Going global: strategic implications for Chinese brandsA market trends report on China consumer electronics and appliances industryTrends report for 2024 Table of contents Executive summary04China consumer electronics and home appliances (CEH) market overview06Global CEH market opportunity17CEH market segmentations19Industry best practices31EY solutions and case studies40References461235647 China is a global powerhouse for consumer electronics and home appliances, dominating the market with over 22% of global sales. It also holds a significant position in the Asia-Pacific (APAC) market in terms of sales volume.As the ‘world’s factory’, China has massive electronic manufacturing and exporting capability across a wide range of electronic products including smartphones, computers, televisions, consumer appliances and electronic components. The country has been home to most popular domestic and multinational consumer electronics brands for over two decades due to the ease of sourcing electronic components for products, saving significant logistics costs. Major cities such as Shenzhen, has established as a hub for the electronics industry with end-to-end value chain capabilities including presence of component manufacturers, low-cost workers, and product assembly suppliers. Strong supply chain network with some of the largest container ports globally, such as Shanghai, Shenzhen, and Ningbo-Zhoushan which facilitates easy movement of products internationally, also enables the market growth.The consumer electronics market attained significant growth over the past decade, driven by multiple factors on both supply and demand sides. Rapid urbanization, a doubling of disposable income, a rising middle class population and increase in lower age group population have significantly bolstered the demand for high tech consumer products for personal and professional usage. On the other hand, low-wage workers, easy access to raw markets and components, government policies that support innovation and high skilled workforce contribute to the upliftment of the region.The market witnessed a disruption in demand since the pandemic with uneven sales. There was a remarkable recovery in 2021, attributed to a significant rise in remote work, demand for household convenience products and consumers reinstating their electronics purchasing decisions that was put on hold. However, the market has experienced a gradual downturn again in 2022, and it is further expected to largely remain sluggish in 2023 due to mixed consumer sentiment towards investments in new products. In recent years, the market growth is primarily driven by the convenience of online channels, product advancements for sustainability, durability and convenience, availability of easy credit to enable purchases, and government incentive programs to boost consumption. The market is also exhibiting significant transformation marked by increasing popularity of smart home devices for personalized consumer experiences, demand for 5G enabled devices for better products responsiveness and reliability and rise in attraction towards premium and high-performance consumer electronics products. As innovation always remained a key differentiator, Chinese manufacturers continue to improvise product attributes by integrating artificial intelligence (AI) and 5G into their devices, revamping phones with foldable functionality and advanced camera systems, adding 3D technology in displays, launching 5G enabled PCs, developing local operating systems for both smartphones and PCs, and many more, to provide a connected and personalized experience to customers as well as for reducing the dependency on foreign branded products. There is also an increase alignment towards developing sustainable products using recycled plastics.Executive summary4Going global: strategic implications for Chinese brands However, Chinese consumer electronics and home appliances companies continue to face roadblocks such as intense competition and market saturation, pressurizing them to continuously innovate and evolve products suitable as per changing consumer preferences and adopt faster go to market strategies. To overcome such challenges, Chinese brands can leverage their capabilities to further develop their businesses globally. China's dominance in consumer electronics exports is undeniable, with its global share reaching a staggering 42%8in 2022. Though the rise in exports of home appliances and communication equipment is in single digit, demand for cost-effectiveproducts with innovative features is driving the sales volume globally. The popularity of Chinese products has spread to regions such as Southeast Asia, Africa, Latin America, and even Europe. This provides a favorable environment and significant opportunity for China’s consumer electronics companies to expand their presence and capture a larger market share. However, this will require strategic vision with a multifaceted approach to establish a stron