 percent from to 17 million in the second quarter of 2009.
As regards the Poor market of the electronics: While the domestic markets surged for China consumer electronics products, some export markets, such as terrestrial STBs, digital cameras and white goods suffered a monthly decline in unit shipments in June. As a result, iSuppli expects that the manufacturers in this market will slow production growth in the third quarter as they monitor demand in other countries. A number of products, including PMPs, will suffer a year-over-year decline in unit shipments in the fourth quarter.
Rising inventory levels will help to reduce the cost of materials for consumer electronics products in China in the second half.
However the overall market will be impacted negatively by the government’s decision to increase the value of the Chinese currency in the second quarter. Such a development, China market analysis shows, will affect the country’s export market, decreasing the selling price of end products. Combined with rising labor costs, this will lead to meagre profit margins in the export consumer electronics markets during the second half of 2010.
Moving Inland: In an effort to reduce costs and stay profitable, some electronics product companies plan to move factories to cheaper areas farther inland from the Pearl River Delta and the Changjiang River Delta. Some of these companies have even established new factories in other developing countries, such as Vietnam and India, to improve margins. Nonetheless, China will remain the world’s most important electronic products factory in the next 10 years because of several important advantages.
For one thing, China’s government is adjusting its development policies. Owing to challenging export markets, the government is no longer encouraging the rapid expansion of manufacturing production capacity that offer little added value. On the other hand, local governments in developing territories inland are trying to set up new facilities to improve their economic status and employment rate. Some of them even limit the wage levels of workers in hopes of attracting new investments. As a result, total unit shipments of China consumer electronics products will grow moderately, instead of rapidly, during the next five years.
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