Consumer Electronics Industry Recovery in China

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Category: Business in Asia, Economy & Trade
Consumer Electronics Industry Recovery in China

China has a strong reputation for its electronic markets, producing various types of gadgets and machinery that are in high demand among consumers worldwide. Moreover, its consumer electronics industry is among the top choices for job-seekers, potential shareholders, and prospective investors who set their eyes to gaining entry into China’s budding economy.

Have a look at our previous article on China Market Entry: A Guide for Potential Investors

China is the largest producer and exporter (and largest end-user) of consumer electronics in the world with several cities focusing on electronics. Thus, it can rival that of the US’s Silicon Valley. Moreover, the steady recovery of China’s industries from COVID-19 allows China to develop new trends toward more business opportunities.

Production and export of consumer electronics

Consumer Electronics include communications or entertainment gadgets (brown goods) and housekeeping devices (white goods) designed to be functional for the daily use of consumers. In other words, the consumer electronics market sells any electronic device that people use in everyday life. They are classified into (a) brown goods and (b) white goods.

  • Brown goods include gadgets used for entertainment purposes and communications like TVs, Smartphones, speakers, and printers.
  • White goods on the other hand are those used for house chores and utility such as refrigerators, vacuum cleaners, washing machines, etc.

The consumer electronics industry has recovered rapidly despite the impact of COVID-19. Furthermore, it has topped China’s 2020 list of export products. In the U.S. alone, the industry’s exports accounted for 42 percent of the total electronic exports in 2020. Among the most commonly produced consumer electronics in China are the following products:

  • Smartphones
  • Power banks
  • Tablets
  • Laptops
  • Desktop Computers
  • LED TVs
  • Drones

In 2018-2019, the consumer electronics market size reached around RMB 30 billion quarterly. This figure dropped to RMB 20.9 billion during the first quarter of 2020 with the initial wave of COVID-19 in China. Despite this decline, the market showed indications for continuous improvement since the consumer electronics sector is a huge part of China’s e-commerce market. E-commerce platforms like Taobao, Tmall, JD, and other independent brand websites offer their products directly to Chinese consumers.

Consumer electronics – markets and hubs in China

China’s consumer electronics manufacturing industry corresponds to about one-third of the global total output. It takes credit for established and emerging cities famous for their technological innovations. From the old first-tier cities (Beijing, Shanghai, Guangzhou, and Shenzhen), Shenzhen tops the list regarding consumer electronics. It is famous all over the world as the “Electronics Capital of China” given that it produces the majority of electronic products manufactured in China. Wholesale and retail shops can be found within the city to cater to the market. Also, emerging cities like Chengdu, Hangzhou, Tianjin, and Dongguan are known for electronics manufacturing, information technology, and rising GDP, among other things.

China’s sophisticated Information and Communications Technology (ICT) industry and vast consumer demand for modern innovative gadgets have brought the rapid development of the industry. Moreover, the country-wide focus and development of infrastructures and highly capable e-commerce platforms, courier services, and logistics in the country have paved the way for the demands of Chinese consumers (as well as import and export). Accordingly, Chinese consumers mostly preferred to spend on virtual reality electronics, Smartphones, and smart gadgets, and drones. For example, Smartphone production was pegged at 901.2 million units during 2017 but dropped significantly during the 2020 pandemic.

Recovery from COVID-19

Leading Chinese manufacturers like Huawei, Xiaomi, and OPPO as well as international brands such as Apple have all suffered the brunt of the pandemic in China during 2020. Supply chains, imports, and exports reached a stand-still during that year. However, industry players have enjoyed a rather rapid COVID-19 recovery. Along with other industries, dramatic online or remote trends accelerated in terms of business operations, shopping, entertainment as well as medical services. China is expected to see changes in consumer behavior and business models as it has efficiently controlled the spread of COVID-19 within its borders.

Trends have evolved rapidly during the pandemic. Consumer Electronics Industry trends include the incorporation of microLED technology in televisions and large displays. Consequently, this growth is expected to expand the market size of audio and video consumer electronics in the coming years.

Trends and challenges amid COVID-19 pandemic recovery

  • Shorter product lifecycles
  • Increasing product variants
  • Reduction of product development time, and
  • Increasing demand for latest technologies

Conclusion

The consumer electronics industry in China, vast though it may be, still has not matured and has plenty of room for expansion and innovation. Before COVID-19 impacted the world, the industry already faced challenges such as the rapid pace of technological advancement, quality problems, imitations, and counterfeits, and costing.

During the pandemic, the global industry came to a stand-still when China stopped production for a time being since the supply chain relied on China. China is leading the recovery from the pandemic and its supply chain has settled into the “new normal”. To gain entry into the industry these days, job-seekers, shareholders, and investors must also be informed on which city their goals may be best fitted in. Since China is not just a single market but a cluster of various markets, having adequate research on the matter at hand must be taken into consideration before entering the consumer electronics industry in China.

Contact us

S.J. Grand provides advisory on setting up a business in China. We put our competent team at your service to give you the most effective China market entry, due diligence, and tax optimization strategy for foreign-invested enterprises.  Contact us to get you started.

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