International Business Analysis

EC521

(University of Brighton, 2020)

Words count: 1913

Table of Contents

1. INTRODUCTION__________________________________________________________________________3

2. INDUSTRY ANALYSIS_____________________________________________________________________3

2.1 CONSUMER ELECTRONICS MARKET SIZE:____________________________________________________3

2.2 SWOT ANALYSIS_______________________________________________________________________4
2.3 RETAILS VOLUME WITHIN THE THREE MARKETS_______________________________________________5
2.5 GLOBAL DEMAND FOR ELECTRONIC PRODUCTS_______________________________________________5
2.6 THE MAJOR PRODUCERS WITHIN THIS MARKET________________________________________________6
2.8 THE STRUCTURE OF THE INDUSTRY_____________________________________________________7
2.9 THE MAJOR TRENDS SHAPING THE CONSUMER ELECTRONICS INDUSTRY___________________________8
2.10 THE IMPACT OF GLOBAL GROWTH ON THE INDUSTRY_________________________________________8

3. MACROECONOMIC PERFORMANCE_______________________________________________________8

3.1INDIA__________________________________________________________________________________8
3.2 CHINA________________________________________________________________________________10

3.3 UNITED STATES_______________________________________________________________________10

3.4 GDP PER CAPITA IN EACH OF THE THREE COUNTRIES_________________________________________11

3.7 GENERAL GOVERNMENT GROSS DEPT_____________________________________________________12

4. MODE OF ENTRY________________________________________________________________________12

6. THE POLITICAL, LEGAL, AND CULTURAL SITUATION OF INDIA_________________________13

7. CONCLUSION________________________________________________________________________14

REFERENCES_____________________________________________________________________________15

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1. Introduction

This report will analyse the global consumer electronics industry. The evolution and the
forecast for this market will provide a clear understanding of the risks and benefits of a
possible investment. The content will be structured as follows: a complex industry analysis
including a SWOT framework, the macroeconomic performance of the three biggest consumer
markets, and a report on two factors: Mode of entry and Political, Legal, and Cultural factors.

2. Industry Analysis

The current and future trend 5G wireless connectivity has given a big advantage to the drivers
of consumer electronics. The major consumer markets that took advantage of this upgrade
and placed themselves on top of the list are China, the USA, and India (Euromonitor,2022).

2.1 Consumer electronics market size:

Figure 1

Market size
600,000.0

400,000.0

200,000.0

0.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

China Consumer Electronics Retail Volume 000 units India Consumer Electronics Retail Volume 000 units
USA Consumer Electronics Retail Volume 000 units

(Euromonitor, 2022)

As illustrated in figure 1, over 10 years these companies have developed and grown
steadily, however they confronted and still do, many obstacles. COVID-19 and the war
between Russia and Ukraine affected the industry globally and influenced them to adopt
constant change (Euromonitor,2022).

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2.2 SWOT Analysis

SWOT Analysis highlights the strengths, threats, opportunities, and weaknesses of the
consumer electronics industry.

Strengthts Opportunities
Continuos technological Become more sustainable
growth Increase revenue
Positive impact on well-being Expand globally
Increase in household demand

Threats Weaknesses
Inflation rate Global pollution
Income fluctuations Cost of living crisis
New competitors E-waste
Covid 19 Component shipment delays
War between Russia and
Ukraine
Increase production costs
Barriers within the market
Energy crisis

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2.3 Retails volume within the three markets

Figure 2

Consumer electronics Retail volume

3,500,000.00
3,000,000.00
2,500,000.00
2,000,000.00
1,500,000.00
1,000,000.00
500,000.00
0.00
2018 2019 2020 2021 2022

Consumer Electronics Retail Volume Computers and Peripherals Retail Volume

In-Car Entertainment Retail Volume In-Home Consumer Electronics Retail Volume
Portable Consumer Electronics Retail Volume

(Euromonitor,2022)

Across the three countries discussed previously, consumers are purchasing different
types of products from in-car entertainment to portable electronics. However, looking at
figure 2, the leading products are computers and peripherals (Euromonitor, 2022).

2.5 Global demand for electronic products

Several major issues had influenced the demand for electronics. The pandemic
made consumers think twice if they need a product and save money for food and
medical expenses. Consumer electronic demand had fallen through this period,
however, this changed rapidly as consumers needed to work from home and purchase
equipment (Euromonitor,2022).

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2.6 The major producers within this market

Samsung, Apple and BBK Electronics Group.

