Canon digital camera EOS 5D [CFP]

According to research firm GFK, digital camera shipments in China are predicted to decrease by 3 to 4 percent this year due to the ongoing economic downturn. This is in sharp contrast to the 13 percent growth seen last year, during which period digital camera shipments reached 110 million in the country.

GFK said the market may not resume growth for a further two to three years as digital camera penetration in large Chinese cities, the major market engine in the country, is nearing saturation point after years of rapid growth.

"The digital camera, by nature, is a kind of entertainment product, which people will buy only when they have disposable income," said M K Wong, client service manager at GFK.

"So, it will be very difficult to grow this year under the current market environment."

However, Yoshioka said he was confident that Canon could still grow by 20 percent in China although the market growth itself is slowing. "Chinese consumers may become more prudent in making purchasing decisions at bad times but they will not stop buying digital products," Yoshioka said.

As part of its efforts, Canon released 17 new digital cameras in the domestic market mid-February. The company also launched a marketing campaign called "Hello, Color" and invested a great deal of money in setting up huge advertising posters in the metro systems in Beijing, Shanghai and Guangzhou to stimulate consumer demand.

"We do not plan to reduce our marketing spending in China this year because we regard China as the only country that can withstand the current global economic slowdown," said Yoshioka.

The vice-president pointed out that Canon plans to accelerate the expansion of its sales network to third- and fourth-tier Chinese cities, where digital camera penetration was lower and the market less impacted by the crisis.

In fact, Canon is not the only firm that is eyeing China to get through the current difficulties. Some Chinese competitors are also gearing up to challenge the Japanese company's dominance.

A manager at Beijing Huaqi Information Digital Technology, one of China's largest consumer electronics product vendors, said his company plans to take up to 5 percent market share in the local digital camera market this year, surpassing companies like Fujifilm, Panasonic and Kodak.

"The Japanese companies need to spend a huge amount in operations and marketing their products in China. We can release the same quality product at a much lower price," said the manager, who declined to be named.

He said his company plans to aggressively expand into third- and fourth-tier cities this year where consumers are more sensitive to low pricing.

Yoshioka, for his part, said Canon would be flexible in pricing but emphasized that Canon will not take part in any price war.

(China Daily April 22, 2009)