An overview of the Consumer Electronics Industry
The term consumer electronics pertains to a broad range of electronic equipment with functionalities designed for casual daily use of end-users. It comprises two product segments — brown goods (communications or entertainment gadgets like TVs, DVD players, smartphones, tablets, and printers) and white goods (housekeeping devices like refrigerators, washing machines, and built-in kitchen systems).
The latter is different from the so-called white labeling in consumer electronics products. White goods pertain to a product category while the white label is a way of producing goods, which involves the manufacture and supply of generic products (flash drives, power banks, phones, monitors, and displays) to offshore retailers, which resell them under their own labels. While a specific product prototype may be manufactured by specialized suppliers, white-label goods are typically similar for a given product category.
Global consumer electronics production: China vs. other regions of the world
According to IBISWorld, the global consumer electronics manufacturing industry was valued at $283 billion in 2015. BizVibe estimated that China’s production corresponds to more than one-third of the global consumer electronics manufacturing output. Research from the European Council found that from 2012 to 2017, China’s worldwide production share increased from 36% to 38%, well ahead of other electronics manufacturing hubs such as North America (15%), Europe (14%), and Japan (12%). China is likewise the world’s largest consumer electronics exporter, with estimated earnings of US$557 billion and accounting for 24% of the US$2 trillion worth of exports worldwide. The actual value is likely significantly higher than these estimates, considering that exports through Hong Kong usually originate from Mainland China as well.
Why China is the Right Choice for Consumer Electronics Production
The electronics industry in China grew rapidly after the liberalization of the economy under the national strategic policy of accelerating the “informatization” of its industrial development. The main areas of China’s electronic information industry are computer-related goods (including software), communication equipment, electronic parts, and household entertainment equipment. The electronic parts-related investment made up 50% of the total investment in the electronic information industry. The promotion of the electronic parts industry is a part of China’s national industrial policy to raise the ratio of value-added in the sector. Due to the expansion of the internal and external markets, the ratio of sales to production (sales rate) has remained at over 98%. The vast majority of China’s mobile phones, notebook computers, color displays, and other products are exported, making China a global production base.
- Consumer electronics production capacity — In terms of large-scale production of consumer electronics, China remains the go-to destination. Shenzhen alone, the so-called “electronics capital of the world” or “the Silicon Valley of hardware”. Which is home to more than 4,700 national-level high-tech enterprises, 30,000 science and technology companies, 5,000 product integrators and design houses, caters to the white label requirements of the majority of the world’s premium consumer electronics brands like Apple, Sony, Nintendo, Dell, Acer, Microsoft, and Huawei — all of which work with Chinese suppliers usually unheard of in the West, with the exception of Foxconn. China‘s consumer electronics production has a comparative advantage over other consumer electronics manufacturing countries. Strong supplier and supply chain infrastructure tops the list of China’s industry strengths, enabling it to fulfill large volume orders at shorter production lead times.
A smartphone, for instance, requires 2,000 different components — from tiny machine screws and capacitors to circuit boards and LCD screens — all of which are readily sourced from China’s all-encompassing supply chain. This high density of suppliers, ranging from automated high-tech factories like Foxconn to small garage workshops, makes China’s production capacity more than capable of developing functional prototypes from custom design to production engineering.
- Modern logistics infrastructure -In 2015, China initiated an infrastructure upgrade of 20 cities in China’s nine regions, optimizing road freight, air freight, contract logistics, and international freight forwarding. Multi-billion investments in port, road, and rail infrastructure helped boost China’s logistics sector as the world’s largest, with annual growth of 20% annually. This well-developed logistics network spans global coverage, able to provide offshore clients with accurate information and visibility as to the status of products’ cross-border movement, from point of order to delivery.
Supply Chain Performance of Asian Countries in the Consumer Electronics Industry
Chinese Electronic market in India
There are many Chinese companies operating in India. China and India always have border disputes and trade disputes that is why Indian citizens demand to boycott Chinese products and companies. According to FICCI reports that the Chinese have invested in the following Indian sectors:-
- Automobile Industry (40%)
- Metallurgical Industry (17%)
- Power (7%)
- Construction (5%)
- Services (4%)
India sends 8% of its total exports to China whereas China sends only 3% of its total exports to India. China has established a stronghold over the Indian smartphone market. Four of the five highest-selling smartphone brands in India during April-June this year were from the mainland, according to data from Hong Kong-based market research firm Counterpoint Research. South Korea’s Samsung was the only non-Chinese brand in the top five by market share.
Top 10 Chinese companies in India- Electronics companies of China are not only providing cheap products at low cost but also services and worldwide leaders in electronics.
Here are 10 Electronics companies of China in the Indian market with products, brands, and smartphones.
- BBK Electronics is the Chinese electronics corporation that owns five most popular brands of smartphones under the name Realme, Oppo, Vivo, and OnePlus. The Chinese smartphone company is the number one smartphone company in India with big brands and one of the largest consumer electronics in China. The Chinese company also specializing in other electronics products such as television, MP3 players, and digital camera.
