Consumer electronics in China

CHINA: Retail volume sales growth of consumer electronics decelerated in 2012 and 2013, compared with the double-digit increases recorded in 2010 and 2011. This was mainly because the Chinese economy slowed down in 2012 and 2013, amid the uncertain global economic performance.

This led to a decline in consumer confidence, which hampered sales of products which are not widely considered to be daily necessities, such as consumer electronics. However, overall retail volume sales growth remained healthy due to the demand from new households and product upgrades and replacements by existing consumers.

Convenience trend and advanced technology boost sales

Convenience and advanced technology continued to stimulate sales of consumer electronics, owing to accelerated lifestyles, especially among urban dwellers, and the search for higher-quality products as disposable income levels improved. Smartphones and tablets, for instance, recorded dynamic performances in 2013, as they offer added convenience and portability to consumers.

Moreover, advanced product features, particularly for high-end smartphones and tablets, boosted demand. Fast-rising smartphones have threatened sales of imaging devices and portable media players, for example, as consumers are used to taking photos and video clips and listening to music with their smartphones.

Consumer trading-up fuels sales growth

Backed by rising household income, Chinese consumers continued to trade-up to better quality electronics in 2013. Home audio and cinema, smartphones, LCD TVs and BD players outperformed hi-fi systems, feature phones, plasma TVs and DVD players, respectively, in terms of retail volume sales growth, as consumers went in pursuit of an improved entertainment experience and greater convenience.

On the other hand, manufacturers have been making efforts to launch new products to promote sales, represented by 4K (ultra HD) digital TVs premiered by Sony and Skyworth and OLED TVs by LG, in the review period.

Outlook 2014

The outlook for 2014 remains bright for consumer electronics in the forecast period. Over the forecast period, overall retail volume sales growth is expected to remain healthy, driven by continuously rising per capita income among Chinese consumers. As a result, the replacement cycle is predicted to shorten as product upgrades among consumers accelerate.

On the other hand, rural sales of consumer electronics are set to grow faster than urban sales, underpinned by the anticipated narrowing of the income gap between urban and rural residents in the forecast period. It should be noted that the rural growth rate is derived from a relatively small consumer base in the countryside.

Electronics and appliance specialist retailers continues to dominate

Electronics and appliance specialist retailers remained the dominant retail channel in consumer electronics in China in 2012. With the robust expansion of chained operators, such as Suning (Suning Appliance Co. Ltd) and Gome (GOME Electrical Appliances Holding Ltd), electronics and appliance specialist retailers have achieved even higher penetration in lower-tier cities and developed rural areas, making such products easier to access for average consumers.

Wide product ranges and in-store sales consultations also appeal to consumers. However, Internet retailing has rocketed to become the second-ranked retail distribution channel in consumer electronics. B2C online operators, manufacturers and chained specialist retailers constantly enlarged their online sales platforms for such products during the review period.