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With the steady progress of the macro economy, China's technology consumer goods market has gradually returned to the right track, and will accelerate the recovery this year

The macroeconomic picture for 2024 is complex and volatile, driven by a slow global economic recovery, rising geopolitical tensions, volatile energy prices, and supply chain pressures. In response to these challenges, the Chinese government has adopted a series of macro-control policies, including proactive fiscal policies and prudent monetary policies, to promote economic growth and stabilize employment. According to the economic data for the first half of 2024 released by the National Bureau of Statistics, China's GDP grew by 5.0% year-on-year, showing that the economy is generally stable and making steady progress.

In the first half of 2024, China's economy has maintained a steady growth trend, the consumer market has gradually recovered, investment has increased, foreign trade has remained dynamic, employment and prices have been stable, the government's consumption promotion policy has achieved positive results, consumer confidence is generally optimistic, and the industry trend is good. It is expected that in the second half of the year, policies such as infrastructure construction, large-scale equipment renewal and real estate destocking will be further exerted, and "expanding domestic demand" will return to the top of the key work.

First, with the support of the "old for new" policy of consumer goods, home appliance consumption will have a better performance. At present, many provinces in the country have successively introduced the "old for new" work program for consumer goods, and it is expected that the subsequent policy effects are expected to further show. Second, service consumption still has growth potential, and the growing number of young consumer groups will bring stronger consumption demand for travel entertainment. Young people's tourism consumption and elderly people's pension consumption.

From the GfK China technology and consumer durables market forecast data, the market turnover will rise to more than 2.2 billion yuan in 2024, becoming the second highest point in 2019 so far, with a year-on-year growth rate of about 5%, accelerating the recovery compared with the year-on-year growth rate of 3% in 2023. The outperformance of the technology and consumer durables markets has been remarkable in a period of slightly weaker overall consumption ⸺ thanks to the interaction of a number of factors: Manufacturers continue to innovate and improve the cost performance of products, consumers' delayed demand for replacement and upgrading has been gradually released, and emerging categories (such as wearables, headphones, small household appliances, etc.) still have a large penetration space, which fully reflects the dialectic of "organic in danger". At the same time, these positive measures have also received more policy support from relevant departments.

In terms of industry, the communications industry led the recovery of the domestic market. The personal consumer electronics scene dominated by mobile phones and supplemented by wearables contributed half of the turnover scale of the entire technology and durable consumer goods market, and the growth rate reached 10%, becoming the double champion of volume and growth. The home appliance industry followed closely behind, contributing more than 600 billion yuan in turnover in China. Among them, small household appliances blossomed, and new consumption scenarios and new sales channels pulled up the growth trend of new categories dominated by scientific and technological innovation, and there was steady progress compared with the same period last year. With the support of a number of policies led by the state to "replace the old with the new", we also maintained the basic disc and remained stable for three consecutive years. In addition to personal consumption scenarios and family consumption scenarios, the IT office industry, as the product pillar of office learning, education and entertainment and other special scenarios, due to the rapid expansion and early release of the PC industry during the epidemic period of additional consumer demand, the current demand for new is weak, still in the downward channel of over-peak decline, but the year-on-year growth rate has been significantly narrowed. Because of the continuous recovery of the tourism industry, the market this year still has a positive growth of 8% compared with the year-on-year growth rate of 37% last year, and new consumption scenarios such as outdoor tourism and live broadcasting continue to stimulate new categories and innovative designs to be put into the market to create and meet the new needs of consumers.

Consumers are still cautious about consumer confidence, and the need for diversification and rationalization is a new test and a new opportunity

According to the results of the eighth China Consumer confidence tracking survey released by GfK in June 2024, the current overall consumer confidence index in China is stable at a high level (86 points), and there is little difference between consumers in different tier cities and different age groups, among which respondents from high-income families (monthly household income of more than 30,000 yuan) have more confidence in the market.

From the perspective of consumers' consideration of consumer electronics products, brand trust and cost performance are still the most prominent decision-making factors. At the same time, it can also be seen that the intelligent elements of science and technology are as important as the core performance and appearance design of other products. Since last year, AI has undoubtedly been an unavoidable topic of scientific and technological intelligence in many categories and industries.

