China Consumer Electronics Report Q2 2012

China’s consumer electronics devices market, defined to include computing devices, mobile handsets andvideo, audio and gaming products, is forecast to be worth about US$201.0bn in 2012, and this is expectedto increase to US$289.7bn by 2016. Consumer electronics sales should grow continue to grow strongly in2012, boosted by economic recovery, product innovation and the rural subsidy programme.Based on advanced orders, Chinese retailers appeared to be optimistic about the outlook for increasedsales of flat-screen TV sets and other consumer electronic products in 2012.Vendors will look to newertechnologies such as Smart TVs; LED TV sets, which were expected to comprise around 50% of flatpanelsales in 2011; and 3D TV sets, forecast at around 10-20%, to drive sales.

Smartphones are one particular growth area, with high double-digit growth forecast after sales of around99mn were estimated in 2011. A second phase of the government’s rural consumer electronics subsidyprogramme will also drive sales of flat-screen TV sets and other products in rural areas.Spending on consumer electronics products is projected to grow at a CAGR of 9.6% through 2016, withdemand for computers and TV sets in rural areas and tier-three to tier-six cities a key driver, along withthe increased popularity of high-end items such as flat-screen TV sets, tablet computers, 3G mobilehandsets and smartphones.

Computers

Computers accounted for about40% of China’s consumerelectronics spending in 2011.BMI forecasts Chinese domesticmarket computer hardware sales(including notebooks andaccessories) of US$81.3bn in2012, up from US$72.6bn in2011. Computer hardwareCAGR for 2012-2016 will beabout 10.4%. The government’srural computer subsidyprogramme will act as asignificant driver, along withfalling prices.

AV

AV devices accounted for about39% of Chinese consumerelectronics spending in 2011.China’s domestic video, audioand gaming device market isprojected to grow at a CAGR of9.3% between 2012 and 2016,up to a value of US$112.1bn.About 47mn LCD TV set unitsare projected to be sold in 2012,with strong double-digit growthas Chinese consumersdemonstrate a preference forlarger screen sizes and internetenabledTV sets.

Mobile Handsets

China’s mobile handset salesaccounted for about 21% ofChinese consumer electronicsspending in 2011. Total Chinesemarket handset sales areexpected to grow at a CAGR of14.1% to 561mn units in 2016.The rural market will be themain source of subscribergrowth, while vendors will alsofocus a rapidly expanding 3Ghandset market and demand forsmartphones, which currentlyaccounts for about 20% ofChinese handset sales.