Mainland China's decades-old speakers industry is strong and growing. According to the main industry body — China Audio Industries Association — output in four major speaker categories — home theater speakers with 5.0 or more channels, computer multimedia speakers, Hi-Fi speakers and subwoofer satellite systems — will grow from 60.5 million units in 2003 to nearly 69 million units this year. This means a revenue climb from US$1.7 billion last year to a projected US$1.87 billion by year-end 2004.
About 200 professional speaker makers form the backbone of the industry, and Guangdong province is the dominant manufacturing hub. Production is supported by an ample supply of engineering and technical talent; abundant components, particularly raw speakers; and the availability of service industries such as SMT, molding, tooling and plastic injection.
Expansion has been a major focus in the last few years, with key industry players building new factories or large industrial parks and purchasing new equipment. Capital investment in this area ranges from US$600,000 for a new factory to up to US$12.5 million for a new industrial park. Makers are also strengthening their market presence abroad by participating in international trade shows and establishing sales or market information collection branches in other countries.
The companies covered in this report, including the 20 profiled maker-exporters who account for 30 percent of the country's speaker exports in 2003, have strong in-house manufacturing capability or have established networks to outsource critical requirements. Most have in-house production facilities for speaker cabinets; many can assemble their own raw speaker requirements. Final production processes such as spray painting and surface lamination are commonly done in-house. For molds and plastic injection, numerous outside providers are tapped.
All companies featured in this report put a premium on quality systems, with most makers already ISO-certified. Management systems such as MRP-II and 5S are common and some firms are applying for TS16949 and SA8000 certifications. In QA, common standards applied are MIL-STD-105E and China's GB2828, GB11218 and GB11217.
China's speaker manufacturers engage in various forms of R&D ranging from simple cosmetic enhancements to complex circuit design and software programming. R&D investment, as a percentage of sales, ranges from US$36,000 to US$3 million annually. Most companies have specialized R&D staff and collaborate with various agencies, including reputable Chinese universities.
Industry Overview
A rapidly growing export business has injected vitality into mainland China's decades-old speaker industry. Global Sources research in the first quarter of 2004 and in-depth interviews of major industry players draw a clear picture of capacity building efforts and technical developments designed to cater to overseas buyers' requirements.
Output projections provided by the main industry body in China for home theater products, the Shanghai-based China Audio Industries Association, are solidly for growth. According to the CAIA, total speaker output — including home theater or surround sound speakers, computer multimedia speakers, Hi-Fi speakers and subwoofer satellite systems — will grow from 60.5 million units in 2003 to close to 69 million units by year-end 2004. In dollar terms, this translates to US$1.7 billion revenue in 2003, climbing to US$1.87 billion in 2004.
Looking at total figures alone would obscure the very significant contribution made by export shipments to the industry's development. Export volume will grow by 26 percent in 2004, while total output (including domestic sales) will grow just by 13.6 percent. Exports will also show higher revenue growth — 20 percent compared to the 10 percent growth forecast for the industry as a whole.
The industry is driven by about 200 professional manufacturers, a number that has stayed stable in the last few years. The highest concentration is, not surprisingly, in the Pearl River Delta, and particularly Guangdong. About 80 percent of makers are located in the province, which also serves as the global factory floor for many other consumer electronics products. Within Guangdong, the majority of manufacturers can be found in Guangzhou, Shenzhen, Dongguan, Zhongshan and Huizhou.
The other major locus of activity is in the Yangtze River Delta, which is home to an estimated 10 percent to 15 percent of makers. Zhejiang and Jiangsu provinces are the major production centers on the eastern seaboard, and Shanghai hosts the factories of several leading overseas brands, including Kenwood and Pioneer. Smaller pockets of makers are located in Beijing to the north, in Sichuan in China's interior and in Guangdong's neighbor, Fujian province.
But Guangdong remains the dominant player on this board due to its proximity to Hong Kong, which gives makers easy access to the lucrative overseas market. Also, makers based here can easily keep track of product and market trends, as Guangdong and Hong Kong are entry points for new products into China. Already, a few Beijing-based speaker manufacturers have established factories in Guangdong.
Supplier Profile
Aspeed Technology Co. Ltd
Based in Shanghai, privately owned Aspeed Technology Co. Ltd has been designing, manufacturing and marketing speakers and subwoofers for PCs and notebook computers since 2000. With an annual turnover of US$5 million, the company exports nearly 30 percent of its products to Europe and Asia. Computer speakers make up 20 percent of exports.
The company started producing home theater systems and digital presentation products late in 2003 and currently, home theater systems represent 10 percent of its total output. Aspeed is an OEM supplier to leading Chinese IT companies such as Lenovo and Founder and electronics manufacturer Hisense. Overseas customers include South Korea's LG and France's Amarina, Pearl and NEMO. Aspeed plans to expand its market to Japan and the US, following the approval of its foreign trade license in February 2004.
Manufacturing Capabilities
Aspeed's 9,000sqm factory in Jiashan, Zhejiang province houses an R&D facility and employs about 250 workers. The factory is equipped with a dynamotor to ensure continuous production in the event of power outages. The management system complies with ISO 9001:2000 standards, and the products carry CE, FCC, UL, KTL and CCC approvals.
The Global Sources team visited the plant's three workshops, dedicated to injection molding, speaker assembly and paint spraying. At the injection-molding workshop, we noted 50 sets of molds and six injection-molding machines with 150g to 1.3kg capabilities. The machines were imported from Taiwan Union Plastic. Aspeed purchases all its molds to ensure speedy processing of customers' orders, although it used to manufacture its own molds for several years.
The paint-spraying workshop incorporates an 80sqm clean room that uses silk-screen technology and circulating water pumps. Two UV drying lines equipped with a temperature controller sourced from Shenzhen provide exposure to temperatures ranging from 0° to 400° Celsius.
The speaker-assembly workshop employs 150 staff for assembly and online QC/QA. All raw materials are tested using single-track oscillographs, audio sweepers, millivoltmeters, high-voltage testers and audio signal generators. Four assembly lines, each with 30 positions, were busy assembling inhouse- designed computer speakers at the time of our visit. Total capacity runs up to 100,000 speaker pairs a month.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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