The IT office industry released a lot of hardware update demand in advance during the epidemic, and the volume fell back, but still reflected the rapid upgrading of industrial technology

IT office (ITO) is the only one year-on-year decline in the industry, 300 billion yuan in the market, more than "half of the river" from the PC market contribution, it is also the PC market demand in the epidemic high release, resulting in the current market demand, sales for two consecutive years to maintain a double-digit decline. In the epidemic, the demand for the three PC usage scenarios of distance education, home office, and leisure and entertainment has surged, making the annual sales volume of China's PC market exceed 50 million units. In addition to the short-term expansion of the volume, the core change is the long-term migration of the fixed scene of desktop computers to mobile flexible scenes, and the proportion of notebook computers in the overall PC structure is rapidly rising, accounting for nearly 60%. The Chinese notebook market leads the global notebook market in the trend of light and thin, portable and high appearance level of products, so that consumers entertainment, office, learning a dedicated scene and space of the overall pursuit and style of qualitative change, a series of supporting hardware trends and change pace are affected by this change.

In the market changes of the key category of notebook computers, we first noticed that although the scale of the notebook market fell with the downturn in the overall PC market demand, the volume was still higher than that of the pre-epidemic period, and notebook sales in the first half of 2024 increased by 500,000 units compared with the first half of 2019. In terms of subcategories, the increase of 500,000 all comes from the game product. GfK retail monitoring data shows that the game accounted for about 30% of sales in the overall notebook market, and in the past few years, it has been the main driving force in the incremental market and the more resistant backing in the downward channel. Entering the second quarter of this year, in the context of no updated graphics card products, the proportion of games in this category was stable at 31% in the short term. In the office category, thin and light books have fully occupied the Chinese market. In the market decline, office demand is weak, and the price zone appears to sink stage, the proportion of standard pressure light and light books rose from 22% to 42%, and the low-pressure products completed the status conversion, so that consumers can buy products at the same price to achieve the roll-type upgrade.

The practical scenario of the PC peripheral market is completely based on the capacity and usage habits of the PC usage scenario, and the market size and product development trend have been highly correlated with the PC. The difference in product life and purchase threshold, resulting in market volatility and PC still have a certain difference, but also create the possibility of their respective markets. Due to the rapid squeeze of panel costs in the first two years of the display market, the market maintained single-digit growth at the initial stage of the contraction of PC sales volume and shrinking demand. In 2024, the panel cost reduction space has been exhausted, the display market has also entered the downward channel, is expected to decline 7% year-on-year sales. Similar to the PC trend occurred in the product technology upgrade process, in the context of the price with a comprehensive sinking, the display market resolution, refresh rate and screen size of the price is still upgrading, 800 yuan can buy 27 inches, 144 Hertz refresh rate, 2K resolution display. Driving this market change is a complete supply chain with numerous domestic brands and localisation. In recent years, with the rise of local enterprises in all walks of life, consumer national sentiment is rising, in many consumer electronics markets, the brand trust of local enterprises and product technology level have been significantly improved, consumers in the stage of economic expectations and consumer confidence has not fully recovered, it is easier to tilt to local products with good quality and cost-effective. This phenomenon is reflected in the previous laptop market, and the keyboard and mouse market that will be mentioned later.

In 2024, tablet computers will be second only to PCS in the hardware volume of the IT office industry, and have the highest growth rate among many major categories, with sales exceeding 10% year-on-year. According to GfK's tablet retail market forecast, the market size will exceed 25 million units in 2024, and the sales amount will exceed 70 billion yuan, another record high and nearly double that of 2019. From the perspective of usage scenarios, tablets have always played the role of smart phone amplifiers in the early days, providing a bigger and better visual experience for video viewing, leisure entertainment and education apps. With the iteration of product technology and hardware, the tablet continues to expand productivity and began to explore the original PC scene and field, which undoubtedly gives the tablet a broader market space in the future. GfK tablet overseas monitoring data shows that in mature markets in Western Europe, for every five mobile phones sold, one tablet will be sold, while this conversion rate in China is only half that in mature markets. With the upgrading of product functions and the blurring of the boundaries of coverage scenarios, there are still many possibilities in the Chinese tablet market.

