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CeBit Shanghai: Small show, many gadgets

At Shanghai's CeBit Consumer Electronics trade fair, Chinese businesses show off their digital savvy. Potential success stories lurk in the aisles.

SHANGHAI, China--The sales manager of a Taiwanese-Chinese contract manufacturer showed off one of the better deals at the CeBit Consumer Electronics show here: a 15-inch, wall-mountable, flat-panel television, flanked by stereo speakers that could also double as a PC screen. It sells for $350.

"But I can get it for you for 20 percent less," said the sales manager, who gave his name only as Michael. "It comes out in June."

Michael, who also works at night with a friend who owns a rival company, embodies a dogged determination for a deal that catches the spirit of the three-day consumer electronics fair. Hoping to take advantage of low labor rates and improving export laws, Chinese businesses are angling to become the backroom manufacturers for U.S. and European companies, a job currently held by the Taiwanese.

Like the Taiwanese companies before them, Chinese manufacturers are starting with the basic products--connectors, batteries, speakers and so on--but are teaming up with established Asian manufacturers to produce LCD screens and motherboards.

For many--even established U.S. companies such as software maker Borland--a trade show debut here is a small one. CeBit occupies one wing of the massive Shanghai New International Exhibition Center. An event of the Asia-Pacific international plastics and rubber industry is taking place in the second, while three more wings are being prepped for other events. Fewer than 10,000 visitors are in attendance, according to the CeBit Web site.

"This is the smallest CeBit I've ever seen," said Wojtek Kolan, business development manager at KCUK, a London-based import-export company that deals in Pentium 4 processors, mobile phones and LCD screens. Nine months ago, his company began exporting electric scooters from China. They cost $160 or less but resell in London for just under $600. KCUK started selling electronics a few months ago.

"China is expanding, but the quality is lower than in Taiwan or Korea," said Congliang Liu, Kolan's partner.

Nonetheless, potential success stories lurk in the aisles. Voica, a home entertainment designer, is shipping mini stereo systems to the United States and Japan that are then marketed under local brands. The company, which last year pulled in $10 million in revenue, is also negotiating with Wal-Mart to bring a home theater system to the United States, according to Phillip Liu, vice president of sales. The unit comes with a DVD player, the speakers and a subwoofer, and it sells for $130 in volume quantities.

Many others are promoting in-car TV systems. Sindan is selling miniature CRT (cathode ray tube) televisions with 15-inch and 17-inch screens for $110 and $170 in volume quantities, according to sales manager Tricia Kyo. The company also sells 8-inch flat screens, priced at $270, that fold down from the car roof. DVD players designed for cars sell for $85, according to Jeff Wang, president of EGA Technologies. In-car VCRs with screens sell for less.

Comet Electronics, meanwhile, will release an English-Japanese-Chinese translator in September, according to company representative Sarina Choi. Consumers dictate words into a microphone, and the corresponding words in the other two languages come out of a speaker. It will sell, in volume quantities, for $15 to $18.

"Retail prices are three times higher," she said.

Conversely, foreign companies are at the show to promote products for the local market. CMC Magnetics, a major Taiwanese contract manufacturer, showed off a Pocket PC for the Chinese market that's due in the fourth quarter. Although Microsoft has been aggressively pushing into the Chinese market, local consumers still prefer handhelds containing the Penbex operating system, developed for Asian markets.

"Pocket PC is more expensive," said Jason Wu, product manager for CMC.

Similarly, Korea-based Samsung displayed a variety of camcorders, notebooks, DVD units that serve as personal video recorders, portable DVD players, printers and LCD screens. The company's main difficulty with some products lies in high import taxes.

"We have to pay 22.5 percent in import taxes on mini-DVD recorders and 17 percent value-added tax," said Ivan Coong, marketing manager for Samsung Hong Kong. To get around that, he said, "we are planning to manufacture cameras in China."

Some devices here seem to show that convergence knows no bounds. Sunca Electric Products displayed a CD player/radio unit with a built in survival lantern for $24.

And not to be outdone, Ultraview Technology showed off a recliner with a flat-panel television on a reticulating arm.

"It's for long-distance bus trips," said Gary Ching, vice manager of the sales department.