The December 2022 issue of IEEE Spectrum is here!

Close bar

CESAsia 2015: China’s Consumer Tech Market Moves Upscale

The future may be driven by the appetite of China’s smaller cities for better goods and services

2 min read
CESAsia 2015: China’s Consumer Tech Market Moves Upscale
Market researcher Alfred Zhou and the CEA’s Shawn DuBravc compare the U.S. and Chinese consumer electronics markets.

We take it as a matter of course that China will continue cranking out much of the world’s consumer electronics. But because these products were often not geared to Chinese citizens, their tastes were mostly overlooked. But domestic demand has been rising dramatically in recent years. And the sheer size of the Chinese retail market is changing the game.

Tomorrow, I’ll have a report about the results of some recent data obtained by the Consumer Electronics Association about how individual Chinese people in different cities make decisions about product purchases. But today I’m looking at the macro drivers of China’s consumer tech market, with some highlights from a presentation from Alfred Zhou of market research firm GFK.

The biggest driver has been the continued surge in China’s middle class. Zhou showed a projection indicating that by 2030, 66 percent of the world’s middle class will live in Asia (with Europe accounting for 14 percent, and the United States and Canada just 7 percent).

In earlier years, it might have been enough for Chinese consumers to get just a basic product—that first TV or cellphone. But now China is experiencing market maturation and saturation for the first time. Consequently, the mid-to-high-end market is where much of the growth is occurring. And an increasing portion of the profit in China’s consumer tech is found not in selling products, but in offering services that accompany those items (think streaming TV rather than the TV itself). Niche products also offer opportunities for growth in otherwise mature product categories—for example, notebooks optimized for gaming have captured 10 percent of the Chinese PC market in the past two years.

A similar dynamic is driving the adoption of various technology upgrades as well. Zhou points out, for example, that it took 20 years to fully roll out 2G cellular service, in China, then five more years for 3G. By contrast, 4G should reach 80 percent penetration in just two years.

An important wrinkle to consider when thinking about how China’s market is evolving is the different “tiers” represented by the nation’s cities. There are no formal definitions, but generally speaking, there are just four or five cities considered to be tier-one mega metropolises. Among these are Beijing and Shanghai. There are dozens of tier-two cities, and many hundreds of tier-three, -four or -five cities. But bear in mind a tier-three city can easily have a population of more than a million people. The aggregated wants and needs of these lower tier cities are going to be much bigger drivers of what products and services will succeed in China than what’s going on in the high-profile tier one megacities.

The Conversation (0)

Deep Learning Could Bring the Concert Experience Home

The century-old quest for truly realistic sound production is finally paying off

12 min read
Vertical
Image containing multiple aspects such as instruments and left and right open hands.
Stuart Bradford
Blue

Now that recorded sound has become ubiquitous, we hardly think about it. From our smartphones, smart speakers, TVs, radios, disc players, and car sound systems, it’s an enduring and enjoyable presence in our lives. In 2017, a survey by the polling firm Nielsen suggested that some 90 percent of the U.S. population listens to music regularly and that, on average, they do so 32 hours per week.

Behind this free-flowing pleasure are enormous industries applying technology to the long-standing goal of reproducing sound with the greatest possible realism. From Edison’s phonograph and the horn speakers of the 1880s, successive generations of engineers in pursuit of this ideal invented and exploited countless technologies: triode vacuum tubes, dynamic loudspeakers, magnetic phonograph cartridges, solid-state amplifier circuits in scores of different topologies, electrostatic speakers, optical discs, stereo, and surround sound. And over the past five decades, digital technologies, like audio compression and streaming, have transformed the music industry.

Keep Reading ↓Show less
{"imageShortcodeIds":[]}