Model 635DUC is a mini hi-fi system from Goldyip, which supports MP3, CD, DVD, MPEG-4 and VCD playback.

Makers release new models for more options as they tackle renminbi appreciation and shortage of skilled labor.

There are about 20 hi-fi system makers in Guangdong province's Dongguan. Most of these makers have been engaged in the development and production of home theater systems, and their product lineup covers a variety of speakers that include hi-fi systems. Guangzhou, which is north of Dongguan, is another major production center for hi-fi systems, particularly for high-end models. Dongguan, on the other hand, offers other advantages such as a well-established manufacturing industry that focuses mainly on midrange and entry-level hi-fi systems, including mini hi-fi systems.

Dongguan's strategic location provides easy access to information, finance, manufacturing, transportation and component sourcing. The city is surrounded by prime electronic manufacturing sites like Shenzhen, Huizhou, Guangzhou, Foshan and Zhongshan.

Dongguan's hi-fi industry, in terms of production volume and turnover value, is not very big. The city accounts for only 20 percent of mainland China's hi-fi system production.

Companies in Dongguan have an average monthly output of 15,000 to 50,000 units. More than 90 percent of the output is exported through OEM and ODM channels. Own-brand hi-fi systems, meanwhile, account for less than 5 percent of overseas shipments.

Although Dongguan's $47.38 billion export value lagged behind Shanghai ($266.57 billion) and Shenzhen ($136.12 billion) in 2006, the city was able to establish a reputation as one of the emerging key production bases for high-tech electronic products.

Dongguan's hi-fi system industry continues to face challenges, including shortage of experienced employees, increasing material and manufacturing costs, and the renminbi appreciation against the US dollar. These issues have caused about 5 to 10 percent price increase in the past six months.

Nevertheless, Dongguan-based suppliers rely on their product development and export capabilities, and a wide range of entry-level and midrange units to cushion price increases. Companies usually take two to three months to develop a new model from the drawing board. New product development focuses on external designs, as well as on adding or improving value-added features such as USB interface, multiple card readers and built-in DVD players.

Key export destinations for Dongguan-based companies are Europe, Asia, North America and the Middle East.

	Goldyip's 8161Duc mini hi-fi system plays back DVD, SVCD, CD, MP3, MPEG-4, VCD and DVCD files

The city has a population of about 7 million, although many are not official city residents. This is because many workers come from remote towns and provinces and usually live in apartments and dormitories provided by their employers. As such, they cannot obtain official city residency.

In 2006, Dongguan was reported to have 6.75 million residents, but only 1.68 million were officially registered. The number, however, is expected to dwindle as laborers have opted to return to their hometowns due to mainland China's improving economy.

The problem of labor shortage has escalated during the last two years and has affected companies that rely on labor-intensive production. It has also affected suppliers of hi-fi systems because production mainly involves manual assembly.

The local government has been helping factories solve this problem. Several solutions include increased wages and benefits, and improved working and living conditions for the workers.

Established in 1994, Dongguan Yingxing Electronics Co. Ltd has been specializing in the production and export of audio electronics, including portable cassette recorders, portable CD players, hi-fi systems and mini component systems.

Yingxing Electronics has a 40-engineer in-house R&D department, enabling the company to release more than 20 new models every year.

The manufacturer purchases key components from Sony, Sanyo and Toshiba. Its monthly capacity is 350,000 units.

Yingxing Electronics exports more than 80 percent of its hi-fi systems to overseas markets, including Asia, Africa, North America and Europe.

Yingxing Electronics has a 25,000sqm factory in Dongguan, and employs more than 1,000 workers.

Dongguan Goldyip Electronic Science & Tech Co. Ltd has been manufacturing and supplying A/V products to major brands, including Sanyo and Toshiba, in Western Europe, North America, Asia and the Middle East since 1996.

Goldyip's in-house R&D department comprises more than 100 engineers. It can release a new model within one month.

Major product categories in Goldyip's catalog include DVD/VCD/CD players, flash MP3 players, cassette recorders/players, hi-fi systems and mini component audio systems.

The company's ISO 9001:2000-certified manufacturing facility covers a total area of 186,000sqm.