- Huawei sells consumer electronics, products, and services in more than 170 countries, also is the second-largest manufacturer of smartphones in the world. The company has an R&D center in Bangalore, The popular products of Huawei include the smartwatch, the Honor brand of mobile, mediapad, and the Huawei y9s smartphone.
- Haier is a big multinational Chinese home appliances company that manufactures and sell electronics products in India including refrigerators, air conditioners, microwave, ovens, washing machines, and mobile phones. The electronics group operates as Haier Appliances in India.
4. Hisense is another electronics manufacturer from China, major appliance from Hisense includes Split Inverter AC, Washer, Refrigerator and Television. The Chinese electronics company sells retails products under multiple brands names Kelon, Ronshen, Savor and owns over 40 subsidiaries.
5. Lenovo is another very popular Chinese technology company that offers a wide range of business lines of notebooks, computers, and mobile phones. The company acquired Motorola Mobility from Google, An American mobile phone maker, and acquired personal computer business from IBM and Fujitsu.
6. TCL Electronics Company is a subsidiary of TCL Corporation that manufactures and sells televisions, washing machines, and consumer electronics. Brand TCL India offers Android TV, QLED TV, Ultra HD TV, and Smart TV in India in different sizes and variants.
7. Xiaomi Corporation is the maker of the Mi and Redmi series of smartphones along with mobile apps, fitness bands, earphones, laptops, and a wider range of consumer electronics like television. The Chinese electronics company leading the second-largest smartphone market in India and become the number one smartphone brand in India.
8. Midea Group is a leading appliance manufacturer that includes consumer appliances, major household and commercial appliances like refrigeration and a wide range of product portfolios. The group owns premium appliance brands like Eureka, Comfee, Midea, Toshiba home appliances, and Carrier Midea India.
9. ZTE is not only a telecom equipment manufacturer but also a provider of telecommunications software and selling consumer electronics products under its own name. Mobile phones, Windows Phones, and Mobile Hotspots are few popular products of ZTE and are the leading Telecom Companies in India.
10. BOE Technology is a Chinese producer of electronic components and manufacturers of LCD, OLEDs, and flexible displays. The company also collaborated with many smartphone manufacturers for OLED suppliers
The Atmanirbhar Bharat scheme could give the much-needed fillip to the country’s disrupted business operations by promoting Make in India manufacturing, encourage the substitution of imports of low-technology goods from other countries, particularly China, and encourage local produce at lower prices.
The Rs 20-lakh-crore stimulus package announced by the government focuses on tax breaks for small businesses, as well as incentives for domestic manufacturing. The Rs 3-lakh-crore collateral-free assistance handed out to MSMEs will help crank up their operations. This move could help recover India’s factory output, which plummeted to record lows in March, with the Index of Industrial Production contracting 16.7%. Manufacturing sector output slumped 20% in March, while electricity generation shrank almost 7%, as per data. All categories of manufacturing industries showed a contraction in production in March, with the worst affected being auto (50% decline) and computer & electronic products sectors (fell almost 42%).
Where India can score
India Cellular and Electronics Association (ICEA) chairman Pankaj Mohindroo finds enormous opportunity in building India as an additional export base, and not just a producer for the domestic market. “Dependence on one geography and China’s increasing wages have forced global value chains to look for other destinations. India built its mobile phone industry primarily for the domestic market by increasing production during 2014–15 with mobile handsets worth Rs 18,900 crore, which increased to Rs 54,000 crore in 2015–16, to Rs 90,000 crore in 2016–17, and over Rs 2,10,000 crore in 2019–20,” he says.
The Indian smartphone market surpassed the US for the first time, becoming the second-largest smartphone market globally, reaching 158 million shipments in 2019 with 7% YoY growth, according to Counterpoint Research. The market grew due to the expansion of Chinese brands with their aggressive pricing and promotional strategy. However, China still dominates and makes up for around 70% of the global phone exports, India has 15% of this pie, with Vietnam fast emerging as a key player with around 10% of such exports and with key players like Samsung setting up facilities there.
Nevertheless, as per the ICEA, India’s exports of electronics-leaving aside mobile phones-have remained more or less flat at around $5 billion since the beginning of the decade. Vietnam’s exports rose nearly 10 times, from $3.6 billion in 2010 to $34.5 billion in 2018. The ministry of electronics and information technology (Meity) has planned for the newly-notified schemes worth over Rs 48,000 crore to promote electronics manufacturing, as it wants to utilize the opportunity in making India a suitable alternative to China.
Major brands have set up their manufacturing facilities and some companies have sub-contracted manufacturing to electronics manufacturing services (EMS) companies operating from India. Technology giant Apple plans to produce up to $40 billion worth of smartphones in India and move almost a fifth of its production capacity from China to reap benefits of the new production-linked incentives (PLI) scheme, which offers a 4–6% incentive for local production. Similarly, mobile player Lava International will shift its production and design center for the export market from China to India within six months. In fact, threatened by the interest in India, US President Trump has threatened to slap taxes on companies like Apple keen on shifting manufacturing to India.
This article is the collection of extracts taken from various articles and newsletters available on the internet. All the numerical information mentioned in the article are subject to the respective organization.
some of the sources are mentioned below
Originally published at https://www.linkedin.com.