Opening New Projector Markets in China
“Price-slashing” is the most appropriate term to describe China’s projected market of 2007. Projectors in China were sold with prices that ranged from RMB between 20,000 and 30000 (US: RMB = 1:7) for over 10 years. Naturally, the majority of purchases are made to corporate clients, and very few would purchase a projector for their personal use.
The market for household goods is still in its infancy.
Although sales from institutional sources will dominate the market for projectors in 2008, a lot of producers and distribution companies are hopeful there will be more project sales to consumers. In the process, companies that sell projectors have been trying to market low-cost models since 2007. As an example, a new model was sold around RMB 14,000 at the time it appeared on the market in mid-2007. However, its price was reduced to RMB 8000 by the close of the year. Similar to the situation in the DVD-R market at the beginning of 2005, when the cost of a typical DVD-R model was reduced from RMB 1000 to just 499 in three months.
Yet, despite a lot of companies discussing the benefits of household projectors, the fact that sales from institutions dominate the market has meant that the manufacturers aren’t likely to invest any real money on projectors for the home. A distributor has stated that he would rather have 1000 commercial projectors rather than stock 10 projectors that are household-owned. From an accounting point the view of a commercial projector, 1000 are bound to take up hundreds of times more money than 10 home projectors. However, the truth is that the distributor would clear out the 1000 commercial projects before they were able to sell the majority of the 10 models for household use. Thus, the working capital was stuck with the family models as well as the additional time spent dealing with the very demanding, selective and accommodating customers.
As you can see, projectors for the home in China are at the “test-water” stage; however, it is an important time to develop the market for the home. Alongside the entrance into the market for household products with top international brands, numerous local Chinese companies that are excellent in design but not so great at production are making their way into the growing market for household products.
The education market is hard to access
However, the largest consumer segment of projectors in China, which is the education market, is seeing a decline in demand for projectors. Since it may take time to rebound, companies selling projectors are now shifting their focus to the growing commercial market. This is another situation that could benefit small-sized brands in the field of projectors.
Different from other commercial projection users, Educational institutions are distinguished through their joint tenders and their insensitivity to price. They also are frequent users of projectors that require the highest level of aftermarket service. This has long made top international brands popular with schools. This is why many newcomers, smaller to medium-sized companies and regional brands have struggled to gain market share in the educational sector.
Looking forward to the commercial market
However, the slowdown in the educational market in 2007 and the saturation of the large corporate markets has enticed companies that make projectors into the smaller and medium-sized enterprise (SME) marketplace. Because of China’s economic growth, the amount of SMEs has increased over the past few years, which could generate a substantial market for the projector. Based on Sony’s introduction of advanced data projectors and the fact that even the most renowned international brands are fighting to capture the SME market.
In contrast to educational institutions, Commercial users tend to pay attention to the weight of a projector and size. Additionally, since their experience with projectors is different, they also have a keen interest in whether the product is user-friendly. It is understandable that projector manufacturers deal with experienced commercial clients who are willing to bargain in order to strike an equilibrium between performance, models and costs and other aftermarket products. However, the bargaining process for commercial customers is not as savage as the consumers of household models.
Due to the growing demand from commercial customers, It is evident that there were a lot of recently launched high light output projectors during the second quarter of 2007 to replace older models. However, the increase in new models of projectors did not result in high-profit margins. Due to the presence of a variety of small and medium-sized companies, the pricing of older models that were entry-level has slowed down since the close of 2007. Now, the marketplace for commercial projects is divided by crucial performance indicators like brightness, with a minimum that is RMB 8000. Since the SME market isn’t as brand-conscious as the education market and SMEs must strike a balance between cost and aftermarket services, a lot of small and medium-sized projector manufacturers are beginning to see hope for this segment of the market.
The end of 2007 was a pivotal period for the Chinese market for projectors, which has grown from the dominance of educational clients to the same importance of commercial and commercial customers. However, the consumer market is in the early stages of its own in China, and nobody knows how it will develop. However, the products for projectors are becoming smaller, simpler to use and more mobile, and the competitive prices of the household models are challenging LCD TVs that are used at home.