Chinese Tech Shipments Falling as Subsidies Cease

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Earlier this week an analyst report predicted that over half of all mobile phone shipments in the year 2015 will come from from Chinese brands. As the Chinese mobile industry rises, however, the country's overall tech market may be seeing a significant slump.

Market research firm IHS today released data showing that the consumer electronics market in China actually declined during 2013. The firm estimates that shipments for major consumer electronics in China fell 9% from 2012, down to just 710.2 million units. Shipments during 2014 are expected to fall again to 674.2 million units.

These falling shipments continue a trend that has been seen in China in recent years. Before May of last year, Chinese electronics brands had relied on government subsidies to inflate demand among the largely rural Chines population. Now these same companies are shifting to a more western strategy of producing high-end devices for more well-off consumers in Urban areas.

“Last year was the third straight year of declining shipments and the second consecutive year of revenue contraction for the Chinese consumer electronics space,” said Horse Liu, principal analyst for connected home at IHS. “The cessation of government subsidies for consumer electronics products played a major role in the annual decline.

“Chinese manufacturers are investing more resources on high-end products carrying expensive prices in order to push up sales revenue, but they must also be careful to adjust production capacity to reduce the risks of overproduction.”

According to the IHS report the Chinese markets for electronics such as televisions and digital cameras are contracting significantly. However, product categories such as refrigerators and air conditioners are seeing growth large enough to prop up overall tech sector revenue. IHS estimates that consumer electronics revenue in China will increase to 104.8 billion this year.

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