China’s consumer electronics market is expected to gain growth momentum, with total revenue reaching 2.3 trillion yuan ($315.7 billion) in 2024, an increase of 5 percent year-on-year, fueled by the rapid development of devices utilizing the internet of things and artificial intelligence technology, according to a white paper released by market research company GfK.
China’s economy is on an upward trajectory, while the consumer electronics sector has reached an “inflection point” and is set to rebound, the white paper said, adding that increasing demand from consumers and technological innovation will result in the continued growth of China’s consumer electronics industry.
The meteoric rise of ChatGPT, a chatbot developed by US-based AI company OpenAI, has brought significant impacts to many industries. Therefore, AI-enabled consumer electronics devices, such as virtual reality and augmented reality, are predicted to experience explosive growth, it noted.
Frankie Lee, vice-president of marketing at Nielsen IQ GfK Asia-Pacific, told China Daily that the IoT market is recovering quickly, with wireless earbuds and smartwatches starting to recover earlier than smartphones.
“With the launch of AI large language models, it is clear that the scenarios of AI applications have changed from personal computers to other IoT devices, including smartphones, smart speakers and smart home devices,” Lee said, adding that the development in IoT devices and AI will further accelerate the upgrading of the whole consumer electronics industry.
The domestic consumer electronics market is projected to see a steady recovery in 2023, with total retail sales increasing by about 11 percent year-on-year in the second half, with the growth rate of this segment likely to reach 4 percent this year, according to the white paper.
Lee said Chinese consumer confidence had returned to its highest level since the COVID-19 pandemic, and the economic situation of Chinese households had generally improved in the past six months, according to GfK’s survey of consumer confidence in China in May.
“We noticed that consumers are more likely to buy products with better durability than they did before the pandemic. Comparatively speaking, Chinese consumers are more inclined to buy consumer electronics products than the average global consumers,” Lee said.
Against the backdrop of sluggish global economic recovery, consumers look for innovation to free up time and are pursuing a flexible lifestyle. According to GfK consumer research data, 41 percent of consumers worldwide are willing to pay more for products that make life easier.
In addition, GfK predicts that China will transform from a follower to a leader, eventually taking the leading position in technological innovation in the next decade. Connected devices powered by 5G and smart applications enabled by AI and artificial intelligence of things have become the most powerful drivers for innovation and growth in the consumer electronics industry.
“Chinese brands have shown the potential to lead the industry not only in mature categories such as smartphones, but also in new categories of hardware products, such as AIoT, robot vacuum cleaners and AR and VR,” GfK added.
Chinese consumer electronics manufacturers have accelerated efforts to integrate AI chatbots into their products and services in hopes of providing a better human-machine interaction experience.
For instance, Midea Group, based in Foshan, Guangdong province, is among the first batch of partners for Ernie Bot, a ChatGPT-like AI chatbot launched by Chinese tech heavyweight Baidu Inc in March. Midea will bolster the upgrade of human-machine conversation abilities in the smart home sector by using cutting-edge generative AI technology.
The emergence of new AI technologies will better facilitate the conversational interaction between human beings and electronic devices, and speed up the digital and intelligent transformation of China’s consumer electronics industry, said Liu Fei, research director of the consumer electronics department at Beijing-based market consultancy All View Cloud.
Liu said the iteration and upgrade of product functions and technologies will stimulate consumers’ purchasing appetites and create new revenue growth drivers for companies. The move also demonstrates the continuous exploration of large language models in the scenario of intelligent content production, he added.