The DFP104 from Leno fetures a 10.4in LCD screen and 128MB built-in flash memory.

The city accounts for about 90 percent of China's digital photo frame supply.

Digital photo frame manufacturers have mushroomed in Shenzhen, Guangdong province since the product line's entry into the city in 2006. Many of these makers focused on MP3 production prior to jumping onto the digital photo frame bandwagon. As of 2007, the Shenzhen production hub—which has more than 100 digital photo frame makers—has churned out about 90 percent of China's digital photo frame output.

Shenzhen's quick rise to the top of digital photo frame production is no surprise given the city's leading edge in manufacturing the product line's predecessors and related products such as MP3 players, portable media players, memory card readers and USB flash drives. The city's sustained economic performance and favorable supply chain conditions also contribute to the digital photo frame market growth.

Digital photo frame makers in the hub are expected to ramp up production in 2008. The supplier base will continue to serve the full spectrum of the digital photo frame markets with product specifications and price points targeted at high-end, midrange and low-end segments. Makers indicate that market conditions are leading to price reductions of at least 5 percent. The majority of shipments this year will still be under OEM and ODM terms, with Europe and North America leading the makers' list of key markets.

In 2007, Shenzhen's per capita GDP reached $10,628, exceeding the World Bank threshold of $10,000 for classifying an economy as developed. Shenzhen's 2007 per capita GDP also exceeds that of Beijing and Shanghai, which were $7,700 and $8,788, respectively. Shenzhen's GDP hit $939.64 billion in 2007, 14.7 percent higher than its GDP in 2006. The city's 2007 population was 8.6155 million. Much of Shenzhen's economic growth is attributed to its flourishing OEM and ODM activities, which are attracting a host of support businesses as well as a growing hub of corporate offices. At least 83 of the world's Fortune 500 have invested in Shenzhen.

In the real estate sector, Shenzhen recorded more than 8.7 million square meters in new developments, 3.2 percent higher than the area developed in 2006.

In the labor sector, the city raised the special economic zone (SEZ) minimum wage by 4.9 percent. For the period Q3 2007 to Q2 2008, the effective hourly wage is about $0.68, while monthly wage is about $118.32. In the Bao'an and Longgang districts, the minimum wage was raised to roughly $0.60 per hour or $104.40 per month. The minimum wages in Shenzhen are now among the highest in China.

Access to and from Shenzhen is very efficient, for personnel as well as for cargo. Shenzhen's highway, bridge and train networks serve well in connecting different parts of southern China with the rest of the world. These include the Hong Kong-Shenzhen Western Corridor, a 5.5km multilane highway that spans across Deep Bay and the Guangzhou-Shenzhen expressway, which has a second line set for completion in 2009. In 2010, the Shenzhen-Xiamen railway is also set for completion. The railway will provide a new key link between the Pearl River Delta and the Yangtze River Delta.

The Shenzhen Port has steadily increased in capacity and throughput in step with the area's increasing productivity. In 2007, the port handled 199.1 million tons, higher by 13.28 percent than its throughput in 2006. In terms of volume, Shenzhen Port handled about 21.1 TEUs, higher by 14.24 percent than 2006. This performance enabled Shenzhen to retain its standing as the world's fourth-busiest port in terms of throughput, with Singapore, Shanghai and Hong Kong ahead.

Shenzhen's major container terminals are the Yantian International Container Terminals (YICT), Chiwan Container Terminals (CCT) and Shekou Container Terminals (SCT), which contributed about 9.31 million TEUs, 6 million TEUs and 5.03 million TEUs to Shenzhen Port's 2007 throughput. The port is projected to handle 23 million TEUs this year.

North America and Europe, and to a lesser degree Australia, are the main destinations of digital photo frame export shipments from Shenzhen. For instance, the US and Australia each absorb 40 percent of the digital photo frame exports of Shenzhen Hundred Digital (Leno Technology) Co. Ltd. The remaining 20 percent goes to the rest of the world. About 80 percent of Leno's digital photo frame output is exported.

Best Wisdom Industrial (Shenzhen) Co. Ltd sold about $4.5 million worth of digital photo frames in 2007. It predicts that in 2008, its digital photo frame sales will reach $11 million. North America and Europe combined contribute 80 percent to the sales. OEM and ODM orders account for 60 percent of the company's digital photo frame output. The rest carry the company's own brand, BW.

Shenzhen Arlink Tech Co. Ltd's entire digital photo frame output is made for OEM clients. About 80 percent of its shipments are bound for export clients, mostly in North America and Europe.

Shenzhen's digital photo frame suppliers are generally expanding production to meet rising demand. For instance, Best Wisdom is planning to increase its monthly capacity by 50 percent within H1 2008. Its average monthly output as of H2 2007 was 200,000 units. The company has a 6000sqm factory that is equipped for in-house SMT, assembly and packaging.

Leno's monthly digital photo frame production capacity is set to reach 200,000 units within the year. As of H1 2008, its monthly outputs has been ranging from 130,000 units to 150,000 units.

Shenzhen Arlink's production capacity as of H1 2007 was 30,000 units, against an average monthly output of 20,000 units. Its output increased by 10 percent in H2 2007.

Regardless of display size, prices will drop by at least 5 percent. Mature technology, ample component supply and rising supply are the main factors of the price reduction.

As of Q1 2008, Leno's large digital photo frames (8in to 10.4in) ranged from $80 to $105 per unit. Its mid-sized 5.6in to 7in models ranged from $40 to $60 each, and its small 1.1in to 2.4in frames listed at $7 to $25 each.

Shenzhen Arlink's high-end units (7in to 8in) are quoted at $65 to $95 each, while its midrange units with 5.6in to 5.8in displays list at $40 to $60 each. Its low-end 3.2in to 3.5in models are priced from $20 to $40 each.

Best Wisdom, which focuses on midrange and low-end markets for its digital photo frames, quoted its midrange 3.2in to 3.5in models from $35 to $50 per unit and its low-end 1.1in to 2.4in frames from $7 to $25 each.