Domestic middle-standing MP3 player makers are breaking into the market in China via indirect channels like OEM or ODM supply, as they find it to be difficult to join the market directly.

According to industry sources, MP3 player makers such as MPio, S-CAM and Hyunwon have sealed contracts with local companies to supply MP3 players on OEM or ODM basis. Industry observers anticipate that other MP3 player firms will follow their suit, since a considerable number of Chinese enterprises are seeking to build partnership relations with them.

MPio has reportedly signed a contract with a leading consumer electronics appliance maker in China to supply its MP3 players, beginning in this month. Under the arrangement, MPio will provide the Chinese partner with 200,000 units of MP3 gadgets by the end of this year and 1 million units next year. Depending on response of local consumers, however, MPio will supply 600,000 units this year and 2 million units next year.

S-CAM is in talks with two Chinese manufacturers to supply its MP3 players either on OEM and ODM basis or establish a joint venture to produce MP3 players. S-CAM is also talking with a distributor in Singapore to provide 100,000 units a month on an ODM basis.

Another MP3 player maker Hyunwon recently began supplying 1,500 units of 3 models a month to J&C, the largest MP3 player manufacturer in China. “Given that it is not easy for small and medium-sized MP3 player makers to break into the market in China, it will be a wise solution to form partnership relations with local companies which have set up distribution networks,” said Kim Hong-gi, executive director at Hyunwon.

After promoting marketing campaigns for months for its premium MP3 players along with mobile phones, Samsung Electronics could make soft-landing in China. And, the largest MP3 player maker in Korea Reigncom constructed its plant in China this year to directly supply products in local market.

A part of industry observers point out that the supply of MP3 players to China on OEM and ODM basis may increase sales in a short term, but it may return as a boomerang in a long run.

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