Date 11 March 2010

In China, traditional media’s replacement by digital and mobile media is an ongoing process. In contrast to many digital industries in the West, many of those in China (the music industry, for example) are relative new and undeveloped, which can bring both challenges and opportunities. In particular, a rapidly increasing number of internet users is transforming the digital industry as a whole.

 

The cell phone industry displays a dual trend of expansion both in cheap phones for those in the low-income bracket (typically in less developed regions of China) and in advanced multimedia phones for those with higher incomes (in major metropolises).  This reflects the simultaneous opening up of China’s lower classes and a strong high-tech demand in developed regions. According to Xinhua, in 2009 cell phone users reached 670 million, about twice the population of the US. Likewise, the industry for electronics in China is huge, and expected to grow over US $1 trillion in 2010. It is largely concentrated in the Yangze and Pearl River Deltas, and governmental support (in the 11^th Five Year Plan, for example) has encouraged investment away from low-wage, production-oriented industry toward more developed hi-tech areas. This sector particularly welcomes foreign companies.

 

Companies should be aware of possible challenges, however. In the digital media industry, there are significant governmental restrictions, and SOEs have a very strong footing in the market. In this industry there is also a continued risk of IP infringement and piracy. Furthermore, companies should be aware of the preferences of the Chinese consumer, which differ greatly by region and economic status. The media infrastructure in general is fragmented and developmental disparities across the country affect the market for digital media. Various options, such as a JV with a domestic enterprise, can present good opportunities for those with knowledge of the industry.

 

  Previous  |  Next      View all headlines