Net-Book Market Troubles in China
PC makers believe that Net-Book computer (NB) is a driving factor to balance a weak PC market worldwide. Consequently, many Chinese small-mid size enterprises are joining the NB battle in 2009 to compete with top PC makers. They want to copy handset business models to grab early high margin returns offered by NB. China Outlook Consulting analyst tracked how the NB market is developing. This market intelligence information indicates caution to semiconductor and component suppliers.
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West China Market Features
China Outlook Consulting analysts went to Chengdu, Sichuan province, for an emerging market research project. We would like to share market features and demand models in Chengdu, an electronic hub in West China. The market demand is mainly from three types of industry sectors: industrial electronics, military electronics, and consumer electronics. The companies involved in the industries are state-run manufacturers, state-run research institutes, and private companies. The industry and consumer electronics demand is experiencing fast growth due to military technology transition to civil engineering.
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Catalogue Distribution to Meet Increased R&D Demand
Chinese local catalogue distributor managed 25% business growth in 2008 despite the global financial crisis. The company grew 30% in the first quarter and expects to see 35% year over year growth in 2009. Apparently, they are very optimistic because of their business focus and positioning in the industry.
China Outlook Consulting analysts observed that this catalogue distributor maintains 5 branches to develop focused businesses and service quality, rather than single side expansion in revenue and product lines.
After tracking the company¡¯s growth for several years, COC analysts found that the company has enjoyed stable growth of 15%-20% since its establishment. The average margin of the company is over 30%, which is higher than other franchised distributors.
China Outlook Consulting analyst interviewed executives from this catalogue distributor about business strategy and we will share our observation and insights in this market report.
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Jan to May China Market Update
The January-May electronics industry figures, released by the Ministry of Industry and Information Technology (MIIT), give mixed positive and negative growth figures. The domestic market demand figures look good at 6.8% growth year over year (YOY), but export has not yet hit the bottom. Given the fact that China exports 2/3 of its electronics products production, the weak export figures drag overall data down.
China¡¯s electronics sales (January-May) were down 8.5% YOY. The all-industry profitability was also down. However, the May single month value-add of manufacturing activities at 4.3% shows more growth compared to the 3.2% in April. This is a recovery sign as manufacturers are marking up margins, compared to a poor Q1 which was in negative territory.
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Charts and Tables
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