Strong demand for HD digital home entertainment products in China

HONG KONG: Despite the global economic slowdown, most China home entertainment product suppliers expect sales to grow this year, according to Global Sources' China Sourcing Report: Home Entertainment.

Among surveyed suppliers of home entertainment products:
-- 47 percent forecast sales growth of more than 20 percent;
-- 21 percent expect growth of 10 to 20 percent;
-- 11 percent predict sales to increase by less than 10 percent; and
-- 21 percent anticipate flat or declining sales.

"Global demand for high-definition and digital home entertainment products, coupled with a drop in the cost of LCD and plasma displays, are spurring growth in the sector," said Spenser Au, Publisher of the report.

"Even as the economy slows, consumers are rapidly adopting new digital entertainment technologies. In the United States, HDTV-equipped homes doubled in 2008 to 23 percent of all households. HDTV is also expected to take off in Europe from today's 59 million HDTV homes to 116 million in 2010 and over 200 million by 2018. This is one reason suppliers are so optimistic about the EU market, with 63 percent ranking it as their top export destination."

Prices set to drop
Au said: "Sixty-seven percent of suppliers we surveyed expect price competition to be the biggest challenge they face in the coming months. In order to gain or maintain market share, 79 percent are planning to maintain or decrease prices.

"A number of suppliers are also producing or planning to produce their own LCD modules. This is backed by strong support from the China government, which listed LCD module production as a key concern in its Eleventh Five-Year Plan."

Suppliers are also working in other areas to increase competitiveness with:
-- 32 percent widening their product ranges;
-- 26 percent improving operating efficiency; and
-- 26 percent working to reduce production costs.

The remaining 16 percent of suppliers cited decreasing product defects and shortening design/development time as their main strategies to win more orders.

Au concluded: "As competition increases along with demand, it is a buyers' market in the home entertainment sector. Companies buying from the region can expect to find more value-for-the-money products, all at lower prices than they paid last year."