McKinsey Quarterly reports on the consumer electronics market:

Retail chains dominate the consumer electronics landscape: a handful of these players control as much as 40 percent of sales in first-tier cities like Shanghai and Beijing. They dominate even more in some product categories: the new giant forged from the imminent merger of Gome and China Paradise will control 60 to 70 percent of TV sales in Shanghai.

Unless consumer electronics players—whether Chinese or foreign—rethink their strategies, they risk losing the battle for the wallets of millions of mainland consumers. A lot is at stake: the mainland's consumer electronics market has been growing at a compound rate of 12 percent a year and is expected to reach about 1 trillion yuan ($125 billion) by 2010, up from 590 billion yuan this year.

This market will account for 25 percent of the global market by 2010. Carving out a share of it has ranked high on the agendas of many of the world's consumer electronics companies for some time. Many of the world's best-known brands already have a sizable presence in China. But price wars—triggered in part by the rise of the electronics retail chains and overcapacity—have pushed profit margins on TVs and other white goods to below 3 percent.

To read more:

http://www.mckinseyquarterly.com/article_page.aspx?ar=1855&L2=4&L3=116&srid=17&gp=0