As the global financial crisis continues to affect electronics companies around the world, suppliers and buyers participating in exhibitions have become cautious. However, at the China Sourcing Fair: Electronics & Components held April 12-15 in Hong Kong, booth numbers rose 3% despite the tough economy. Netbooks were the hottest products at the show; in-car multi-media entertainment systems also drew much attention. The organizer and exhibitors are also content with the increase of buyers from emerging markets including Brazil and Russia.

Buyers attracted by innovative products

The biggest-ever spring China Sourcing Fair: Electronics & Components featured 2,525 booths from 14 countries and regions, with 76% from mainland China.

Global Sources' Executive Director, Sarah Benecke, said "We are delighted to be opening our biggest-ever spring electronics show, despite the difficult market circumstances. We know that the market has changed and buying habits are different, but buyers are still buying. In many cases, they are looking for new 'value' products, innovative items to get shoppers back into the stores, smaller quantities and faster deliveries."

Benecke stressed that the China Sourcing Fairs are an essential marketing channel for suppliers and buyers in this economic climate. Suppliers need to maintain a high profile and good relationships with their existing buyers. They also need to meet new buyers from developing markets.

One Brazilian buyer, Intelbras' Business Manager, Juan Carrillo, said the show's traffic was good and there was a wide range of products to choose from, which attracted a great number of top overseas buyers to visit. At last fall's show everyone was cautious because the global financial crisis had just emerged. But now the economy is showing signs of recovery and participants are regaining confidence.

Global Sources Exhibitions General Manager, Tommy Wong said as the European and the U.S. markets remain steady, suppliers should take a three-pronged approach: First, retain old customers in Europe and the U.S.; second, explore new opportunities in emerging markets such as UAE, India, Russia and Brazil to offset losing orders in established markets; third, pay more attention to the domestic market, taking advantage of the Chinese government's stimulus packages such as the Rural Home Appliance Subsidies Scheme.

Despite global consumers' falling spending power this year, many international buyers plan to increase imports, particularly from China. A Global Sources survey revealed that 57% of surveyed buyers are expecting to increase or maintain their total value of imports from China in 2009 as compared to 2008, with China remaining at the center of their sourcing plans. It's also noteworthy that emerging markets including Russia, Middle East, India and Brazil have become a new force. Wong said: "We will be holding shows in Dubai in two months. Last November, we had very successful shows in Mumbai, India too."

Netbooks become hot products

Now that buyers are regaining confidence, suppliers are getting a boost. They are launching new products to quickly take market share, and netbooks have become a hot item. Netbooks were everywhere at the show. An industry insider said netbooks were no doubt the star of the show.

Statistics from iSuppli show that global shipments of notebooks in the third quarter of 2008 recorded significant growth, surpassing desktop computers for the first time. This was attributed to the rapid development of netbooks. In 2008, global shipments of notebooks totaled 140.62 million units, of which 9.86%, or 13 million units, were netbooks. iSuppli estimated that global notebook shipments for 2009 would reach 160 million units, increasing 13.8% year-on-year. Netbooks are expected to see even stronger growth of 87.3%, totaling 259 million units.

The netbook has become popular in recent years because it fulfils basic Internet browsing needs with lower power consumption, longer battery life and is highly portable. Many MP3, MP4 or even GPS manufacturers have switched to produce netbooks now.

One Shenzhen supplier told us that their company started as an MP3 and MP4 manufacturer, and have in recent years been focusing on LCD TVs. However, starting last year, the netbook market has been booming and they started to focus their R&D on this product. This year, netbooks will be their company's main product line and they expect it will account for 80% of the company's total sales. To further promote netbooks, he believes improvements should be made to cooling systems. Therefore, his company has set up a laboratory with high-tech temperature test equipment. Plus, better solutions will be coming up from technology solution companies. So, he believes there'll be a breakthrough in cooling technology in the near future.

