China's multimedia focus..............................................
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Special Feature: Outlook 1998 - China
Expanding multimedia focus pushing growth to new levels
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Building on last year's strong performance, PC product manufacturers in China are confident that their competitiveness in the world market will continue to grow this year. Sales of China-brand PCs for 1997 are estimated at about 1 million units, and this year the figure is expected to grow by more than 60 percent.
The segment of multimedia products is particularly strong. "Last year, multimedia PCs and Video CD players were the two hottest products in China's electronics field, and this also will be the trend throughout this year," said an official of the China Electronics Committee.
Evidence of the multimedia PC's growing importance in the China market can also be seen in changes in advertising spending. While there has been little investment in advertising by the multimedia industry over the past few years, mainland manufacturers now seem determined to enhance their media images and are ready to spend on publicity. For instance, the most expensive advertisement on China Central Television this year will be for a multimedia PC.
Another indicator of strength in the computer industry is that export activities are on the rise. In the first seven months of 1997, Chinese companies shipped 155,305 PCs overseas, marking an increase of nearly 72 percent compared with the same period in 1996.
The top multimedia products, mostly manufactured in or near coastal areas such as Guangdong, Shandong, Jiangsu and Fujian, include color monitors, sound cards, software, speakers and networking and communication devices. And multimedia-oriented manufacturers are expanding their lineups to include more communication products, 3D graphics cards, videoconferencing solutions, optical drives and multimedia notebooks.
DVD players, while a young line, are expected to boom in three to five years in China, especially when prices begin to fall. However, the relatively low supply of compatible software is considered to be a drawback for the DVD line, so Video CD players -- which command a huge market in China -- are expected to remain key products for Chinese companies for some time.
Statistics
China's PC exports by volume, 1996-1997
Growing domestic presence shows PC success
The rising strength of Chinese computer product suppliers can be seen in their growing prominence in the huge domestic market. The share of the local PC market occupied by China brands grew from just 35 percent in 1995 to 56 percent in 1996. And in the first half of 1997, China-brand PCs took 60 percent of the mainland market.
And with multimedia PC output expected to grow by 40 percent per year for the next three to five years, this dominance -- as well as China's prowess overseas -- will expand. "China will not only be the largest talent market, but also a world-leading multimedia PC manufacturer in the year 2005," said Bing Liu, a spokesman for Qingdao HiSense Electric Appliance Corp.
According to the Information Center at the Ministry of Electronics Industry (MOEI), the Legend Group Corp. ranks first in domestic desktop computer sales. The maker has become the eighth-largest PC manufacturer in the Asia-Pacific region. It has a sales target of $3 billion for the year 2000, which would put it among the world's top 60 PC manufacturers. And by 2005, total sales are expected to hit $10 billion.
Much of this success can be attributed to investments in R&D. The Legend Group has an R&D center in Shenzhen specializing in the development of world-standard software. Its staff has increased from six several years ago to 70 now, and this year, more experienced people are expected to join the center.
The company plans to expand its market scope in Europe and America. "Our products have been sold in the United States and Hong Kong. It is very exciting to sell our multimedia devices in markets where most of the world's largest computer makers are concentrated," said Hong Wu Liu, Legend's sales representative in Shenzhen.
Other leading local suppliers such as China Great Wall, Nanjing Tontru and Qingdao HiSense are also increasing their shares of the mainland market while boosting exports. China Great Wall Computer Group Corp. plans to focus its development efforts on design, network technology and multimedia applications, according to chief designer Hong Xu. The company plans to launch 29-inch PC/TVs early this year.
As one of China's leading TV manufacturers, Qingdao HiSense entered the multimedia sector at the end of 1996. Currently, the company is offering 15-inch color monitors, a new type of ergonomical keyboard, a multimedia super-woofer speaker system, multimedia stereo headphones and multimedia microphones.
The maker will add MMX technology into its products this year and produce an integrated device with PC, Video CD, TV and fax functions. "This year, we are going to launch more high-end multimedia devices to give our customers more choices," Liu said.
Makers head high with notebook PCs
By closely following international trends, Chinese companies have made continual improvements in a high-end segment heretofore considered to be the exclusive domain of major multinational players: multimedia notebook PCs.
The next wave of releases from mainland suppliers will incorporate even more sophisticated features, even as prices fall. Jin-sheng Huang, Shenzhen marketing manager at Nanjing Tontru Information Ind. Group Co., said that features such as full-motion video and videoconferencing functions will be popular in the forthcoming models.
"Notebook computers have always been attractive to business users, and now more office workers are willing to use the convenient tools," Huang said.
According to Huang, prices could fall by more than 10 percent this year. "We predict notebook computers will be more competitive this year, as LCD costs are falling and battery prices are coming down."
The standard memory capacity of notebook PCs is also on the rise. Currently, most high-end models include 16M of DRAM as standard, but this is set to change this year.
Nanjing Tontru's PC plant was founded in 1995, and in just three years it has become the second largest PC manufacturer on the mainland. This year,its annual PC capacity is expected to reach 1 million units, with about 40 percent dedicated to desktop home multimedia PCs and 10 percent to notebook models.
VCD focus remains strong, but DVD climbing
Bolstered by an abundant supply of inexpensive software titles, Video CD players have become China's hottest multimedia products, with total sales for 1997 estimated at more than 10 million units. The heady growth is expected to continue, even despite the emergence of DVD.
