Liu Xiangdong: The Electronic Products Have Enormous Potential for Upgrading and Replacement

—By Liu Xiangdong 

China’s National Development and Reform Commission and other 6 departments, recently jointly issued a notice on "Several Measures to Promote Consumer Electronics Consumption," aiming to facilitate the continuous recovery of consumer electronics consumption. Compared to categories such as food and beverages, automobiles, etc., consumer electronics products undergo rapid upgrades, promptly reflecting new changes in fashionable consumer trends. This has become a focal point for driving industrial and consumer upgrades.

The domestic consumers' demand for electronic products has shifted from "whether it exists" to "how good it is," becoming more focused on individuality, quality, and cost-effectiveness. This has led to new trends in electronic product consumption. Firstly, there is an increasing trend towards high-end products. With rising incomes and living standards, consumers' demands for performance, fashion, and quality are increasing. There is a higher frequency of replacing electronic products, and high-performance upgraded electronic products are gaining popularity in the market. Secondly, the market is becoming more differentiated. The younger generation and older people have significantly different demands for electronic products. The "Z generation" favors fashionable and multifunctional electronic products, while those aged 60 and above prefer simplified products suitable for the elderly, driving manufacturers to adapt their products accordingly. Thirdly, there is a greater emphasis on green and healthy consumption. With the deepening of the green development concept, consumers pay more attention to the health hazards of electronic radiation and focus on the energy-saving and carbon-reducing effects of products. Fourthly, local brands are becoming a new consumer trend. With the increasing quality, brand recognition, and cost-effectiveness of domestic products, consumers in China prefer domestic brands. The younger generation is particularly willing to accept "Guochao/China-chic" new brands with Chinese cultural elements, considering local brands superior in understanding their taste preferences. Fifthly, channels are becoming more network-oriented. With the rise of e-commerce, live streaming sales, express logistics, and other online shopping channels, consumers are gradually adapting to online consumption patterns, fostering widespread demand for electronic products.

To adapt to and meet the domestic consumers' demands for quality, niche, green, and localization of electronic products, electronic product manufacturers need to accelerate the pace of product research and development innovation, driving the accelerated upgrading of electronic products. They should respond to market demands with higher efficiency, continuously experiment with applying new technologies to develop new products, lead in creating new demand through high-end supply, and consistently improve in practical innovation and appearance design to meet the diverse demands for personalized, varied, and cost-effective products. Relying on next-generation information technologies such as virtual reality and ultra-high-definition video, they should promote the high-end, digital, intelligent, and green development of products to foster new growth points in electronic product consumption. Enhancing the convenience of human-machine interaction, lowering the usage threshold for rural residents and middle-aged/elderly residents, with self-controllable and high-quality effective supply to meet and create demands, is crucial. Simultaneously, manufacturers and their supply chain partners need to continuously optimize the electronic product supply chain, provide full-lifecycle after-sales services, establish recycling channels for electronic products, promote the green cyclic development of electronic products, and offer consumers high-quality, multi-level, comprehensive products and services. Deeply tapping into the substantial consumption potential of different consumer groups.

To promote the dual upgrade of consumption and industry, effective government roles are necessary to create a market-oriented, legal, and international business environment. Identifying the organic combination points of implementing the strategy to expand domestic demand and deepening the supply-side structural reform, implementing systematic and effective policies, increasing the supply of new infrastructure, continuously optimizing innovative consumption scenarios, and stabilizing and expanding electronic product consumption are essential.

On one hand, actively adapting to new trends in consumer development, optimizing the electronic product consumption environment, nurturing new consumption models and formats such as online retail, online education, internet healthcare, etc., further improving the consumer rights protection system, especially protecting consumers' personal information and privacy. Timely promulgation of relevant supporting regulations on the purchase, use, and recycling of smart electronic products, accelerating the policy and industry standard formulation for desensitizing data and the compliant use of data, and legally combating "big data discrimination" and other improper uses of personal privacy, as well as illegal activities of obtaining and profiting from privacy.

On the other hand, there should be increased policy support for the upgrading and replacement of electronic products, with the formulation of relevant tax incentives, fiscal subsidies, and other support policies. Encouraging manufacturers to accelerate technological research and development innovation, supporting the industry in establishing a sound system of standards for smart electronic products, supporting manufacturers in improving the sales and distribution system for electronic products and the defective electronic product recall management system, supporting various regions in promoting the replacement of old electronic products with new ones, low-carbon transformation, and the distribution of home appliances to rural areas. Focus should be on eliminating obstacles to electronic product usage, building a favorable ecological environment for electronic product consumption, and further recovering and expanding electronic product consumption.

(The author is the Researcher of the Department of Macroeconomic Studies, China Center for International Economic Exchanges)

(The original article was published on Economic Daily on 23rd September, 2023)