Consumer electronics market in the first half or stronger than the second half

The implementation and termination of government subsidy policies will cause the Chinese consumer electronics market to fluctuate drastically. It is expected that the main products will grow strongly in the first half of 2013 and will slow down significantly in the second half of the year.

Unit shipments will grow strongly in the first quarter, and the LCD TV and air-conditioning markets are expected to grow by 11.7% and 43.5% respectively. In the second quarter, overall consumer electronics products will record the best growth, with LCD TVs growing by 14.1%, air conditioners by 11.3%, refrigerators by 16.2%, and washing machines by 10.9%. However, starting from the third quarter, the growth rate of all these products will be reduced to a single digit, and in the fourth quarter of 2013, there will be only a modest increase in some markets.

The growth in the first half of the year will come from a one-year government energy-saving product subsidy policy. This policy aims to encourage consumers to purchase certain energy-efficient products. However, this policy will expire in May, after which consumer demand growth will slow down.

The new television strategy has emerged as the most heavily subsidized LCD TVs, mainly because this policy subsidizes more than 90% of LED-backlit TVs. IHSiSuppli Company believes that TV manufacturers and sales channels may implement a new round of promotional activities, which will drive the LCD TV market before the subsidy policy expires in May.

For the domestic market, China's major LCD TV manufacturers are also adopting new strategies. For example, TV makers adopt aggressive pricing strategies for 32-inch or smaller TVs, while the 40-inch and larger TVs are mainly differentiated. Although the 32-inch TV is basically similar in appearance and function, the 42-inch TV has 3D, Internet connection, voice control and more. Through the above two strategies, manufacturers can use a large number of small-size TV shipments to maintain market share, while using 40-inch and larger LCD TVs to improve profitability.

Overcapacity risks For the air-conditioning market, taking into account the weak market performance in the first half of the year, shipments in the first half of 2013 will see rapid growth, but will slow down in the second half of the year.

In particular, the 2013 air-conditioning market will continue to face the risk of excess capacity. Therefore, suppliers with higher inventory levels will encounter more challenges in 2013 in seeking to increase sales, and will be forced to adjust their development strategies. As always, improving profitability is an important goal for all air-conditioning manufacturers. Each company will invest in design resources to develop high-end products and strengthen control of key devices rather than blindly expanding production capacity.