MP3 sunglasses

	The 102B from Shenzhen Telstar supports MRS, WMA, WAV and DRM 9 files. It is available in 32MB, 64MB, 128MB, 256MB, 512MB and 1GB versions.

The hub expects a more than 20 percent increase in production volume and value in the next two years.

China, with its flash MP3 player supplier base of 300 manufacturers, churns out more than 20 percent of the product's global output. Guangdong province is the region's production hub, hosting the operations of more than 60 percent of the makers. Its major cities of Shenzhen and Dongguan have about 80 to 100 and 30 to 50 makers, respectively. Another key city, Zhongshan, is also a manufacturing center for flash MP3 players. Other makers are spread over Shanghai and Suzhou in Jiangsu province.

About 80 percent of the enterprises in Shenzhen are mainland China-owned and the rest are foreign-invested, mainly from Hong Kong and Taiwan. Thirty percent of mainland companies and more than half of non-mainland suppliers conduct large-scale manufacturing, with capacity exceeding 100,000 units monthly.

Despite the competition, more new entrants from both in and out of China are expected to join the line in Shenzhen, especially with the forecast sustained growth of more than 20 percent for 2008 and 2009. Last year, the city industry achieved an increase of more than 20 percent in production volume and value, with total output hitting an estimated 22 million units worth $620 million. In 2006, Shenzhen's output was at 20 million units valued at about $520 million, or two-thirds of the region's total shipment.

Like most electronic industries based in Shenzhen, the flash MP3 player line enjoys the advantages offered by the city's special economic status, which includes an open trading environment and preferential industry policies. This decades-long distinction extends to Shenzhen's mature manufacturing chain covering high-quality, low-cost raw materials, components and services.

Among these services is product research and development. A number of domestic and foreign companies have set up R&D centers in Shenzhen, no doubt because the city attracts specialists from various fields and continues to receive technology support from local universities such as Shenzhen University.

For MP3 player makers, the city gives easy access to imported key components like flash memory via Hong Kong. Suppliers also benefit from the close contact with overseas customers and technology partners that Shenzhen also provides.

Almost all makers based in the city are involved in exportation, with the majority shipping more than 60 percent of their flash MP3 players overseas. Many also export by way of Hong Kong.

Among the suppliers' primary export markets are Europe, the United States, East Asia, Southeast Asia and the Middle East. Between 30 and 60 percent of Shenzhen makers' total exports are under OEM and ODM projects. These makers are expected to focus on their overseas businesses in anticipation of an average annual growth rate exceeding 20 percent in the years to come.

Most manufacturers in Shenzhen offer various types of flash MP3 players to suit customer requirements. Mainstream models have more than 2in TFT-LCD screens and 1GB memory. According to makers, popular among domestic and overseas customers are models that support multiple formats, added functions, long playback time and high sound quality.

To keep buyers interested, makers accelerate their product development and release new models. On average, suppliers have more than 10 staff members dedicated to product development. Shenzhen Telstar Co. Ltd employs a 100-member product development team to attend to its customers' various design requirements at shorter lead times.

More Star Industrial Ltd uses private molds rather than public molds to differentiate its products from the competition. The company will continue to focus on cosmetic design to widen its product selection.

Shenzhen Gold-East Electronic Co. Ltd jointly develops new products with its customers. It has international and national patents for techniques used in its products.

	Friendship Star's FD-2011 has a 2in TFT LCD and built-in radio. It is compatible with MP3, WMA, Ogg Vorbis and APM formats.

Interviewed companies have been in the manufacturing business for sometime—Shenzhen Telstar began its operations in 1995, Shenzhen Gold-East started in 1996, Friendship Star Int'l Ltd began in 2000 and More Star in 2002.

Shenzhen Telstar and Shenzhen Gold-East are planning a production expansion, with the former projecting it at more than 30 percent this year. Friendship Star and More Star will maintain current production levels. Some of these makers also plan to acquire advanced manufacturing and testing equipment to further boost production in the coming years.

Each of the four companies maintain an ISO 9001-certified factory in Shenzhen. Some of them secure product approvals such as CE. Besides flash MP3 players, they also produce LCD TVs, USB flash drives, DVB-T receivers, computer headsets and digital photo frames. Flash MP3 players account for 25 to 80 percent of all four makers' total sales revenue.

For flash MP3 players, these makers are utilizing more than 80 to 100 percent of their capacity. Shenzhen Telstar's monthly capacity is 400,000 to 500,000 units. Shenzhen Gold-East puts out 100,000 flash MP3 players a month, More Star has 150,000 units and Friendship Star records 10,000 units.

Their total sales are $80 million for Shenzhen Telstar, $30 million for More Star, $10 million for Shenzhen Gold-East and $5 million for Friendship Star.

With the exception of Shenzhen Telstar, which exports 95 percent of its products, the three other makers ship their entire output overseas.