CCID Consulting: Domestic Video MP3 Brands Seized First Opportunity in China First Half of 2007

CCID Consulting: Domestic Video MP3 Brands Seized First Opportunity in China First Half of 2007

BEIJING, Aug. 17 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), releases its article about domestic video MP3 brands seized first opportunity in China first half of 2007.

CCID Consulting's latest research report for July 2007 shows that thanks to continuous price drops, active promotion by all major firms and rising product performances, China's video MP3 player market continued to maintain a healthy growth momentum in the first half of 2007.

CCID Consulting's analytical findings show that the market had 5 major characteristics in the first half of 2007.

1. The Market Grew Over 200%

After the fast growth in 2006, China's video MP3 market has maintained a stable growth trend this year. CCID Consulting's latest Research Report on China's Video MP3 Player Market, January-June 2007 shows that in the first half of 2007, a total of 3.263 million video MP3 players were sold in China, up 289.4% year-on-year. Sales revenues reached 1.55 billion Yuan, up 216.3% year-on-year.

Table 1 Sales in China's Video MP3 Player Market in First Half of 2007

Time First Half of First Half of Year-on-Year
2007 2006 Growth Rate
Sales volume
(10,000 sets) 326.3 83.8 289.4 %

Time First Half of First Half of Year-on-Year
2007 2006 Growth Rate
Sales
revenues
(100 million
Yuan) 15.5 4.9 216.3 %
Source: CCID Consulting, July 2007

2. Market Competitions Were Intense, and Prices Varied

In the first half of 2007, competitions in all the links of the MP3 industry chain intensified. Price competition became the main driving force for fast market growth. Price cuts swept almost all the products of Chinese and foreign firms. This was mainly due to 3 major factors. Firstly, China's video MP3 market continued to expand in size. Secondly, upstream firms continued to increase their production capacity and lower their price of spare parts. This gradually reduced the manufacturing cost of video MP3 products. Thirdly, to increase their market shares, local firms introduced many new products. Their consistent price strategy resulted in a drop in product prices. Leading international firms also followed suit. Intensified competitions among firms resulted in product price drops. As product upgrading continued and international firms speeded up their localization, price competitions also reached a new height. The price of mid-end products dropped continuously.

Average price changes in the past 6 consecutive quarters showed that there was a notable drop in average product price in China's video MP3 market in 2007Q1, down almost 90 Yuan from 2006Q4. In 2007Q2, there was a small rise in the average product price. This was mainly because the introduction of new big capacity video MP3 products pushed up the overall average price.

Fig. 1 Changes in Average Product Price in China's Video MP3 Market, 2006-2007Q2

http://www.ccidconsulting.com/upload/11880.JPG

Source: CCID Consulting, July 2007

3. Big Screen Video MP3 Player Are in the Mainstream, and HD Has Become the Development Direction

As technology progresses, video MP3 screen, which is the main part of MP3 player sales, has increased from 1.0 inch to 1.8 inch and then over 3 inch. Video MP3 display screen size has continued to set new record. The mainstream in the market has also changed. CCID Consulting's monitoring data show that 2.0-2.4inch video MP3 players have gradually established their mainstream position, claiming a market share of 60.2%.

Fig. 2 Shares of China's Video MP3 Market in First Half of 2007 -- by Screen Size

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Source: CCID Consulting, July 2007

Major MP3 firms have never given up efforts to improve their product screens. They have increased their screen size and carefully selected screen materials to better cater to consumers' desire for a high quality digital life. The whole video MP3 market develops towards the high definition direction.

4. The Market Is Highly Concentrated, and Domestic Brands Are in an Advantageous Position

From 2006 to the first half of 2007, the degree of concentration of the top 5 brands in China's video MP3 player market reached 43.9%. All the top 5 brands on the sales volume chart were home brands, namely Newman, MEIZU, Changhong Zarva, Unibit and DEC. Among them, Newman, MEIZU and Changhong ZARVA all have their distinct styles. Aigo, a veteran strong brand who was the first to take root in China's MP3 market is finding itself unable to do what it desires to do in the fierce market competitions.

Newman's success has derived its sponsorship of CCTV's Dream China entertainments gala for 2006. It unbelievably became the No.1 well-known brand in the market. Its brand reputation reached a peak as the nationwide tour performances of Newman Sings Over China were staged. However, due to its inadequate product quality and falling earning power of its channels meant that while rapidly gaining popularity in the market nationwide, Newman started to see its product reputation falling. Its product notability was much detached from its brand loyalty. In the future, the company will still have much to improve upon.

MEIZU's success has benefited from the successful promotion in the national market of its classic model Mini Player and Music Card formally realized in March 2007. Also because the MEUZU Forum has attracted many registered users, there have been very good integration and exchanges between its users and its product development. MEIZU's digital products have long enjoyed a high popularity. This has also brought high returns to its product sales.

In comparison to Newman and MEIZU, Changhong ZARVA also has had its unique performances in the market. The solid strength of the home appliance giant Changhong Group behind it is a competition chip unrivalled by Newman or MEIZU. With a net asset of 10 billion Yuan, Changhong Group takes the lead in the TV, air conditioner and digital STB fields. Changhong ZARVA as Changhong's flagship IT enterprise has received for its digital businesses optimum resources support from Changhong Group. In addition, Changhong ZARVA further advanced its new entertainment brand position of "Unbound joys and splendid heart". In particular, Changhong ZARVA staged "Z dream person" show in May 2007, and deepened its "Unbound joys and splendid heart" brand roadmap. This has greatly improved Changhong Zarva's ambiguous brand positioning in the past. In China's video MP3 player market in the first half of 2007, Changhong Zarva has attained a rather high position.

5. The Video Player Market Is Expected to Continue to Grow

Looking at the second half of 2007, China's video MP3 player market will enter a traditional peak season in 2007Q3. Sales volume will grow at around 5%-10%. The fourth quarter is a traditional peak season for gift sales. Affected the new year of 2008, December 2007 will see another peak season for video MP3 sales. In the second half of 2007, sales volume is expected to grow at 15%-20%.

To sum up video MP3 firms' market strategy trend, upstream resources supply and demand balance and market demand features, CCID Consulting forecasts that China's video MP3 market will reach a size of 7-7.2 million sets in 2007.

About CCID Consulting

CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The Company's business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.

Based on four major competitive areas of powerful data channels, industrial resources, intense knowledge and deep understanding of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategy planning, IT application, marketing strategy, human resources and information technology outsourcing. Our customers range from industrial users in IT, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks.

CCID Consulting is committed to becoming the No. 1 brand for strategy consulting, the No. 1 consultant for enterprise management and the No. 1 expert in market research. For more information, please visit our website at http://en.ccidconsulting.com/ .

For more information, please contact:

Cynthia Liu
Coordinating Manager
CCID Consulting Co., Ltd.
Tel: +86-10-8855-9080
Email: liuyan@ccidconsulting.com

Source: CCID Consulting Co., Ltd.

CONTACT: Cynthia Liu, Coordinating Manager of CCID Consulting Co., Ltd.,
+86-10-8855-9080,or liuyan@ccidconsulting.com

Web site: http://en.ccidconsulting.com/

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