Abstract
Demand for 3C products is growing steadily in China, aided by an enormous market, a rapidly expanding economy, and an increasing standard of living. In addition, international companies have become yet more aggressive in expanding into China with the further opening up of the domestic market. This report will examine influences from political, social, and economic spheres, as well as discuss the impact of these forces on the Chinese 3C market.
Risks Facing 3C Companies
In the future, familiarization with Chinese laws and regulations, and awareness of government policy changes will likely be vital for 3C manufacturers and vendors. Risk prevention will increase in importance, given the time lag before full implementation of laws and regulations and the anticipated increase in crime and political instability following the reform of SOEs. In addition, government efforts to strengthen domestic enterprises through administrative entry barriers are also expected to contribute to the necessity of risk prevention.
Rising Consumer Demand Bodes Well for 3C Industries
Considerable Potential in the Consumer Electronics Market
There remains a great deal of potential demand for consumer electronics, as the household income in rural communities continues rising and the number of households in more demand-intensive urban areas grow.
However, 3C companies must face several issues in the area of consumer electronics. First, surplus capacity has brought on a price war in the consumer electronics industry. In addition, Chinese citizens are adopting more conservative spending habits.
Communications Products
The ongoing urbanization in China and rise in the number of migrant workers provide opportunities for communications products such as mobile phones. An important new market segment is rural inhabitants moving to the cities in search of work. This segment will also aid in stimulating demand for communications products in rural communities and small towns.
On the other hand, communications product manufacturers and vendors also need to consider costs, despite the growing demand in medium-sized and small cities. These costs include expansion of marketing coverage to these geographic areas, maintaining an inventory of components for after-sales service, and repair work.
Computing
As family size shrinks, urbanization continues, and educational levels rise, demand for PCs is growing rapidly. The major challenge for PC makers will be how to extend marketing coverage to third and fourth level cities in order to capitalize on new demand for value-line PCs.