VHS..............................
asiansources.com
Asian Sources Electronics
October 1997
High-tech CD, DVD formats pose little threat
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THE ADVENT of the popular CD and CD-ROM and the high-tech DVD and VCD have had little effect on the V-0 market, Hong Kong makers say. "The price difference is just too big," said Benjamin Chan, director of Century Holdings Ltd, Hong Kong.
"Recordability at a low price is the VHS advantage," adds Keensin Industries Ltd-HK's marketing manager Allen Ho. "But in the next five to 10 years when recordable CDs are firmly in place, V-0s will probably take a backseat." Until then, marketing executive Alan Mau of Casin Video Cassette Ltd agrees, the video cassette can be expected to maintain its market position.
The V-0 market is a highly specialized, narrow industry that is extremely competitive, said Chan of Century Holdings. Buyers are very knowledgeable regarding product specifications and quality requirements. Product testing prior to shipment is normally in accordance with the buyer's stated specifications.
"The current demand for V-0s is expanding primarily due to the use of video cassettes in education," adds Chan. "However, the market is being over supplied and we are therefore facing tough price competition and very tight margins."
Stable market
Tony Shek, sales and marketing manager of Wai Shing Cassette Tape Mfy Ltd agrees with Chan, and said that though total market demand is now stable, a slow attrition is expected in the future as the market is mature and under-attack from high-tech developments in other media. "There are too many suppliers in the market, and as a result some of the larger companies are now reducing production because profit margins are too slim," Shek said. Wai Shing accepts orders based on a minimum requirement of 50,000 units, or the equivalent of one 20 foot full container load.
But like Ho of Keensin, Shek stressed that video cassettes will not fade from the market within the next ten years. At present there is no competing medium that offers the user the advantage of low-priced recordability.
Strong demand from US, Europe
Hong Kong makers claim to be unaffected by the competition from CDs and DVDs in mainland China. In mainland China, it's a different story. Makers here say too many cheap, pirated CDs are on the domestic market, drawing interest away from VHS tapes.
Losing their key local market, suppliers are focusing instead on exports. China-based suppliers say demand for V-0s is strong overseas. Hangzhou Magnetic Tape Factory exports 90 percent of its monthly output to South Korea, the United States, South America and the Middle East.
One hundred percent of Zhangzhou Kanli Magnetic Co. Ltd's OEM/ODM output is sold to the United States, Europe and Africa.
Another firm, Quanzhou Overseas Chinese Magnetic Tape Factory exports more than 50 percent of its output to Europe and the United States. "Our market has been expanding since last year, as we have improved product quality by using new technology, as well as imported materials such as polystyrene and V-0 fittings", said Liu Zheng-liang, the firm's marketing manager.
Hong Kong makers say no different. For all the companies interviewed in this report, Europe, the United States and Asia are the main markets for their V-0 output. |
