Consumer electronics are the electronic devices that are intended for day-to-day life in applications such as mobile communication, networking, media, and entertainment. The main consumer electronic devices are smartphones, tablets, PCs, gaming consoles, TVs, and cameras. China is considered to be the largest base for consumer electronics as it is the most populated country in the world.

Technavio analysts expect the consumer electronics market in China to exceed USD 276 billion by 2019, growing at a CAGR of over 9%, according to their latest report.

According to Navin Rajendra, a lead research analyst at Technavio for computing devices, “The market will mostly be driven by smartphones and gaming consoles followed by the demand for tablets and PCs as the Chinese government is investing a lot in the IT sector, which will lead to the high adoption of consumer electronics for commercial purposes as well.”

Technavio has identified the following four factors that will drive the consumer electronics market in China:

Chinese government issuing 4G licenses
Ban lifted on gaming consoles
Rising disposable income
Declining ASP of tablets and smartphones
Chinese government issuing 4G licenses

At the end of 2013, the Chinese government issued 4G licenses to three major telecom operators, namely China Mobile, China Telecom, and China Unicom marking the beginning of China’s high-speed mobile network. The purpose of issuing a 4G license by Ministry of Industry and Information Technology (MIIT) is to encourage consumer spending on information technology. China aims to increase consumer spending on information technology at the rate of 20% each year.

The introduction of 4G will fuel the retail sales of smartphones and many smartphone manufacturers are launching 4G smartphones to grab this opportunity. This has also led to a drop in prices of 3G smartphones, which has again fueled the sales of 3G smartphones in China.

Ban lifted on gaming consoles

Gaming consoles were banned in 2000 in China to protect children and youth from the perceived negative effects of playing video games. But in January 2014, after 14 years, the ministry of culture of China lifted the ban on manufacturing and selling of gaming consoles across the country.

“This has opened the gateway for major gaming console manufacturers like Sony and Microsoft. China is the world’s third largest video games market and has the potential to surpass the US, the largest video games market. Microsoft started sales of Xbox in September 2014 and almost sold 100,000 units in a day,” says Navin.

Rising disposable income

Since 2006, the disposable income of China has risen by 175%. The increase in disposable income means a boost in consumer buying power. A higher disposable income also increases the probability of consumer spending on entertainment and leisure activities.

Thus, the increased disposable income allows for higher potential sales of consumer electronics like smartphones, tablets, laptops, and gaming consoles.

Declining ASP of tablets and smartphones

Over time, smartphones and tablets have become products of the masses rather than products of the elite classes due to their affordability. So, the decline in the price of smartphones and tablets has given a boost to the market.

The average selling price (ASP) of smartphones in China is expected to decline from USD 260 in 2014 to USD 221 in 2019. This decline in prices adds to the consumer’s perception of value for money.

Source: Technavio

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