Figure 3

Company shares
20
15
10
5
0
1 2 3 4 5 6

Samsung Corp Apple Inc BBK Electronics Corp Ltd Xiaomi Corp

Figure 4 provides insights into the companies that lead the industry, specific
characteristics of their structure and mode of operation.
Apple manages to run their processors to reduce production costs offering a wide
range of products at low prices to be available for people with low income
(Euromonitor,2022). Nevertheless, Chinese products had penetrated both emerging
markets and developed markets. Even if, Xiaomi is growing fast, the Chinese brand is
not allowed to enter to US market.
On the other hand, Samsung remains the main alternative for premium products if
the apple chain is not the first choice for consumers. Samsung and Apple are keen to
compete on prices only in critical markets like India, as their economy of scale makes
them unaffected by supply chain uncertainty (Euromonitor,2022).

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 2.8 Forecast

Figure 4

(Euromonitor,2022)

In the next 5 years, the consumer electronics industry is predicted to grow

significantly. The growth of this industry is influenced by increasing atomization, Covid
19, and government policies. The forecast for the r next 5 years is favourable because
companies will increase demands by focusing on research and development (CISION,
2022).

2.8 The structure of the industry

China can be considered a monopoly as it has the majority of components within

the country. Part of Honor brand, Shenzhen Zhixin New Information Technology is
planning to extend from China to reach customers globally. On the other hand, Apple is
no longer in need of Intel as it develops processors and Nokia has started to invest in
India (EMSNOW, 2022).

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2.9 The major trends shaping the consumer electronics industry

1. Prices fluctuate due to inflation and production costs

2. The point of differentiation is the attention to design
3. Consumer health is prioritized
4. A big part of financial resources to be allocated for new technology
5. Becoming more competitive
(Euromonitor, 2022)

2.10 The impact of global growth on the industry

The businesses within the consumer electronics industry are pushed to grow globally and
invest in research and development. Consumers had shifted their attention to health and
products that help them become more conscious about their bodies and mind. Therefore, the
technology offered them exactly what they need and developed new ways to track health and
improve well-being. Products like air pods used to listen to music and therefore release stress
and anxiety, smartwatches to track physical activities and even sleeping patterns, and apps
that help people meditate are used frequently around the world (Euromonitor, 2022).

Investing in new technology is the main focus for companies to grow their businesses.
Because of widespread usage, Artificial Intelligence plays a vital role in the electronic industry.
Businesses are looking forward to investing in developing IA technology to enhance their
products and create innovative technology (Euromonitor, 2022).

3. Macroeconomic performance

3.1India

The consumer electronic market size has a value of USD 71.17 billion in 2021. Therefore,
India is considered to be the fastest-growing big economy in the world (The Economist,2022).
Moreover, from 2020 to 2030 this market is predicted to have a compound annual growth of
6.5% (Grand View Search, 2022).

Significative factors such as increased disposable income and therefore, increased household
demand for electronics, easier-to-access credits, and the need for equipment to work from

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home had influenced the industry to grow. The government had reduced the import bills, and
spending, and focused on facilitating foreign businesses to invest (Grand View Search, 2022).

Figure 5

(Grand View Search,2022)

As per figure 6, the CAGR of the Indian consumer market is predicted to reach 6.5 by 2030
pointing to smartphones bringing the majority of revenue. New factories dotted with the solar
system are built and the ecosystem for a start-up business is favourable. In 2019, were
founded 1300 start-ups and the number increased massively to 8900 total, from them 24 are
evaluated with more than $1 billion. Moreover, India is considered to be the third-largest global
start-up ecosystem (Arete Ventures, 2022).

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3.2 China

China was considered the place for manufacturing capacity for electronics for more than
half of the world including mobile phones in 2018. Apple had operated 357 facilities in China
and only 63 in America. The majority of components for production are within the country and
high-end parts come from abroad. While in China, the labour cost has gone up between 2011
and 2016, in India labour is far lower (The Economist, 2018).

However, their economy may be affected by the cost of production and shortages of power
supply, lockdown, and inflation (SAP,2022). China surpasses the US in 2014 as the largest
economy in the world and promised to combat climate change by reducing carbon dioxide
emissions between 2025 and 2030. In 2010 China become the largest exporter and in 2013
(Factbook, 2022).

3.3 United States

The lack of supply from China during the pandemic influenced the US companies to
shootdown several manufacturing centres. Another factor that contributes to US and China
trade connection, is the tension relating to Taiwan (SAP, 2022).

US companies such as Target and Walmart are going through a difficult time as they have
overfilled their stock because of their fear relating to lockdown and they may have to clear the
shelves causing financial loss (Euromonitor, 2022).

