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David answered on
Dec 22 2021
Determinants of Demand for Electronics in China
Determinants of Demand for Electronics in China
Table of Contents
3Introduction
3Problem Statement
4Goal of this Research
4Overview of the factors of Demand
6The Importance for choosing this subject for Global economy
7Electronics Trade
8Industry Drivers
10Overview of the Regulations
10Increasing the Upgrading of Home Appliance Industry
11Increasing the Growth of Strategic Industries
12Stimulus Plan
12Home Appliances to the Countryside Program
13Household Appliance Replacement Program
13“Energy Saving Products Benefit People” Program
14Market Structure and Trends
17Research Methodology
17Research Approach
17Data Collection Methods
18Sample technique and Sample Size
19Data Analysis
22Conclusion
24References
27Appendices
27Appendix 1: Interview Questions to Market Analysts
Introduction
In this report, the factors affecting demand for electronics in China will be discussed thoroughly. According to the market analysis, it can be observed that there has been a great increase in demand for consumer electronics in China and in the past decade the demand has grown at a fast pace. The market analysts also assume that both production and demand will continue to grow in the coming five years. Moreover, with the help of this new study, China’s economic trends, demand, and supply, along with industry development have also been examined. Studies have suggested that the electronics industry in China was heavily affected due to the affects of global economic recession.
There are various reasons that affect demand of a product, such as price of the product, income of the consumer, the price of associated goods, expectations of the consumer, taste of the consumer’s, and their preferences, as well as the amount of consumers in the market. Nearly all global electronics manufacturers, OEMs, ODMs, and EMS providers have power over established facilities presently in China. In addition to this, Chinese products are expected to continue and lift their market share up in the international market. The research for China Electronics is established on some of the factors that affect demand, and will be argued in the report
iefly.
Problem Statement
The problem statement of the research is “What are the determinants of demand that affect electronics market in China?”
Goal of this Research
The goal of this research is to study about the factors of demand that affects electronics market in China. It is very essential to note that the factors that drives demand for various products in any business as it will help in projecting future demand and also determine how demand can be stimulated by making changes in the government policies. Moreover, these determinants are also responsible for
inging alterations in the demand curve either in the forms of movements or shifts.
Overview of the factors of Demand
The market analysts suggest that elasticity of demand can differentiate from product to product, along with this, the elasticity of demand of the same product also differentiates for varied individuals. There are various reasons that have been discussed below for differences in elasticity of demand.
1. Price level:
Basically the observation is that the demand for very cheap and very costly products is generally elastic. This is because very expensive products are demanded by the people who are wealthy and for that reason, their demand is not impacted much due to modifications in prices. This can be explained with the help of an example; when the price of LED is raised from 25,000 to 27,000 it does not really make any considerable difference in its demand. In the same manner, the increase in the price of very inexpensive goods like salt, will not affect its demand as such commodities require a less quantity of income.
2. Accessibility of Substitutes:
If some other products can be used for it, the demand for a product will be very elastic. This is because a small increase in the price of a product will stimulate the customers to use its substitutes. This means that if the price of a commodity or a raw material increases such as wood, as a result, the substitute of wood will be used on its place for the purpose of fueling (Sage 2011).
3. Time period:
It can be observed that if the demand is more elastic the time period will be longer. This can be explained with the help of an example, if the price of a product such as petrol rise, there will not be an instantaneous fall in the demand, and as a result, it would be a lesser amount of elastic or inelastic. On the other hand, an optional source of energy can be developed if period is longer and consequently, the demand would be flexible.
4. Percentage of full amount of expenditure spent on the product:
The demand will be inelastic if a diminutive percentage of entire expenditure is used up on a product. On the other hand, the demand will be extremely elastic if a most important section of whole expenditure is exhausted on a product, such as demand for luxurious goods and services (Sage 2011).
5. Behavior:
The marketers have observed that some of the products may not be necessary for some individuals and very essential for others. The demand for the products will be usually inelastic if the behavior of the individual is attracted towards a certain product and the one is habituated to it and will be used by the individual even if the prices go up (Sage 2011).
6. Nature of the Products:
Basically, it has been acknowledged that the demand for the necessities is generally inelastic; on the other hand, the demand for the goods and services that are luxurious and provides comforts is elastic. The reason is that a number of products and services are considered as essential to life and therefore, are required and demanded at any price while the products can be easily dispensed which are meant for comforts and luxuries, if they come into view to be expensive.
7. Different uses:
Basically, a product that has a number of uses is considered to have an elastic demand, for example wood whereas the product that has merely a single use will have inelastic demand (Sage 2011).
8. Delay:
Generally, the products that can be delayed for use is considered to have an elastic demand, for example, if the prices of a DVD player increases, its use is likely to be delayed for sometime as its demand is elastic. In addition to this, it is important to notice that the demand for wheat and rice is inelastic because one cannot delay their use even if their price increases (Sage 2011).
