“Price-slashing” could be the best word to describe China’s projector market in 2007. Projectors in China had long been sold at a price range between RMB 20,000 to 30,000 (US: RMB = 1:7) for more than 10 years. Understandably, most of the sales are to institutional clients, few individuals would ever buy a projector for personal use.
Household market still young
Although institutional sales will still dominate the projector market in 2008, many producers and distributors are hoping that there could be more project sales to households. As a result, projector companies have been trying to promote low-price models since 2007. For example, a new model was priced at RMB 14,000 when it first came to the market in mid-2007, but its price was slashed to only RMB 8,000 at the end of the year. Such situation is similar to the DVD-R market in early 2005, when the price of a typical DVD-R unit was cut from RMB 1000 to 499 within three months.
But despite many companies are talking up household projectors, the fact that institutional sales are still dominating the market has determined that manufacturers will not spend too much real effort on household projectors. As one distributor has pointed out, he would rather stock 1000 commercial projectors than stock 10 household projectors. From an accounting point of view, 1000 commercial projectors would no doubt tie up several hundred times more funds than 10 household projectors. But the reality is that this distributor could clean out the 1000 commercial models before he could sell most of the 10 household models. So working capital was actually tied up in the household models, in addition to the extra time spent on dealing with those demanding, picky and patient individuals.
As we can see, household projectors in China are still at a “test-water” stage, but it is also an important time for cultivating the household market. Apart from entry into the household market by leading international brands, many local Chinese brands which are good at design but short at production are also making inroads into the fledgling household market.
Education market hard to access
On the other hand, the major projector consumption segment in China, namely the education market, is experiencing a slowdown in projector demand. As it will take some time for this market to recover, projector companies are now turning to the emerging commercial market. This is also a situation that can benefit those smaller projector brands.
Different from other commercial projector users, educational institutions are characterised by their collective tenders and insensitivity to prices. And they are frequent users of projectors requiring high level of aftermarket services. This has long made leading international brands favourites of educational institutions. Therefore many later comers, small to medium brands and local brands have failed to win educational market shares.
Hopeful of the commercial market
But the cyclical downturn in the education market in 2007, as well as the saturation in large corporate market, has lured projector companies to the small and medium enterprise (SME) market. Due to China’s growing economy, the number of SMEs has blossomed in recent years, which can provide some meaningful demand for projectors. As can been from Sony’s launching of sophisticated data projector products, we can tell that even leading international brands are now fighting for this SME market.
Different from educational institutions, most commercial users would pay particular attention to a projector’s weight and size. Also because their knowledge on projectors varies significantly, they would also care about whether a product is easy to use. And understandably, projector suppliers are dealing with the more business-savvy commercial clients, who will drive a hard bargain to achieve a fine balance between models, performance, prices and aftermarket services. But even so, the bargaining process of commercial clients is still not as harsh as those household model buyers’.
As a result of this increasing demand from commercial clients, we can see that there have been many newly-launched high light output projectors in the second half of 2007, in order to replace the older models. But the surge in new projector models didn’t translate into high profit margins. Due to the participation of many small and medium brands, prices of entry-level older models had slumped at the end of 2007. And now the commercial market is divided by critical performance indicators such as brightness, at a watershed of RMB 8000. As the SME market is not as brand-sensitive as the education market, and SMEs do need to achieve a balance between price and aftermarket services, many small and medium projector companies are now seeing hopes in this sub-market.
In conclusion, 2007 was a critical year for the Chinese projector market, which has evolved from dominance by educational clients to equal importance of educational and commercial clients. But the household market is still at infancy in China, and nobody knows when it could grow up. On the other hand, projector products are now getting smaller, easier-to-use and more portable, and the competitive prices of household models are now posing a threat to LCD TVs at home internationally.