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3.4 GDP per capita in each of the three countries

Figure 6

GDP per capita

120000
100000
80000
60000
40000
20000
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

China, People's Republic of India United States

(IMF, 2022)

As illustrated in figure 8, there is a massive difference between the GDP of each country as
the USA has the biggest input and India has the lowest. The US has 23.93% of shares of the
Global Economy, and China has 18.45% and occupies second place since 2000. China has
released collectivized agriculture and industry and become an open economy. On the other
hand, India has the lowest GDP per capita 8.9% because it has a large population
(Investopedia, 2022).

3.6 Inflation rate

Figure 7

Inflation rate ,average consumer prices

12

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

China, People's Republic of India United States

(IMF,2022)

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In recent years, the inflation rate fluctuated because of covid 19 and the war between Russia
and Ukraine which led to an increase in energy and gas prices (Finance Feeds, 2022).

3.7 General Government Gross Debt

Figure 8

General government gross debt( percent of GDP)

350
300
250
200
150
100
50
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

China, People's Republic of India United States

. (IMF,2022)

Figure 10 highlights the hat USA is on top of the list of gross debt per cent of GDP, whiles
China has a minimum, and India is placed between these two countries (IMF, 2022). The high
national dept of US is influenced by being the producer of the reserve currency (Investopedia,
2022). Furthermore, the US has a loan of $216 billion from India (The Hindu, 2021). On the
other hand, the external debt of India is placed in the 23rd position when compared with a
cross-country context (Ministry of Finance, 2022). China has released collectivized agriculture
and industry and becomes an open economy which benefits them financially (Investopedia,
2022). When measuring by the size of the economy, China has a high level of debt caused,
mainly, by the Covid-19 pandemic (CNBC, 2021).

4. Mode of entry

The chosen country to invest in is India as this country is becoming the world leader in supply
chain overcoming China (The Economist,2022).

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New factories dotted with the solar system are built and the ecosystem for a start-up business
is favourable. In 2019, were founded 1300 start-ups and the number increased massively to
8900 total, from them 24 are evaluated with more than $1 billion. India is considered to be the
third-largest global start-up ecosystem (Arete Ventures, 2022).

It seems apparent then that the most efficient and advantageous way of entering this market,
in India, is through a joint venture. Consequently, foreign firms do not need approval from
Indian partners to function independently and the NOC is not required anymore in India (India
Briefing,2020).

6. The political, legal, and cultural situation in India

India is a democratic country but used to be the country with the largest population of poor
people (The Economist, 2014). Nowadays, India has enough labour to follow up with the
growing market but the fact that the labour is the mostly young generation, they need to be
properly trained to be able to follow the manufacturing processes. Besides the fact that India
has more access to raw materials, the infrastructure still needs to be consolidated (EMSNOW,
2022). The Indian government speeds up business applications and upon reflecting on tariff
laws for foreign companies and already received applications for a total of $20.5 billion
(EMSNOW, 2022).

There is a long path in starting up a business as the Indian procedures are taking around 27
days which is above the OECD. Other delaying factors include a long time to enforce a
contract and a long list of documentation for exporting and importing goods. However, the
process can be facilitated by having local help as India has a solid financial system (TMF,
2022).

Another issue to contend with is that India scores an average of 45 out of 100 on the 2021 CPI
index, being in the same situation for over a decade. Moreover, they do not have yet
legislation criminalising foreign bribery and corruption (Transparency, 2022).

On the other hand, in order to reduce the effect of government regulation and red-tapism, India
provides start-ups with a three-year tax and compliance (Law Insider, 2022).

From a cultural point of view, India is a country that appreciates building relationships more
than financial figures. Their multicultural society requires adaptability and hierarchical respect
to have a successful business (TMF,2022).

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There are several legal obstacles for start-ups in India. Permits and licences that take a long
time to achieve, concerns about the zonal infrastructure laws for any possible construction,
Privacy and Data Protection as a result of digitalization and marketing, as India prohibits
certain products to be advertised (TMF,2018).

The risk of expropriation in India is low due to the government acting towards strengthening
this regulation. (Marsh, 2021). On the other hand, Pakistan is a weak point for India as the
Taliban of Afghanistan is considered a threat (USIP, 2022).

7. Conclusion

Overall, the consumer electronics market size increased faster than the global economy and
was ranked 3rd Global Manufacturing industry and the 13th largest (IBISWorld, 2022). This
industry is highly attractive for investment as it has continuous growth and is enhanced by the
fastest-growing retail channel, Ecommerce (Emmy Le, 2020).

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