China's health monitor exports are on the rise as demand from major markets continues to grow and makers enhance the quality of their products.
In the first four months of 2006, health monitor exports from China amounted to US$214 million, up 10 percent from the same period in the previous year. Overseas shipments are expected to increase about 20 percent by the end of 2006. In 2005, suppliers shipped out US$673 million worth of products, a year-on-year increase of 18 percent.
China's main export market for health monitors is the EU with overseas revenue reaching US$244 million in 2005. The region accounted for about 35 percent of total exports in the line.
Although low-end products still dominate output and exports, intense competition in this industry is pushing many large suppliers to midrange and high-end production.
The following are some of the key trends we see in China's health monitors industry:
• Many suppliers will increase export prices by up to 10 percent through 2007 as raw material costs continue to escalate.
• Competition in the industry will continue to intensify as more local makers, attracted by rising international demand, join the line.
• Export sales will rise by up to 20 percent in the next 12 months as more suppliers focus on producing upscale models.
• A large portion of exports will be driven by medical equipment multinationals that are setting up their own factories in China or establishing joint ventures with local makers.
• R&D efforts of most suppliers will be directed toward multiple functions, user convenience, portability and aesthetics. For example, more makers will release bathroom scales that are capable of determining other vital health indicators.
This report covers the four major health monitor categories produced in China: bathroom scales, clinical thermometers, blood pressure monitors and body fat analyzers.
While most suppliers specialize in one line, some offer a range of products across all categories. Most companies that offer all major types of health monitors are typically medical device suppliers, while those offering one major product category are usually electronic premiums companies.
The Products & Prices section in this report details the features and price ranges of health monitors made in China. The latest trends in design are discussed in the R&D/Design section.
The Manufacturing section explains the processes involved in the production of different types of health monitors and how these differ in small and large companies.
The Industry Overview elaborates on the industry composition, highlighting key characteristics of the different types of suppliers.
The majority of health monitor suppliers in China are privately owned and a few are foreign-invested. More than 60 percent of these suppliers have direct export capability, while the rest ship their products through trading companies. Reflecting the industry structure, 72 percent of suppliers featured in this report are China owned while the rest are foreign invested.
Industry Overview
Higher raw material costs, intense competition and the labor shortage that have been affecting nearly all industrial provinces in China's coastal regions have considerably cut profit margins of health monitor suppliers in the country. Many makers in this sector are therefore increasing their focus on upscale products such as digital models, which yield higher profits.
Despite these difficulties, the health monitors industry continues to have a positive outlook for 2006 and 2007.
According to China customs statistics, the country exported 325 million units worth US$673 million in 2005, up 18 percent from the previous year. In the first four months of 2006, suppliers shipped 98 million units worth US$213 million. This is an increase of 10 percent in value from the same period of the previous year.
In terms of volume, however, overseas shipments increased by a mere 1.8 percent in the entire year 2005, and about 2.5 percent in the period January to April 2006.
The higher growth rates in export value indicate an increase in the shipments of upscale health monitors in the country. They also denote a rise in export prices due to escalating material costs, especially plastic.
Health monitor makers are facing rising production costs that are widespread in nearly all manufacturing industries in China. Increasing material costs have hit suppliers, particularly those exporting to the EU since RoHS-compliant components cost typically up to 10 percent more than noncompliant parts.
Raw material costs, particularly plastic, have risen significantly in the past year. With consistently higher crude oil prices directly affecting the costs of plastic, suppliers are expecting that ABS, currently selling for US$1,850 per ton, will be about 20 percent more expensive by the end of 2006.
In addition, increasing freight and labor costs are adding pressure to the industry. The rise in transportation expenses is also driven by the surge in crude oil prices in the world market.
Further, due to the labor shortage in China's coastal provinces, many companies have had to raise salaries and improve working conditions in order to retain staff.
Apart from rising manufacturing costs, makers have had to deal with intensifying competition. Growing demand for health monitors from international markets, coupled with the fact that materials and components for most types of monitors are widely available locally, are attracting many companies to join the business.
In addition, an increasing number of suppliers from Taiwan and Hong Kong are shifting their manufacturing facilities to the mainland to take advantage of lower production expenses. This has added to the already intense rivalry in the industry. For example, Microlife Corp. and RossMax International, two of Taiwan's leading suppliers of blood pressure monitors, have established manufacturing facilities in the mainland.
Rising domestic demand for medical devices, which is expected to reach US$5 billion by 2007 with an average annual growth of 11 percent, has also lured a number of well-known international companies to invest in or set up their own production facilities in China. Most of these MNCs offer a full product line of medical devices, ranging from health monitors to hospital apparatus.
Well-known medical brands such as GE, Terumo, OMRON and Panasonic have their own factories in the country.
Supplier Profile
Fuzhou Emax Electronic Co. Ltd
A joint venture with a Hong Kong investor, Fuzhou Emax started out making digital clocks in 2001. The company later branched out to bathroom scales and barometers.
More than 30 percent of the company's total sales in 2005 came from bathroom scales, all of which are for export. Of these, 90 percent are OEM orders.
The EU absorbs 80 percent of shipments, with the rest shipped to Australia. Ikea is a major client.
Bathroom scales exported to the EU carry the CE marking.
The company plans to expand to the US in the future. It will also be putting up a 10,000sqm workshop in the next two years. The added facility is expected to double the output of bathroom scales.
Products
Midrange models account for 80 percent of Fuzhou Emax's output. Priced at about US$8 each, these bathroom scales have stainless steel platforms and weighing range of 2.5 to 150kg.
Low-end models are priced at about US$5 and have 10mm-thick tempered glass panels. High-end models have stainless steel panels, body fat analyzing functions and are priced at US$10. Prices of low-end bathroom scales are expected to drop by 5 percent as output increases.
Most raw materials and components, especially those for making low-end and midrange models, are sourced locally. On the other hand, the PCBs for high-end models are imported from Japan or Taiwan. LCDs are produced in-house.
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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