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An escalating price war is again eroding the strength of China's electronics industry, this time among manufacturers of language repeaters, an increasingly popular language-learning device particularly among students.
The popularity of foreign languages, particularly English, is also growing among the average Chinese especially after the country's entry into the World Trade Organization late last year, which expanded the sales of the learning tool that was especially made for the Chinese late in the 1980s.
Sales soared to 10 million units last year. Meanwhile, many video disk player producers and home appliance companies also jumped on the bandwagon, driving competition to all time highs. More than 200 companies now reportedly produce nearly 100 different brands of language repeaters in China.
A price war broke out in July, with industry bellwether BBK Co Ltd slashing price tags on its BK-791 and BK-792A models by 30 per cent, forcing other major players like disc player heavyweight Nintaus to follow suit.
"The language repeater industry is following in the footsteps of disc players. If we cannot step out of the shadow of these price wars, the outlook is worrisome," an insider said.
Shrinking profits, which haunted disc player makers in price wars in recent years, is already threatening this burgeoning industry. Analysts predict that sales leader BBK, who hold a 30 per cent chunk of the market, is likely to suffer a 50 per cent drop in profits, to around 50 million yuan (US$6 million) this year, although sales forecasts nearly doubled from last year's 3 million units.
However, analysts noted, companies specializing solely in repeaters, unlike those that also make other products such as TVs and refrigerators, are emerging rapidly from the melee.
(China Daily September 24, 2002)
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