According to the latest statistics from the China Electronics Industry, there are more than 450 companies manufacturing Video CD players on the mainland, and more are planning to enter the line this year. This competition has brought prices close to the bottom, so this year's competition will not be focused on price, but on brand recognition.
But even despite the strong focus on Video CD in China, the building momentum of the DVD standard in the international market is beginning to turn the heads of the mainland's larger Video CD player suppliers. "Although the Video CD market will still be optimistic throughout 1998, DVD players are just around the corner," said Guang-hua Wu, assistant general manager at Shenzhen SAST Laserdisc System Co.
At the end of last year, at least five companies in China had released DVD sample machines, including Shenzhen SAST Laserdisc System and Jiangsu Shinco Electronics Group Co. "Our DVD players will enter mass production early this year, but we are still not sure about the market demand," Wu said.
Shenzhen SAST has also developed DVD disks, with which it hopes to compete on price with Japanese suppliers.
The Jiangkui Group was scheduled to begin batch production of DVD players at the end of last year, with 1998 output slated for 100,000 units and a targeted annual capacity of 1 million units by the year 2000. The company will invest $5.18 million in the segment over the next three years.
Jiangsu Shinco Electronics is speeding up the development of DVD players. "As the largest Video CD manufacturer in China, we will not miss the chance of manufacturing DVD players," said general manager Zhi-shang Qin.
According to chief engineer Wen-lin He, the company's DVD development center was set up one year ago. It recently reached an agreement with Toshiba of Japan to transfer key DVD technology. "We will launch our first-generation DVD player in the first half of this year," he said. "Second-generation players are expected to be in the market at the end of this year, and these units will use more locally sourced components."
Added value norm in speaker segment
Steady growth in the multimedia speaker segment throughout 1997 has makers enhancing their products to bring continued success this year. More 3D and sub-woofer systems will be launched, and many companies are planning to increase output to meet demand locally and overseas.
"This year, more people will choose 3D speakers because of their high-quality sound and relatively low prices," said Guo-xing Wen, general manager of Shenzhen Top Industrial Co. Ltd. "By incorporating 3D chips into the speaker circuitry, we can offer a practical and not too expensive solution."
Wen said that technology is not a problem, so multimedia speakers with expanded feature sets are becoming common in the China supply. They will include higher output power ratings as well as special housing designs. "We are planning to manufacture wooden cabinet speakers this year," he said. "Multimedia speakers in wooden cabinets are gaining in popularity because of their better sound output."
Makers see boom for PC/TV devices
As the local multimedia industry matures, one of the key trends manufacturers are following is multifunctionality. TV, PC, telecom and audio features are being integrated into single devices by TV makers and PC suppliers alike.
Xi'an Seastar Group Co., which claims to be one of the first 25-inch multimedia high-definition PC/TV manufacturers, is delving deeper into the multifunction multimedia realm. "We have been trying to launch more new products to make our company more competitive, and we are closely following production trends in the multimedia field," said general manager Hai Rong. "In the next two years, we plan to manufacture 17-inch digital remote-control color monitors and 29-inch HDTV/PC devices."
According to Rong, the company has evolved from an investment of $3,600 nine years ago to a group with annual revenue of $144.58 million.
Hangzhou Haier Electrical Appliance Co. is also active in this field. In October, it launched a combination desktop 25-inch TV and Video CD player, as well as a 25-inch digital TV. It is preparing to release a 29-inch digital TV and a 29-inch TV/Video CD unit this year. A 16:9 large-screen TV and a high-end multimedia PC are also on the release docket.
The company is a joint venture formed last August between the Qingdao Haier Group, the largest household electrical appliance manufacturer in China, and Hangzhou West Lake Electronics Group, one of the mainland's leading TV suppliers. "We are hoping to become a world-famous brand and we are planning to develop high-quality Video CD players, telephones and multimedia PCs in the very near future," said assistant general manager Song Li.
More color, larger sizes in monitor supply
The monitor supply is expanding at an accelerating pace in China. With prohibitively high production costs in Hong Kong, Taiwan and the United States, mainland China has become a dominant manufacturing base for monochrome monitors, and the trend is now spreading to the large-screen color monitor segment.
With the popularity of email and Internet applications growing in the mainland market, demand for multimedia monitors is forecast to increase by 15 percent to 20 percent this year. According to statistics from the China Computer Industry Committee, an estimated 7.6 million monitors were exported from China last year, with half of them measuring 15 inches or larger. This year, more 15-inch and 17-inch models will be released, replacing most 14-inch units. And resolutions of 1,024 by 768 dots will succumb to models enabling display at 1,600 by 1,200 dots.
The most universal goal of local monitor makers is to improve the quality level of their products. "The only way to improve our products' fame in the world market is to sell higher-quality products to overseas buyers," said Zhi-jun Zhang, assistant general manager of Weihai Daewoo Electronics Co. Ltd.
The company offers various 15-inch and 17-inch multimedia monitors to meet the various needs of domestic and overseas buyers, and production is on the increase. "By introducing another production line, we will expand our annual capacity from last year's 600,000 sets to 1.2 million sets this year," Zhang said. "We are also planning to manufacture a multimedia PC/TV in late 1998."
But in addition to providing optimum multimedia performance, some of the latest monitors from China integrate a microphone and a CCD camera for videoconferencing applications. Low-radiation designs will also be widely implemented.
Despite the continued market growth and rising sophistication of multimedia monitors, makers here say that prices will stay on a downward track. Cuts of at least 10 percent are predicted for this year, enabled largely by component cost reductions and the maturation of the technology. |
