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iPad revives China's portable electronics industry

ARM-based systems and the Android open-source OS are helping netbook and PMP suppliers to capitalize on the iPad's popularity. The latest tablet PCs from China have resistive touchscreens and 720 or 1080p playback.

Apple's iPad is reshaping and energizing the netbook and portable media player industries in China.

iPad revives China's portable electronics industry
The model Sanxi_007 tablet from Fujian Sanxi has a Rockchip 2808A 600MHz CPU, 128MB DDRII RAM, 2GB flash storage and 7-inch resistive touchscreen TFT LCD. It runs on Android 1.5 and supports 802.11b/g connectivity.

The Sangda Electronic Market in Shenzhen, Guangdong province, has been a reliable barometer of the consumer electronics industry's pulse. It was a lively marketplace for white-box netbooks and mobile Internet devices until H2 2009, when the crowds started to dwindle and many sellers closed shop because of waning demand.

But just three months after the iPad was released, Sangda was revitalized and once again became a bustling trading center, this time for devices and tablets that look and function very much like an iPad. New shops opened and a recently decorated second floor now displays mostly tablet PCs. Buyers not just from mainland China but even Hong Kong, Taiwan and neighboring countries flock to Sangda, all eager to score nifty tablets at much more affordable prices.

Netbooks and mobile Internet devices are still available, but there are just a handful of stalls offering them and fewer models are on hand.

Sangda's transformation is a reflection of changes in China's portable electronic devices industry.

ARM, Android spur development of iPad-like tablets

The iPad is generally regarded as more powerful and user-friendlier than a smartphone. Compared with a netbook or a laptop, it is lighter and has a battery life. Mobile Internet devices were once touted as the bridge between smartphones and laptops, but their high cost, short battery life and limited OS and software options made it difficult for them to gain acceptance in the mainstream. Save for the price, the iPad does not have such drawbacks. This development has consequently opened the door for white-box makers in China to develop their own, lower-cost versions of the iPad.

Netbook companies were one of the first to launch touchscreen tablets sans keypads. The devices were fitted with the same hardware and OS as netbooks, but had decreased user experience and convenience. They were more expensive as well, which made it difficult to gain mainstream acceptance.

Slate tablets fitted with ARM-based systems made for a viable solution, particularly since Apple's iPads have an Arm Core CPU. Additionally, unlike ARM-based mobile Internet devices that ran on Windows CE or Linux, the new tablets have an Android OS, which is generally regarded as the OS that can compete head-on with Apple's iOS in the smartphone arena.

But although ARM-based CPUs have advantages over x86 structures, they have weak multimedia capability and support Windows CE and Mobile, and Linux. There are very few applications that run on Windows CE and Linux. Windows Mobile is expensive, costing between $10 and $20 per unit, and is still not regarded as a suitable option for smartphones.

The release of the Android OS strengthened ARM-based CPUs' smartphone capabilities. Because the free OS is open source, developers can create a multitude of applications for a richer multimedia experience.

Despite the fact that Android is open source, most of the available applications were developed by industry leaders, including HTC and Motorola. Such companies will not share their codes and experiences developing the applications with competitors. As such, China makers need to work closely with design houses in developing their own applications.

Further, not all netbook and PMP makers have the capability to develop tablets running on the Android OS. Such companies also turn to design houses that specialize in smartphones for R&D assistance.

Impact on portable electronics industry

As of May 2010, more than 60 percent of China's netbook makers have launched tablet PCs. Suppliers of portable media players have also jumped into the fray.

Compared with netbook makers, PMP suppliers are more familiar with handheld devices. Most have established marketing channels, mature production lines and long-term cooperation with design houses. As such, nearly all PMP companies are launching tablets patterned after the iPad. The only exception is the small group that focuses on audio-only devices.

Between the netbook and PMP industries, the latter is more likely to be affected adversely by sales of iPads and other slate tablets. Sales of white-box netbooks have been on the wane even before the iPad transformed the industry. Additionally, although sales are declining, there remains a stable market for netbooks that can handle basic PC functions such as word processing and computing. Similarly, while sales of e-book readers are also affected negatively, there is a niche for such products.

The newest tablets, however, are more likely to cannibalize PMP sales. Although they have similar functions, the tablets perform better and provide a richer user experience, be it in Web browsing, social network services or video streaming.

As with netbooks and e-book readers, slate tablets are not expected to wipe out sales of GPS units and smartphones. The tablets can be integrated with a GPS module and antenna, but doing so can generate signal noise, which can affect the GPS receiver. Smartphones, on the other hand, require wireless connectivity and location-based services, features that are not fully functional in most tablets. The main advantage such tablets have over smartphones, however, is cost. The price of an entry-level tablet is roughly 30 percent that of an Android smartphone.

Product range

Although the latest tablets from China are made to look and perform like an iPad, some have features the Apple device does not have. These include HDMI output and 720 or 1080p playback. Most models, however, have a resistive touchscreen, which does not support multitouch and is more suitable for use with a stylus. A few units have a capacitive touchscreen, but these are priced $30 to $40 higher.

Most China-made slate tablets have 7, 8 and 10in touchscreen panels with a 16:9 aspect ratio. A few companies, including Fujian Sanxi Electronics Co. Ltd, fit the tablets with the same LG Display touchscreens used on the iPad. Prices, however, can reach $350 per unit.

In general, low-end tablets are priced between $65 and $85 each. They have a 7in screen with an 800x480 resolution. Models run on Android 1.5 or 1.6, and support Wi-Fi connectivity, 720p playback, and MKV, AVI, WMA, RMVB and MPEG formats. Their OS cannot be updated to Android 2.0 or higher, but some have a G-sensor.

At $85 to $120 per unit, midrange versions have a 7 or 8in screen with an 800x480 resolution, 256MB RAM and Wi-Fi connectivity. They run on Android 2.1, have an HDMI output and G-sensor, and support 1080p playback and AVI, RM/RMVB, FLV, DAT, VOB, WMV, MPG, MPEG-1, MPEG-2, MPEG- 11, MP4/M4V and VC-1 formats.

High-end devices are from $120 to $350 each. In addition to midrange features, models may have a 9.7 or 10in capacitive touchscreen with a 4:3 aspect ratio, 3G connectivity and GPS.


Note: This article "iPad revives China's portable electronics industry" was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.

All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.

Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.

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