Yifang's EM715 is available in 128MB to 2GB capacity. It supports SD/MMC cards.

Mold makers, EMS providers and distributors of imported components help Shenzhen manufacturers lead in flash MP3 player production.

The flash MP3 player industry in Shenzhen, Guangdong, mainland China is made up of about 200 small- to largescale manufacturers, or about 67 percent of the total number of suppliers in mainland China. The majority of these makers are relatively new in the industry, having entered the line only between 2001 and 2004, when demand for the product increased significantly.

Shenzhen makers turn out about 70 percent of the region's supply of flash MP3 players, easily making the city a major sourcing center. According to industry sources, makers in Shenzhen shipped about 25 million MP3 players in 2005 and converted about $300 million in sales. The volume output is expected to increase by 30 percent in 2006.

Among the primary reasons for the prominence of Shenzhen as a sourcing center is the early development of its electronic industry. Along with the cities of Zhuhai, Shantou and Xiamen, Shenzhen was declared as a special economic zone in August 1980. The classification further boosted the city's status as a primary hub for high-technology manufacture.

Favorable governmental policies sustain the city's advantage. Both the provincial and city governments implemented a series of policies and financial assistance programs that support the development of more related industries. These include the continuous designation of more industrial and export processing zones, technology parks, and free trade areas within Shenzhen's borders.

Shenzhen sits at the mouth of the Pearl River Delta. Hong Kong lies in the south while Dongguan and Huizhou are in the north. Shenzhen's international seaports in Yantian and Nanshan, and its airport in Bao'an link mainland China with overseas markets.

Shenzhen has six districts and the majority of makers maintain manufacturing facilities in Bao'an and Longgang districts because of relatively lower land cost and adequate labor force.

The sales offices and headquarters of these makers are based in Luohu, Futian, Nanshan and Yantian-all within the special economic zone. For instance, Keen High Technologies (HK) Ltd's headquarters is in Futian while its factory is in Bao'an. Egoman Technology Ltd's main office is also in Futian while its factory is in Longhua. Nanshan also hosts a sizable number of MP3 player manufacturers.

The number of suppliers in Shenzhen has grown in 2006. Most makers, however, adopt common molds and only handle final assembly, QC and packaging. Most production processes such as mold-making, plastic injection molding, SMT and R&D are subcontracted to other mainland suppliers.

These makers generally turn out 5,000 to 20,000 MP3 players monthly. There are about 10 large-scale makers that produce more than 200,000 units. Medium-scale suppliers average about 100,000 to 200,000 flash MP3 players per month.

Most manufacturers, however, expect the number of small-scale makers with common molds to thin out due to fierce competition. These small-scale makers also lack the critical advantage of sourcing flash memory and chipsets at competitive costs. Manufacturers that lack mold design capability and steady volume orders are expected to exit the line by the end of 2006.

Most flash MP3 player makers in Shenzhen also produce other electronic products such as portable media players, USB storage disks, PC cameras, multimedia card readers, GPS navigators and receivers, mini speakers and headphones. For example, Netac Technology Co. Ltd is among the largest suppliers of mobile storage and wireless data devices in mainland China. The company began manufacturing MP3 players in 2003.

In 2006, some large-scale MP3 player makers in Shenzhen also plan to produce GPS navigators and receivers, DVB-T receivers and car A/V devices.

Among the many advanced electronics companies in Guangdong province are the numerous electronic manufacturing service (EMS) providers in Dongguan and Huizhou. These subcontractor factories for components, EMS and mold making sustain many Shenzhen flash MP3 player makers. These EMS companies also support new suppliers that only concentrate on general assembly, QC and packaging processes.

Other service providers for cosmetic and software design, as well as for plastic injection molding, are present in the area. With these allied sectors, makers can easily outsource part of their production, expand their capacity, or adjust their product development and focus on the requirements of overseas customers.

Suppliers of components such as PCBs and batteries can also be found in Shenzhen. Distributors of imported ICs and flash memory, such as Samsung and Hynix, have branches and offices in Shenzhen, which offer technology support for manufacturers.

