Competitive Advantages and Regional Distribution of the Chinese Touchscreen Industry
Industry Introduction
The domestic touchscreen industry of China is still in the growth stage, and the industry concentration is low. Apart from a few touchscreen companies with complete intellectual property rights, there are much more manufacturing companies that do not own their own intellectual property rights.
At present, the main listed touchscreen companies in China include IRTOUCH, OFILM, Laibao Hi-Tech, Token Science, SUCCESS ELECTRONICS, etc. Most companies are mainly involved in the small-size capacitive screen except IRTOUCH which mainly deals with infrared touchscreen products. In recent years, an increasing number of companies have been scrambling to vigorously launched consumer capacitive screen projects, which has further intensified competition in the small-size touchscreen industry represented by the mobile phone touchscreen industry. At the same time, the medium-size and large-size touchscreen market ushers in more development opportunities with less competition.
The touchscreen industry does have some advantages even though it is not well-developed compared with touchscreen forerunners like North America, Japan, and Korea. Its advantage is not limited to price. It is estimated to grow by utilizing policy, location, and technology development.
Favorable Policy
In recent years, the touchscreen-related component and sensor manufacturing industry has benefited from a number of government industrial policies. The governmental support and promotion of the development and industrialization of core technologies such as flexible displays and smart sensors can be seen in industrial policy reports such as the "Guiding Catalog of Key Products and Services in Strategic Emerging Industries (2016 Edition)" and "The Catalog of Industries Encouraging Foreign Investment (2020 Edition)". These policies clearly state that the manufacturing of new-type electronic components and touch components are strategic emerging industries and the government encourages foreign investment. The application fields of touchscreen such as vehicle smart terminals, smart manufacturing, and smart home appliances, have been included in the industrial development plans and policies such as "Made in China 2025", "China's 14th Five-Year Plan and Outline of 2035 Long-term Objectives".
The support of industrial policy is the prerequisite for the survival and development of enterprises in the industry in China. At present, the introduction of the country's industrial policies has important guide significance for the development of the touch industry and the strategic layout of related companies. The market size of the touch industry will continue to grow with industry policy support.
Technology Development
The research and development of touchscreen products began in the United States in the 1960s, and the maturity and growth of this technology should be mainly attributed to the Japanese industry. With the continuous popularization of applications, the Japanese industry has developed a touch screen production process suitable for mass production and has gradually taken over more than 80% of the world's touch screen production capacity. In order to control the production technology, the Japanese industry has always insisted on not transferring the technology.
It was not until the 1990s that manufacturers in South Korea and Taiwan made breakthroughs in touch screen technology and mass production, and began to gain a place in the touch screen market. However, their production capacity and technical level are still relatively low compared with those of Japanese companies.
Compared with Japan, South Korea and Taiwan, the touchscreen manufacturing industry of mainland China started even later. Some of the initial manufacturers were mainly distributed in the Pearl River Delta region, the scale was relatively small, and most of the products they supply were in the middle and low-end fields. Most of them mainly produced resistive touch screens because the growth rate of consumer terminals integrated with resistive touch screens is much higher than others. Many companies had swarmed into the production and sales of resistive touch screens, and their manufacturing companies were mostly private or Taiwanese companies. However, due to the small scale, low technical level, and relatively poor production conditions, there was a big gap between its level and international standards in terms of technology and quality control. Moreover, most manufacturers were still focused on the production of digital touch screens instead of high-end analog touch screens. Due to its limitation of production capacity and poor quality-stability, it directly affects the cooperation with Japan, South Korea and other major players in the industry. At present, the Chinese touchscreen market only accounts for about 1% of the global market, but the development momentum is promising. It is predicted that the country's touch screen market will grow at an annual rate of 25% in the next few years.
The optimistic prospect of the touchscreen industry in mainland China is based on the policy level, technology development level as well as market competition level. The strong support of the national industrial policy will absolutely contribute to the industry; the technology is becoming more mature and applicable, which means the touchscreen products will take a bigger market and more abundant applications; the competition in the industry is relatively moderate, and there is no high degree of monopoly or excessive competition, which means it is a promising industry to enter.
The touch industry involves a long industrial chain, which requires not only huge capital and labor investment but also a certain accumulation of technology. At present, the touch industry chain is mainly distributed in Japan, South Korea, Taiwan, and mainland China, and the industry concentration is relatively high. Compared with Japan and Taiwan, the labor cost in the mainland has certain advantages.
With the in-depth development of the electronic information industry and the gradual expansion of downstream terminal market demand, the location advantages of touch screen manufacturers in mainland China are becoming more obvious. The continuous breakthrough of production technology and the realization of local replacement for some imported raw materials have made the industrial competitiveness of mainland enterprises grow. After the removal of epidemic control and lockdown, the production capacity of the touch industry will accelerate to transfer to China.
Domestic Industry Regional Distribution
China's touch display industry is mainly distributed in Guangdong and Taiwan. There are also many companies and factories located in Fujian and Sichuan Provinces. To name some representative listed companies here: Laibao Hi-Tech (002106), HOLITECH (002217), Token Science (300088), Triumph Technology (600552), etc. Each of these companies has its own areas of expertise.
For example, Laibao Hi-Tech's main business is R&D and production of flat panel display materials and touch and control components. Leading products include ITO conductive glass for small and medium-sized flat panel display devices, color filters, TFT-LCD panels, and medium and large-sized capacitive touch screens.
HOLITECH is a manufacturer and solution provider of liquid crystal displays, touch modules and smart hardware products, integrating development, design, production and sales services. The company's main products are display modules, touch modules, camera modules, fingerprint recognition modules, and wireless charging modules, cover glass, etc.
Top One Tech Ltd. is a professional manufacturer specializing in the design, research and development, manufacture and sales services of touch screen, touch screen monitor and all-in-one touch screen computer. Founded in 2010, it is located in Shenzhen, Guangdong, China, with a plant covering an area of 5,000 square meters. It has accumulated more than ten years of manufacturing experience in the touch screen industry.
