IHS: China’s CE Market Declining10 Mar, 2014 By: Erik Gruenwedel
With Beijing halting subsidies to help stimulate demand of TVs and other devices in rural areas, overall CE unit shipments in the communist country fell 9% in 2013
Hollywood’s love affair with China for theatrical co-productions, screenings, theme parks and home entertainment may be mushrooming, but consumer demand for consumer electronics is waning, according to new data from IHS.
Combined unit shipments for products comprising the overall Chinese consumer electronics industry — TVs, set-top boxes, media players, cameras, DVD players, etc. — fell to 710.2 million units in 2013, down 9% from 781 million in 2012.
Indeed, set-top box shipments slipped 9% to approximately 135 million units, while personal media player shipments have plummeted 92% since 2009.
In addition, an appreciating Chinese currency drove production costs higher, leading international buyers to place smaller purchase orders, which impacted domestic profitability.
“Last year was the third straight year of declining shipments and the second consecutive year of revenue contraction for the Chinese consumer electronics space,” Horse Liu, principal analyst for the connected home at IHS, said in a statement. “The cessation of government subsidies [last spring] for consumer electronics products played a major role in the annual decline.”
Meanwhile, shipments of LCD televisions, air conditioners, microwave ovens, refrigerators and washing machines is expected to remain strong.
As CE unit shipments continue to decelerate during the next few years, revenue will be strong. This is because of burgeoning unit shipments of white goods such as air conditioners and refrigerators.
Lui said Chinese OEM manufacturers are retooling marketing efforts toward higher-income consumers.
“Chinese manufacturers are investing more resources on products carrying expensive prices in order to push up sales revenue, but they must also be careful to adjust production capacity to reduce the risks of overproduction,” Liu said.
Total shipments for the major device categories this year will amount to a projected 674.2 million units. Revenue is forecast to reach $104.8 billion in 2014, up from $99 billion last year and $98.1 billion in 2012.