The Importance for choosing this subject for Global economy
Since 2001, according to the market research, China’s electronics industry has u
anized with high rates of growth until the emergence of global economic crisis in the year 2008. Eventually, the Chinese government helped through its stimulus package, and gradually, in the later in 2009, the industry started to revive again. According to the prediction of the analysts, the industry was expected to grow by 65 in the year 2010. In accordance with the official statistics, the electronics industry sales revenue was recorder to be around the a
ival of RMB 2.86 trillion in the early period of 2010. In addition to this, year by year it demonstrated an increase of 23.8 percent approximately (Chinese Markets for Consumer Electronics 2012).
Electronics Trade
In the recent years, the studies calculate that the trade from electronics industry in China consisted of more than 35% of its gross trade even when the international financial crisis was going on. Along with this, the value of trade of electronics in China consisted of approximately 40 percent of countrywide foreign trade having the full amount of USD 771.9 billion. Furthermore, it is also important to notice that the imports for China electronics were greatly affected by the global economic crisis and decreased first time in the past ever. On the other hand, in the year 2009, the import and export of electronics improved progressively creative a positive growth in the year 2009 (Market Analysis Report: China’s Electronics Industry 2010).
It has been studied that the electronics are imported by China from many of its trade partners that consists of South Korea, Germany, Taiwan, United States, and Japan. In addition to this, Japan, Korea, and Taiwan are considered as the three top countries of origin for the purpose of importing electronics. In 2009, the import value of the top ten countries declined due to the financial crisis. This can be demonstrated with the help of figures that in 2009, the total export value of electronics was USD 457.2 billion that displayed a decrease of approximately 12 percent. Generally, the export of electronics consists of assembling trade, general trade, processing trade, and intermediary trade (Wang 2013).
According to the market analysts in China, the handing out trade of imported electronics still consisted of high amount of China’s electronics foreign trade in 2009 that nearly accounted for 71% of the full amount of exports. According to the study, it has been examined that the electronics were mainly exported to Hong Kong, Japan, Germany, South Korea, United States, Taiwan, Singapore, Netherlands, and India by China. The fact is important to view that the export value of top ten countries and regions provided a total of approximately 74 percent of the overall export value estimated for the electronic products and that was nearly equivalent to USD 334.54 billion (Growth in China's electronic market 2008).
Industry Drivers
While making any study on any of the industry, it is essential to understand its market trends, and the drivers that helped the industry to grow. As discussed above, the research is about the determinants of demand for electronics in china. These industry drivers are explained with justification and facts to make the research stronger and authentic. Moreover, studies have reported that there were large amounts of driver that led China to develop and grow its electronics industry and along with this, the industry returned to normal again after the global economic crisis. No doubt, the crisis affected the industry to an extent but somewhat the industry drivers assisted in providing a support to revive (Zhao and Wu 2007).
The industry drivers consist of strong government support, market demand, and technological development. Furthermore, it can be scrutinized that the demand for electronics in China’s domestic market is specifically strong, such as for home appliances. Studies have also suggested that it was noticed there were more than hundreds of million people existing in the rural areas of china and slowly but surely, the rural areas are turning out to be more developed as the distribution among the rural and u
an populations is lessening (Zhang and Zheng 2008). Due to this, the customer base and market demand is growing at a higher rate for consumer electronics products. In addition to this, it has also been observed that the other notable factor for increase in demand is the 2009 boom in the real estate market of China (Business Monitor International 2012).
The commercial space sale a
ived at 973 million sqm, having an approximate increase of 42 percent year on year. Therefore, this hotheaded growth also led to drive the demand high for the household appliances. Moreover, in 2009, there was a rapid development in the automobile industry that consequently stimulated the growth of automotive electronics. Furthermore, it is significant to note that the electronic products have become more sophisticated in the u
an areas and that acted to engage in recreation and facilitate a vital role in the expansion and augmentation and intensification of the electronics industry to a great extent (Rauch 2009).
On the other hand, the Chinese administration highly supported to increase the improvement of its electronics industry by providing a succession of motivation plans in 2009. In these plans there were a few programs to boost up the electronics industry activities that comprised of “substitute the Old with New” and “house Appliances to the Countryside”, and “Automobiles to the Countryside” stimulating programs. Therefore, these programs consequently helped the industry in a positive manner and these measures turned out to be very effective for the industry and specifically for the demand for automobiles and households in rural areas and contributed a lot to amplify the sales of electronics in China (Miller and Blair 2009).
Additionally, studies and facts also suggest that Chinese government regulations and financial assistances helped greatly to build up the electronics industry keeping in line with its growth policy goals...