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AR/VR Applications to Boost 2017 Electronics Market: The Autumn 2016 Hong Kong Electronics Fair Survey

Although sales of mobile devices may have levelled off, industry players are now expecting AR (augmented reality) and VR (virtual reality) applications to fuel the future of the electronics market. Meanwhile, the market remains optimistic about the potential of wearable electronics, even despite the lower-than-expected recent sales performances of some smart watch models. Wireless system apparatus and audio-visual items with smart functions continue to be viewed as the leading smart home applications for next couple of years.

These opinions were gleaned from attendees at the Hong Kong Electronics Fair 2016 (Autumn Edition), held in October 2016. The Fair is now one of the largest gatherings of electronics professionals in the world. HKTDC Research conducted interviews with 683 buyers and 369 exhibitors at the Fair, focussing on their views regarding market prospects and product trends.

Both buyers and exhibitors shared expectations of steady sales in 2017. These forecasts were made after the global market has experienced a rocky performance over the previous few quarters. In terms of specific markets, most respondents cited China as potentially the most promising amongst all the economies. At the same time, North America and Western Europe continue to be traditional strongholds for the electronics sector.

 

Photo: Hong Kong Electronics Fair 2016 (Autumn Edition).
Hong Kong Electronics Fair 2016 (Autumn Edition).
Photo: Hong Kong Electronics Fair 2016 (Autumn Edition).
Hong Kong Electronics Fair 2016 (Autumn Edition).
Photo: Demonstration of 3D Scanning at the Fair.
Demonstration of 3D Scanning at the Fair.
Photo: Demonstration of 3D Scanning at the Fair.
Demonstration of 3D Scanning at the Fair.

 

2017 Market Outlook: Go Back to Stable

Despite bumpy sales performances during 2016, surveyed respondents at the October Fair generally agreed that the global electronics market will become more stable next year. In particular, a marked increase in the share of surveyed buyers expected their sales to rise in 2017, as compared to those who expressed the same opinion at last April's Fair. This is notwithstanding the fact that there was in fact a slight drop in the percentage share of surveyed exhibitors expressing the same view.

On the whole, 45% and 53% of the surveyed buyers and exhibitors respectively expected that their sales would go up in 2017. Those expecting a sale decrease next year accounted for only 17% and 10% of the buyers and exhibitors respectively. Such changes in the figures would seem to suggest that market confidence among the attendees to the October 2016 Fair has improved markedly.

 

Chart: Market Outlook for 2017
Chart: Market Outlook for 2017

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Overall, the emerging Chinese mainland market was rated as the most promising arena for sales of electronics over the next year. This was followed by a number of traditional markets including North America, Western Europe, Korea, Japan and Australia and Pacific Islands. Other emerging markets, such as ASEAN, India and Russia, scored lower. Nonetheless, every market scored higher than the neutral level of 3 (on a scale of 1 to 5), indicating that respondents were generally optimistic about the markets across the board.

 

Chart: All Respondents’ Opinions: Growth Prospects for Overseas Markets in 2017
Chart: All Respondents’ Opinions: Growth Prospects for Overseas Markets in 2017

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Consumer Electronics Continues to Replace Mobiles as Saleable Items

Respectively, 23% and 10% of all surveyed respondents suggested that electronic/electrical accessories and audio-visual products were the categories with best growth prospects for 2017. When compared with other surveys undertaken during the last couple of years, the ratings achieved by mobile devices have continued to decrease. This time around only 7% saw them as the most promising item for next year. Undoubtedly, demand for mobile items has levelled off after years of rapid growth. In the meantime, though, some players have pinpointed AR/VR devices for entertainment and commercial purposes as potentially the most promising items for 2017.

 

Chart: All Respondents: Product Category with Highest Sales Growth in 2017
Chart: All Respondents: Product Category with Highest Sales Growth in 2017

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Photo: Buyers and exhibitors gathered at the Hong Kong Electronics Fair. (1)
Buyers and exhibitors gathered at the Hong Kong Electronics Fair. (1)
Photo: Buyers and exhibitors gathered at the Hong Kong Electronics Fair. (1)
Buyers and exhibitors gathered at the Hong Kong Electronics Fair. (1)
Photo: Buyers and exhibitors gathered at the Hong Kong Electronics Fair. (2)
Buyers and exhibitors gathered at the Hong Kong Electronics Fair. (2)
Photo: Buyers and exhibitors gathered at the Hong Kong Electronics Fair. (2)
Buyers and exhibitors gathered at the Hong Kong Electronics Fair. (2)

 

Emerging AR/VR Applications

Taking a longer-term perspective, over 70% of the respondents opined that the market potential of, or demand for, AR/VR devices or applications would be 'promising' or 'very promising' over the next two years. Mobile/on-line game and audio-visual entertainment are the AR/VR applications with the greatest market potential, as indicated by 56% and 44% of the respondents respectively.

 

Chart: All Respondents: Market Potential of AR_VR Applications for Next Two Years
Chart: All Respondents: Market Potential of AR_VR Applications for Next Two Years

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Wearables: Focus on Health and Sports Applications

The market is slightly more optimistic than before in terms of the market potential of wearables in the next two years. 76% of the respondents at the Fair indicated that the overall market demand for wearables were 'promising' or 'very promising'. This is higher than the percentage share of those expressing the same in the April Fair (then just 70%).

Although there are reports that recent sales of smart watches were slower than expected, 38% and 25% of respondents at the Fair still maintained that smart wristbands (with health functions) and other health-care or sports related wearables have the greatest market potential for next couple of years.

 

Chart: All Respondents: Market Potential of Wearable Electronics for the Next Two Years
Chart: All Respondents: Market Potential of Wearable Electronics for the Next Two Years

Download excel

 

Smart Home: Increased Price Premium

Other items of particular interest were smart home and smart living products. Wireless system items for connecting to internet/mobile networks (including Zigbee, Bluetooth and Wi-Fi devices), audio-visual items with smart functions, and wireless charging devices for smart appliances were rated by 64%, 61% and 59% of respondents, respectively, as the smart product categories with the highest growth prospects for next two years.

On the other hand, a majority (75%) said they expected that consumers would be willing to pay a 1%-20% additional price premium to purchase electronic products equipped with smart home applications. It's worth noting however that 25% of the respondents expected that consumers would pay more than 20% additionally. When compared with the 15% of the respondents expressing the same view at the April Fair, it seems that industry players increasingly believe they could raise the price of their products if smart features are appropriately incorporated into them.

 

Chart: All Respondents: Market Potential of Smart Home Applications for Next Two Years
Chart: All Respondents: Market Potential of Smart Home Applications for Next Two Years

Download excel

 

Chart: All Respondents: Consumers’ Willingness to Pay a Premium to Purchase Electronic Products
Chart: All Respondents: Consumers’ Willingness to Pay a Premium to Purchase Electronic Products

Download excel

 

Respondents’ Profile

Of the 683 buyers canvassed, 37% were based in Hong Kong, with the remainder based overseas. Their major selling/export markets were the Chinese mainland (24%), North America (21%), Western Europe (18%) and Asia outside the Chinese mainland (15%).

Of the 369 exhibitors polled, 42% were based in Hong Kong, with the remainder based overseas. Their major selling/export markets were North America (40%), Western Europe (24%), Asia outside the Chinese mainland (14%) and the Chinese mainland itself (12%).

Content provided by Picture: Wing Chu
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