Another Shenzhen supplier said the netbook has become a hot product because it's highly portable that can be fit in a briefcase; it consumes less power with up to 4-5 hours of battery life; and it's so convenient for Internet use. He said there are three target groups for the product: business executives who need a second or third notebook to easily connect online through Wi-Fi everywhere; professionals including journalists or land surveyors, who often travel around; and people who like to keep up trends. He told us that the screen and the CPU are the two priciest parts for a netbook. He said: "If you're not pursuing very high performance, do not play games or have image processing on it, then a netbook should fit you just fine as a replacement for a notebook. As shipments increase rapidly, prices of the screen and the CPU will fall. This will make netbook even more popular, driving the market to grow further."

More functions for in-car multi-media systems

In-car multi-media products have been in high demand as the auto industry has grown in recent years. An industry insider said competition among the manufacturers centers around technology. Those who are able to develop more advanced technology will have an edge and win market share. Equipping the products with more functionality is suppliers' other winning strategy. Exhibitors at the show gained a lot of orders.

One Shenzhen supplier told China Electronics News that in-car entertainment systems are very popular in foreign countries and the market in mainland China is also growing fast. He said: "The foreign markets highlight in-car theaters, but the domestic market focuses more on GPS and DVD players. In-car multi-media system suppliers are highly specialized, with products ranging from in-car TVs, DVD players to Bluetooth and even in-car computers. Our company is a monitor manufacturer and we focus on home theater products. I believe that as the auto industry further expands, in-car entertainment products will grow further and prices will go down."

The price of the in-car entertainment products is the critical factor for sales. One Shenzhen supplier said the market needs high quality, low cost, low price products, and so he expects some in-car product manufacturers to shut down in the coming two years due to price competition. He said the in-car entertainment system is technically becoming a computer, with more and more functions such as web browsing and email being added. Manufacturers are now working on incorporating all functions into one machine, just like adding e-banking functions into mobile phones in the past. Buyers now think that systems offering the most functions will attract more consumers to buy. He said their company was the first in the world to pioneer the "All-in-One" in-car multi-media concept, combining DVD playback, Bluetooth, radio, navigation, MP3 and TV playback functions into one machine. And it was the first to use the WinCE operating system.

Opinions of buyers and suppliers

Intelbras Business Manager, Juan Carillo: China suppliers should step up quality control

Carillo stressed that China supplier should improve quality control. Intelbras is a top telecom manufacturer in North America and Brazil, focusing on mobile phone products. The company started developing computer and security products two years ago. China-made products have an edge in price because of their low cost. However, customers now need low-price but good quality products, so quality control is very important. China suppliers are now manufacturing good products, but their quality control is not stable. Intelbras focuses on quality control.

Carillo said: "We are pleased to know that China suppliers are improving. They have learned the lessons from Japan and Taiwan on the importance of strict quality control and are maintaining good product quality. Intelbras's factory in Brazil imports components from China and we verify the quality of all components we're buying. We send engineers and inspectors to check every production line and we have a very strict quality control process for every shipment."

Assistant General Manager of Huizhou Huatong Electronics, Dong Guobin: Different demands for domestic and foreign in-car entertainment product markets

Domestic and overseas consumers have different consumption behaviors, so they have different needs for the in-car entertainment products. The domestic market needs high-end products, and as more new cars are being launched, demand for in-car entertainment products keeps rising. Now, China's manufacturing standard has caught up with overseas'. In fact, 60% of car electronics are now produced in China and the technology gap is narrowing. However, China manufacturers still lag behind in quality control and management. There is very keen competition in the domestic market and to stand out manufacturers need to focus on technology innovation and product quality.

In-car products have very high requirements in terms of temperature, vibration-proof and dust-screening. Products for the domestic market are even more demanding as road conditions in China are not as good as those in the U.S. and Europe. New in-car product technology has been springing up rapidly, integrating with more information, communication and security features. They are in fact becoming mini computers.