Other MP3 player solution providers such as mainland China's Actions Semiconductor Co. Ltd is in nearby Zhuhai. Another solution provider, SigmaTel, opened a branch office to provide immediate technical support to the increasing number of mainland China flash MP3 player makers. SigmaTel is among the largest suppliers of audio SoCs for flash MP3 players. The branch in Shenzhen is SigmaTel's third in Asia.

Shenzhen also continues to attract a large number of skilled workers, managers, and software and hardware engineers that are vital to the MP3 player industry. A growing and highly urbanized city, Shenzhen attracts foreign trade sales professionals with multilanguage skills that often help makers expand their overseas businesses.

MP3 player makers, in general, emphasize their export business to avoid the fierce price wars in the domestic market. For many export-oriented MP3 player makers, the share of exports in their total output is about 70 percent to 100 percent. Most of these makers are experienced OEM and ODM suppliers.

Sales to clients of OEM and ODM products account for a great portion of sales among makers. Europe and the United States account for more than 60 percent of total export sales. Other major overseas markets include the Middle East, Southeast Asia and Africa.

Both Keen High and Egoman export all their output to overseas markets. The former also ships all output to OEM and ODM buyers such as Wal-Mart (UK and Canada), Teac (Germany) and TrekStor (Germany). Egoman exports 70 percent of its output to OEM clients such as Samsung and Wal-Mart.

Shenzhen Yifang Digital Technologies Co. Ltd exports more than 70 percent of its output to Western Europe and Southeast Asia. Some of the maker's OEM buyers include Wal-Mart and Carrefour. In 2005, 20 percent of its output went to ODM clients.

Kinwei Technologies Co. Ltd exported about 95 percent of its MP3 players to overseas markets. Europe is its biggest market, which accounts for 30 percent of its total export sales. North America and Southeast Asia have 20 percent share each. OEM and ODM orders from clients such as Carrefour, Cn Memory and Extrememory represent about 90 percent of Kinwei's business.

Most factories in Shenzhen are ISO 9001:2000-certified. To expand their overseas markets, makers have also acquired certificates such as CCC, CE, FCC and E-mark for their products. Most makers also actively participate in international electronics trade shows such as CES (US), IFA Audio Video (Germany), CeBit and Hong Kong Electronics Fair.

Suppliers of MP3 players, in general, will increase their output to maintain their competitive edge. On average, makers will increase their capacity as well as their output by 30 percent in 2006. To cut down on costs amid greater production, manufacturers make large-volume purchases of flash memory and chipsets.

Yifang plans to increase its total sales and export revenue by 10 percent. For its flash MP3 player line, it expects to increase sales and export revenues by 79 percent and 65 percent by end-2006, respectively. Keen High targets a 200 percent increase in its flash MP3 player output in 2006, and some $100 million in sales. Egoman is set to increase its production volume by 25 percent in 2007.

In 2006, Kinwei expects to double its sales to $50 million with about 60 percent coming from MP3 player sales. Since its factory is operating at nearly full capacity, Kinwei plans to add more production equipment and test devices to meet increasing demand. Kinwei's plan was to expand its production area to 10,000sqm in October 2006. Its monthly capacity of MP3 players is 300,000 units. As of Q2 2006, Kinwei's average monthly output was 200,000 flash-based memory MP3 players and 50,000 non-memory MP3 players with built-in card readers.

Yifang, established in 1992, has 14 production lines with a monthly in-house production capacity of about 1 million MP3 players. In 2005, Yifang produced 4.45 million units and exported about 3.86 million. It mainly produces flash-based products, including USB flash disks and PMPs. Yifang's 5,500sqm factory in Shenzhen houses 670 employees, including 450 production workers, 80 QC personnel and 90 R&D engineers. Its products are shipped worldwide. In 2005, it had about $85.55 million in total sales.

At present, Keen High's facility houses 13 SMT lines but it plans to add six more in the near future. In 2005, the maker turned out 2.5 million flash MP3 players. It has a monthly capacity of 800,000 units with a current average monthly output of about 600,000 units. The company makes its own mold designs.

Egoman, established in 2000, has a 5,200sqm factory and employs about 800 workers. It has a near-capacity output of 300,000 units per month. It plans to add several production lines.