Recent predictions by Moody’s investor service show a down trend for the Asian consumer electronics industry. The negative outlook of the company reflects the macro-economic and sector-wise structural changes inAsia.
The Asian markets are undergoing radical structural changes which include commoditization and maturation of markets for audio-visual and digital products, increasing demands for smartphones and fierce competition. This made the investor service company predict a low operating margin of 3 per cent. The outlook forJapanis even lower at just 1.5 per cent.
The Moody’s have released a detailed report on the outlook for Asian markets which states weak demand and structural demands as the reasons for the colorless outlook. The outlook also intends Moody’s expectations for the market conditions inAsia over the coming months.
The report places a detailed prediction that the markets in the US, Europe and Japanwill show a downward trend which constitutes 50 per cent of the market in the consumer electronics industry. The sales forChina are also predicted to slow down from the current pace of 10-15 percent. All these are a result of sick demands for digital AV products and declining prices of flat panel display TVs. In addition, the Chinese manufacturers are growing to a vast expanse which is sure to take the competition to higher levels. This in turn, will weaken Japanese manufacturers, who are already struggling with high-cost structures.
When all this is happening with the audio-visual gadgets there is something to smile. The demand for smartphones is growing and the outlook also shows a positive trend. Samsung has had a great year in 2012 and is expected to retain the crown in smartphone sales. This comes as a result of Samsung’s enduring product innovations. But it is sad that the market of other consumer electronic items inAsia will be adverse.
The investor service, Moody’s is ready to change its outlook once the market conditions change but for the operating margins to improve, the demand-supply curve must show adequate changes along with pricing and competition.