Practical strategies

As the most popular foreign mp4 product among Chinese users, the iPod Touch, like Apple's other digital products, is famous for providing users with powerful application software support.

While this core advantage has been much envied and imitated by Apple's competitors around the world, no other player has managed to reach the same level. In this regard, Chinese enterprises are no exception.

But that does not diminish the faith of Chinese consumers in domestic brands. In fact, Chinese consumers are taking aim at the supposed advantages of the U.S. CE giant's products.

One Apple user, venting his spleen on a digital products web-forum, asked the question: "Under the single-task operating mode on Apple's products, is there any advantage left in the thousands of applications designed for them?" He pointed out that due to the restrictive nature of the single-task operating mode on his iPhone 3GS, he had to keep opening and shutting down QQ (an online instant messenger).

"When it comes to mp4 players, domestic products cannot provide the rich application software that an iPod does, but they perform wonderfully when playing high-definition movies, music, radio, pictures, e-books or running simple games," the user said.

Huang Yizhou, who has worked on mp3 and mp4 products as a hardware engineer for five years, has kept a close eye on the development of the industry. He believes domestic mp4 manufacturers succeed in satisfying the needs of their "target consumer group."

"The iPod has a very clear target consumer group. That is the high-end of the market. Our target is the vast section of the market beyond their coverage," Huang told ChinAfrica. "Those who are willing to spend more money are still in the minority; that is the simple fact of the matter."

According to Yu Faxing, Marketing Manager of RAmos, the strength of most Chinese mp4 manufacturers lies in two main aspects. One is an accurate understanding of the demands of their market and the ability to move quickly to satisfy those needs. The other is the capacity to offer highly competitive prices.

"We hold a steadfast belief in giving consumers what they want," said Yu. He says that extraordinary visual enjoyment from a large, high-resolution display, and a powerful format decoding capacity are the two most important priorities for Chinese users of mp4 products.

Yu Faxing emphasized that the performance of Chinese mp4 brands on the domestic market shows that they are completely capable of satisfying consumers' needs. He also says that they have been the world's most prolific developers and manufacturers of the three most important components of mp4 products: SoC (system on chip), flash memory and screens.

Price advantage

Offering competitive prices through cost control is another marketing strategy mastered by Chinese mp4 manufacturers. This cost-conscious ideology has led many manufacturers to outsource part of their production processes.

"As a strategic global center for the CE industry, Shenzhen accommodates the complete industrial chain for the mp4 business, including software and hardware R&D, industrial design, procurement, manufacturing and sales. That is of great significance to cost reduction in the industry," explained Yu.

Due to this highly developed industrial chain, which allows production outsourcing as a means to control costs, Chinese mp4 manufacturers are usually relatively small. Most of them have less than 1,000 employees. Of those, R&D personnel range from several dozen to hundreds.

This is a competition that never stays still for long, and is constantly evolving. In January 2010, Apple launched the much-anticipated iPad, a tablet PC product that has become the dream of every Apple fan. The product is considered within the industry as a wind vane indicating further movement of various CE products, including mp4 devices, towards the evolution of Mobile Internet Devices (MID).

Chinese manufacturers have responded quickly to the new MID revolution. Based on Google's open source operating system, Android, Chinese enterprises such as Aigo, Saycool and RAmos released their MID products one after another. In order to strengthen its capacity for innovation, RAmos is already planning to enlarge its R&D team from about 40 staff to 60 this year.

Facts and figures:

The In-Stat, a U.S. research and consulting service provider on mobile Internet and digital entertainment ecosystems, forecasts that by 2012, China's MID shipments will reach 7.2 million. And the potential sales of tablet PCs in the ­total available market will reach 50 million units by 2014.

According to estimates from the U.S. Consumer Electronics Association, the output value of the international CE industry will be $681 billion in 2010. Meanwhile, the global market share of U.S. CE products will shrink from 24 percent in 2009 to 19 percent, while that of the Asian countries will increase to 36 percent from 34 percent one year ago.