04-Sep-06
Asian electronics manufacturers will benefit from the 'iPod economy'.

Singapore, September 4, 2006 – Fusion Consulting, a business intelligence consultancy with offices in Shanghai, Singapore and Hong Kong, predicts that while Asia has traditionally been associated with low-end design, development and manufacturing of consumer electronics, a fundamental shift in its role is imminent. (please refer to table)

Asia Pacific (incl. Japan) already accounts for over a third of global sales, and demand is growing at twice the global average, making Asia equivalent to the Americas in terms of revenues. It will not be long before Asia becomes the number one region in terms of world demand.

Asia is tomorrow's "global consumer", a role in which it will increasingly be at the epicenter of demand for cutting edge games consoles, home appliances, flat screen TVs and MP3 players.

Asian manufacturers are now playing stronger roles in both design and marketing. Haier and Ningbo Bird are just two examples of Chinese manufacturers moving away from low-cost manufacturing towards value-added product development and brand building, by investing in design resources and marketing.

While electronics powerhouses Japan and Korea have almost all their high-end design and development located within Asia, Western manufacturers are increasingly outsourcing their product development to Taiwanese and Chinese ODMs (original design & manufacturing companies). Chinese ODMs have been catching up, combining flexibility and quality with traditional low cost. This has been further driven by the rapid increases in domestic demand in the mainland, and until recently a preference among Chinese consumers for local-brand devices (though this is now changing).

How Chinese electronics manufacturers will fare in the global market for consumer electronics will depend on how they address quality issues and image challenges, according to Fusion Consulting. A strong brand image doesn't come cheap and Chinese manufacturers will need to spend heavily before they can claim a place among the Sonys and Philips of the world. US and European electronics consumers are savvy and discerning, and the product will need to be feature-loaded and malfunction-free, as well as looking the part.

"Chinese manufacturers should aim to take advantage of Asia's involvement in the 'iPod economy', where new media formats and online connectivity provide new channels for growth. Ancillary products and accessories developed by fast-moving Asian design units now draw in a large proportion of overall revenues. Cutting edge products are bringing together audio, graphics, video, TV and information content" said Peter Read, Director of Fusion Consulting in Singapore. "Related to this and digital content is DVD, which is proving to be a robust and long lasting media technology, and is driving very promising global hardware growth prospects of 15% a year. However, China's policies on intellectual property rights, especially in relation to video content, have been taking some backward steps lately and this could potentially act as a brake on the mainland industry's development." Read added.

About Fusion Consulting
Fusion Consulting is a business intelligence consultancy providing clear strategic advice on Asia-Pacific markets. With offices in Singapore, Shanghai and Hong Kong and a network of 400 industry-specialist consultants in 16 countries, the company conducts custom research and consulting to help companies understand their markets, compete more effectively and grow into new areas of opportunity.

For more information, please contact Fusion Consulting at

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