Consumers’ Appetites for Audio-visual Products on theRise: The Spring 2017 Hong Kong Electronics Fair Survey

With the electronics market remaining optimistic, audio-visual and digital entertainmentitems will be the next products worth noting, electronics industry players surveyed at theHong Kong Electronics Fair 2017 (Spring Edition) agreed. Consumer electronics continueto be the items with the best growth prospects in 2017. Smart watches remain theproducts with the greatest potential among wearable electronic items. The market ofsmart home applications also appears promising for the next two years.

Industry sentiment remains positive towards overseas markets. The traditional marketsof North America and Western Europe, and the emerging markets of the Chinesemainland and ASEAN countries, are the most promising, industry players agreed.

HKTDC Research interviewed 589 buyers and 286 exhibitors at the Hong Kong ElectronicsFair 2017 (Spring Edition) in April, one of the largest gatherings of electronicsprofessionals in the world. The electronics industry players were asked for their views ongrowth prospects and product trends in the electronics market.

2017 Market Outlook: Staying Stable

The overwhelming majority of the buyers and exhibitors surveyed (89% and 87%respectively) expected their sales to rise or remain unchanged in 2017. Comparing theresults to the findings of the survey taken at the last Electronics Fair, held in October2016, exhibitors’ views on the global market outlook for 2017 remained largely the same.Half of the respondents (52%) expecting an increase in sales in 2017. Buyers were lessoptimistic about the market outlook, with the number of respondents expecting anincrease in sales falling from 45% in October to 38% in April. Overall, however, thesurvey findings reveal that market confidence on the global electronics market outlookfor the rest of 2017 remains positive.

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North America was rated by 54% of respondents as having the best growth prospect forsales of electronics in 2017 among traditional markets. The next most promising marketwas Western Europe (51%), followed by Japan (41%), Taiwan (40%) and Korea (40%).Among emerging markets, the Chinese mainland was rated as the most promisingmarket for 2017, with 57% of respondents considered it as "promising" or "verypromising", followed by ASEAN countries (41%), the Middle East (30%) and India (30%).

On the whole, the Chinese mainland, North America and Western Europe remain the topthree overseas markets with the best growth prospects for sales of electronics in 2017.

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Consumer Electronics: Sustained Growth

Electronic/electrical accessories remain the products with the best growth prospects in

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2017, according to 20% of the respondents. Steady growth in popularity can be seen inaudio-visual products (12%), digital imaging (9%), home appliances (9%) and electronicgaming (9%). The growth prospects of mobile devices and related accessories continueto be viewed as less promising compared to previous survey results, with only 6% ofrespondents rating them with the highest sales growth prospects of 2017.

Audio-visual and Digital Entertainment Items are the New Trend

After rapid growth in recent years, demand for mobile devices has now levelled off. Thegreat majority of respondents (82%) suggested that consumers’ appetites are turning to

Consumers’ Appetites for Audio-visual Products on the Rise: The Spring 2017 Hong KongElectronics Fair Survey

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new-generation audio-visual and digital entertainment items.

VR/AR gears or headsets have the greatest market potential in the next two years amongall audio-visual and digital entertainment items, 46% of respondents agreed. Otherpromising items in the next two years include audio-visual items with connectivity to thesmart home (20%), ultra-high-definition TVs with “smart TV” features (16%), wearableaction cameras (16%), internet TV boxes (15%) and video game consoles (14%).

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Wearable Electronics: Continuing the Uptrend

The demand for wearable electronics continues to increase steadily, with 79% ofrespondents viewing the market potential of wearable electronic products for the nexttwo years as "promising" or "very promising", up from 76% and 70% in previoussurveys.

Smart watches remain the products with the greatest potential among wearableproducts, according to 40% of respondents. Among the sectors showing improvements ingrowth prospects are health-care or sports-related wearables (28%), 3D goggles forwatching wide-screen movies or playing video games (28%), wirelessearphones/headphones (24%) and wired earphones/headphones (9%), despite thedecrease of market confidence in smart wristbands (29%).

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Smart Home: Sales Boost with Price Premium Levelled Off

An increase in popularity can be seen across all smart home and smart living products.Industry players in the survey were generally positive about the market potential ofsmart home applications. Wireless system items for connecting to internet/mobilenetworks (including Zigbee, Bluetooth and Wi-Fi devices), wireless charging devices forsmart appliances, and audio-visual items with smart functions were seen as the mostpromising items, with 70%, 70% and 68% of the respondents respectively rated thegrowth prospects of these products for the next two years as "promising" or "verypromising".

Asked about the potential for a price premium, a large majority of respondents (80%) tothe survey said they expected the consumers to be willing to pay 1% to 20% more whenpurchasing electronic products or household appliances with smart home applications.However, fewer respondents (20%) expected consumers would pay more than 20%extra, a drop from the 25% of respondents who held the same view at the Electronics

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Fair held in October 2016. The change suggests that the increase in the price of smartfeatures incorporated in products may have levelled off.

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Respondents’ Profile

Of the 589 buyers canvassed, 38% were based in Hong Kong, with the remainder basedoverseas. Their major selling/export markets were the Chinese mainland (48%), Asiaoutside the Chinese mainland (33%), Western Europe (26%) and North America (22%).

Of the 286 exhibitors polled, 37% were based in Hong Kong, with the remainder basedoverseas. Their major selling/export markets were Western Europe (51%), North America(47%), Asia outside the Chinese mainland (25%) and the Chinese mainland itself (16%).

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