Wednesday, September 10, 2008

A Sharp Focus on China’s High-end Consumers

Japan-based Sharp Corporation announced this week that it plans to expand in the already-large-and-still-growing Chinese handset market. Sharp enjoys a 40% market share in the dynamic and lucrative Japanese market, but the company sells few handsets outside the country. In China, Sharp is aiming for the high end of the market with multifunctional handsets selling for almost $600. The company hopes to sell five million handsets a year in China in the next few years. Sharp sold only 15.5 million handsets worldwide in the fiscal year that ended March 2008, so an additional 5 million handsets would have a significant impact on its bottom line.

Vital Wave Consulting likes Sharp’s timing: Apple has not yet entered the China market with its iconic iPhone, and 3G services were rushed to market in several of China’s largest cities just before the summer Olympics. A phone that offers mpayment capabilities – standard in Japan – might also attract China’s wealthy elite. According to one report, Chinese mobile phone users led their counterparts in India, Taiwan, Singapore and Australia in storing music, playing games, making payments, and accessing the Internet. Chinese Internet users do not fit the same usage profile as many Western (or even other emerging-market) users. According to a Chinese government study, the Web is not necessarily perceived as a means of finding information or shopping; rather, it is seen as a highly customizable entertainment medium. Over 70% of Chinese Internet users are under 30, and tend to be avid gamers, social networkers, and “fanzine” subscribers. Handsets that allow Chinese users to access these services outside the Internet café could be highly sought-after.

The high end of the market (for handsets, computers, and many other consumer electronics) is a particularly good opportunity in China and in other large emerging markets such as India. The percentage of the Chinese population that constitutes the high-end market may be relatively small, but in a country with more than one billion people, the total opportunity is still ample and justifies the expense of forging new marketing and distribution channels that target the country’s elite.

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