China's digital photo frames industry emerged only in early 2006 but production and shipments are already experiencing rapid growth. In fact, the country's export volume and value are forecast to increase by up to threefold in the next 12 months, as demand continues to take off.

Exports statistics in the line, however, are not tracked independently and accurate figures are difficult to determine for emerging industries such as this. Nonetheless, overseas sales of the 87 companies featured in this report average at US$5 million, with some foreign-invested players already topping US$30 million per month.

This is despite the fact the most suppliers in China have only stepped into digital photo frames export trade beginning from the first half of 2006. As of February of this year, there are already more than 100 digital photo frame makers in China, and the number is expected to double by the end of the year.

The fast growth of the digital photo frames supplier base is attributed mainly to the influx of MP3 player and LCD monitor makers into the product line. Well-established suppliers of these mature electronic products can shift focus or add digital photo frames into their range with ease, since the components used and the production steps involved are related and similar.

But this booming industry is not without its own challenges. Because there are numerous companies wanting to join this flourishing line, some suppliers fear that this could lead to cutthroat competition and intense price war too early in the game. In fact, a number of makers are already planning to reduce their export prices by up to 20 percent in the next six to 12 months in an effort to stay ahead. Price cuts are more evident in the low-end segment, in which product differentiation is narrow.

Further, technologically advanced Taiwan counterparts are posing barriers for growth, especially for mainland start-ups. Most suppliers on the island entered the line as early as 2004, and are backed by Taiwan's thriving LCD, IC controllers, circuit boards and solutions manufacturing industry.

Digital photo frame suppliers are also faced with stricter overseas standards, particularly the EU's RoHS. The directive forces China suppliers to adopt costly procedures that would enable their products to enter this huge market.

Responding to challenges
China companies are prompted to quickly step up their R&D initiatives to become more competitive in the high-end segment. Shifting upmarket likewise gives suppliers wider room for aggressive product upgrades and price adjustments.

Many suppliers that started with low-end models are now rolling out high-performance designs. Such releases can support multimedia formats such as JPEG, MP3, MP4 and MPEG-1/2/4, and are compatible with CF, MD, MS, MMC, SM, SD and xD memory cards.

Some large and foreign-invested players are also cooperating with reputable providers such as Texas Instruments and mLogic for solutions, and Foxconn-affiliated Innolux for TFT LCD screens.

All information contained in China Sourcing Reports is the result of exclusive, ground-level and definitive research conducted by Global Sources' analysts. Companies featured in these reports may or may not be clients of Global Sources.

Production & exports