Monday, May 09, 2005

China-zation of hifi manufacturing

China made hifi products spark controversy. Just like for many other industries, China is becoming "world's factory" for hifi products. Remember that over 90% of world's DVD players are already manufactured in China. Although the xenophobics cry loud about low salaries, work conditions and demand at least revaluation of yuan against major currencies, the undeniable trend is that it's very difficult for Western hifi companies to compete against Chinese producers in price (and quality?).

Western hifi-industry has chosen two distinctive strategies to deal with and benefit from Chinese comparative advantage. First, respective hifi-manufacturers have outsourced part of their (low price point products) production to China to exploit the cost savings to create budget ranges, like British Mobile Fidelity (with its X-serie).

Second, there are multiple of new companies, who have design shop in Western countries and manufacture actual products with a chosen partner in China. For most people, Mark Levinson's (in person, not a company) decision to launch his Red Rose brand with Chinese partner was an eye-opener, examples today are Melody (Australian), Vincent (German), Audreal (France), and PrimaLuna (Dutch). Some of these joint ventures result in truly new product designs, some are re-labeling or slight modifications of existing Chinese products. PrimaLuna, in particular, have had a spectacularly successful launch, clearly benefiting its European founders' connections with audio journalists and distributors (see Upscale Audio's site for more information).

One should equally bear in mind that established Chinese hifi-manufacturers are entering the Western markets directly, like Cayin, Shanling, Antique Sound Lab etc. People tend to forget that Chinese HE-market has existed over 2-decades, but mainly serving the domestic market. Check, for example, Jungson. Please see my posting on May 15 for reviews of various Chinese origin amplifiers. Plese bear in mind also that Chinese companies are acquiring Western companies in order to capitalise on the existing brand recognition, example here is Quad.

Viewpoint: I have to wonder how Quad ESL owners feel about theirs "British" speakers being actually Chinese? Quad is owned by Chinese consortium IAG, and all Quald speakers are now wholly manufactured in China. Don't get me wrong: if cheaper manufacturing costs allows the brand to survive and results in putting a product to consumers' listening room through competitive retail price, I'm the last to complain. I'm just curious. The last review of Quad ESL 989 I'm aware of is in January 2005 issue of French Haute Fidelite. Conclusions: build quality 3/5, musicality 2/5, and quality/price 2/5 stars. Quite a difference vis-a-vis earlier Anglo-Saxon reviews, n'est pas? Inconsistent production run, or then maybe not? The IAG's manufacturing facilities are ISO 9001 certified, which means that they should have strict standards for quality control and quality assurance.

There are pictures on-line of Stereophile's Wes Phillips' visit to examine IAG's manufacturing facilities in China. See also Stereophile's April 2005 eNewletter for actual article.

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