From the point of view of the technical upgrade of the tablet, the pull up of screen size and quality is the first. GfK mobile phone and tablet market retail monitoring data show that mobile phones from the beginning of 5 inches of large screen development to the current balance point of 6.5-7 inches as the main screen size has roughly experienced 6 years, and tablet computers from less than 10 inches to more than 10 inches of the first balance point took less than one year. And it began to expand further beyond the 13-inch intersection of mainstream PC screen sizes. Compared with the next big screen of the mobile phone, the further development of the folding screen is still needed, and the large-screen process of the tablet has surpassed the mobile phone. The acceleration of this process is not only because of the simple screen supply and cost optimization, but first based on the acceleration of the CPU iteration process, the early tablet CPU has been using the remaining capacity of the mobile phone, and the beginning of 2023 can see the latest mobile phone CPU almost transplanted to the tablet product at the same time. With the iteration of hardware synchrotron, there are practical applications, based on the superposition of AI large model algorithms and other functions, the tablet has been competent for professional scenes such as professional painting and video editing. IT is also through the size upgrade, computing power upgrade, combined with the software application upgrade, the tablet market ushered in a more brilliant development than other major categories in the IT office industry.

Outlook: New scenarios, new track under the science and technology consumer electronics

The growth of the most prominent technology consumer electronics products, in terms of technology and intelligent hardware upgrades, the first fit is often the consumer's demand for scene specialization and high efficiency, personal care hair category can have more than 20% growth is precisely the good combination of technology and beauty.

In the field of beauty and skin care products, anti-aging and anti-pigmentation are the main demands, and technological upgrades allow home beauty devices to complete a course of treatment in a shorter time, and the proportion of use time within 5 minutes is significantly increased.

The growth of wearable categories is in line with the mutual promotion of health and sports, the improvement of health indicators and sports indicators, but also to expand the moderate and mild fitness groups to better grasp their own conditions in real time, to achieve the effective combination of health sports and science and technology.

The technological upgrading of cleaning appliances is also well reflected in the efficiency, especially the rapidly iterated technology of sweeping robots and multi-functional floor washing machines, which have transferred the cleaning demand to the intelligent service demand. China's high-intensity pace of work makes consumers' time fragmented, and aging makes limited energy more need to be effectively allocated, which are the challenges facing the current society, but also an important factor affecting domestic demand. Freeing hands and reallocating time through technology is one of the biggest values that clean appliances release for difficult problems such as family care, elderly care and children's education.

Conclusion:

From the perspective of the four major consumer electronics scenarios shown in this year's white paper, in the context of the urgent need to boost the domestic demand in the overall consumer market, a number of industries are developing new consumer scenarios and subdivided product tracks, making every effort to meet the new consumer demand and consumption power in the new era. It is not difficult to see that, as a technology consumer goods, the continuous iteration and upgrade of technology is an eternal topic, AI is an intelligent direction that every industry actively embraces, and every product attempt is based on the hardware upgrade of the product itself.

Under this premise, manufacturers are actively exploring diversified scenarios, starting from the practical needs of consumers, mining the same product can achieve more possibilities, but also in the appearance level appearance invested more design effort, providing more choices and emotional value. With years of deep cultivation of the Chinese market, the brand is well aware of the price sensitivity of the local market, and at the same time, it also provides a more reasonable upgrade plan for today's consumers who pay more attention to cost performance. This year, local brands in a number of industries are more sensitive to China's national conditions and changes in consumer demand, and they have gained a lot in market performance.

Through GfK's continuous monitoring of the retail market over a long period of time, we can see the similarities and differences between various markets in different development cycles. The only constant in the market is change, grasp the reasons for the formation of the law, in order to warm up for the next change. Deep cultivation of local scenarios and needs requires every partner in the industry to insist at all times. Hope that China's technology consumer electronics industry can be in China, for China, to the world, leading the world!