How to Enter Competitive Connector Market as a New Comer

The market share of Asia-Pacific region including China is increasing as the trend of electric and electronic parts manufacturers moving to Asia, while it is expected to be maintained or reduced in sales in the rest of the world. Hebronstar has analyzed the Chinese and Japanese markets to find out the ways to make market competitive and successful entry into the global connector market where large manufacturer-oriented market environment has formed.

First, Chinese connector market shows a very high growth rate (`17-`19 CAGR 20.2%) compared to the global market (`17-`19 CAGR 7.6%) as the world’s largest connector production base. What’s unique is that the Chinese connector market is divided into state-owned enterprises focusing on aviation, military and commercial products and private enterprises focusing on consumer electronics, automobiles, telecommunications products. Also, majority of end-users in China tend to purchase products directly (85%) without distributor. Furthermore, enough supply of connectors in China has led to increased pricing competition and downward trends in prices, making end-users sensitive to prices.

On the other hand, Japanese connector market is expected to overcome the decline over past few years by increasing facility investment and increasing mass production of connectors for automobiles of major players. As global and Chinese connector market, automobile and telecommunications are attractive market segments in Japanese market. However, there are three key characteristics in Japanese market : 1) There exists high royalty on Japanese products, 2) trading company-oriented distribution system and 3) common practices of distribution channel over the past years.

The market entry strategy for a new-comer in this competitive market is simple : 1) build a track record making revenue base, 2) reinforce capacity of quality and production, and 3) build relationship with cooperative companies in a long-term. New-comer needs to target accessible distributors actively to make foundation for sales and relationships while reinforcing quality and production capacity in a long-term growth. Keep in mind that the fundamental goal should be sustainable growth not in a single market but also in developed markets as a long-term approach.

 

 

Hebronstar Insight, Seoul
Park, Young Sun / Business Analyst