Statistics from the Ministry of Information Industry show that China's electronic component production has maintained a relatively rapid growth rate in the first three quarters of this year. By September 2002, the production of electronic components had increased by 24.7% compared with the same period last year. But at the same time, the fierce market competition makes the gross profit of suppliers drop sharply. China Electronic Components Industry Association pointed out that in the first half of 2002, the profits of 150 electronic component manufacturers in China fell 26.37% year on year.

Recently, we have interviewed some of the top 100 electronic information companies, such as Guangdong Fenghua Technologies, BYD, Jiangsu Changdian and Shanghai Advanced Semiconductor, focusing on their export and sales channels, management certification and market challenges.

Enterprise Quality Management Certification

The interview results show that most of the electronic components manufacturers in China have obtained some international quality management certification more or less, and most of them have passed ISO9000 series standards. In addition, more than half of the interview enterprises have passed QS-9000, ISO14000 and UL international standards. This shows that both private and state-owned enterprises now attach great importance to being recognized by some form of international standards. This is mainly to meet the needs of the overseas market, because even if the manufacturer only has domestic sales business, but more and more customers will engage in export business, so naturally components suppliers will be required to pass certain designated international standards.

Export and sales channels <IMG align=right src="http://www.esmchina.com/ARTICLES/2002 DEC/FT-S6F1.GIF"

VSPACE = 12 HSPACE = 12 ALT = "Table Title: Component manufacturers'sales will grow this year, but profits are declining">

Most of the companies surveyed export their products directly. Individual component manufacturers export a small number of products through distributors while exporting directly. This phenomenon reflects that the cooperation between international component distributors and Chinese component manufacturers is still very limited, and Chinese component distributors are not active in the international market. On the other hand, compared with the import of components, the export scale of electronic components, especially semiconductor discrete devices, in China is not large. It is expected that in 2001, the proportion of imports in the market of semiconductor discrete devices will reach 83%, which indicates that Chinese manufacturers'products are far from meeting the needs of the domestic market, and a small number of exports are not dependent on distributors.

The vast majority of component manufacturers said that they should vigorously develop the export market. Most of them intend to establish overseas marketing channels by setting up foreign offices, attending international electronic products exhibitions, and establishing direct contact with end customers. Only a few of them are exploiting overseas markets through international/domestic component distributors.

The survey also shows that the vast majority of component manufacturers have self-built channels to sell, the average proportion of direct sales in total sales is more than 63%, while the average proportion of sales through agents is only about 20%. This again shows that the relationship between Chinese electronic component manufacturers and professional distributors is still weak.

Facing challenges

Talking about the challenges facing China's electronic components industry, manufacturers believe that they mainly come from three aspects: first, too many peers, low price competition, especially from manufacturers in Japan, South Korea and Taiwan. Secondly, we should change the traditional management mode and sales mode of Chinese component enterprises. Thirdly, the lack of funds and capacity to develop high-end products is also a problem.

Market opportunity

The rapid start and rapid development of automotive electronics, PDA, Internet application products, set-top boxes and other products will greatly promote the development of China's electronic components market. In communication products, not only cellular phones, but also more products such as mobile communications, optical communication networks, ordinary telephones and so on need a large number of components. In addition, computer and related products, consumer electronics products, although not as fast as before, but the demand is still strong. All of these will be the driving force for the development of China's component market.