Optimism grows over mainland China's electronics industry

HONG KONG, June 16, 2009– Eighty-nine percent of mainland China's electronic component distributors expect revenue to grow in 2009, forecasting an average increase of 13 percent; while 55 percent of mainland China electronics manufacturers surveyed said the economic downturn has had little or no impact on their business. The results were revealed in the ninth Annual Electronic Components Distributor Survey conducted by Global Sources' (NASDAQ: GSOL) electronics management title, Electronics Supply & Manufacturing-China (ESM-China,http://www.esmchina.com).

This year, ESM-China asked 326 senior managers who are working for components distributors and 1,243 senior corporate, purchasing or procurement managers from electronics manufacturing companies operating in mainland China about their current challenges and plans for the future.

Mainland China manufacturers well equipped to cope with change

The Survey revealed that 55 percent of manufacturers want to work with local distributors in the coming months, an increase of 18 percent as compared to last year. However, 32 percent still prefer to work with Hong Kong, Taiwanese and international distributors. Other key results include:

• Manufacturers order 54 percent of their components directly from distributors.
• Seventy-eight percent of manufacturers plan to either increase their purchases from distributors, or keep them the same, this year.
• They are selecting distributors based on availability of onsite engineering support (48 percent), reference design (45 percent), test service (30 percent) and development tools (28 percent).

Publisher of ESM-China, Mark A. Saunderson said: "As well as providing an insight into the distribution landscape for 2009, the Survey also points to a robust electronics industry where manufacturers are well-equipped to cope with the market challenges and feel positive about making a profit. Distributors can also take away some good pointers on what manufacturers are looking for, now and in the future."

Distributors are changing their tactics to grow business

Mainland China distributors are also shifting their strategy to grow their business. An increasing number of them are now focusing on serving medium- and small-scale manufacturers rather than larger-scale outfits.

They are also looking at delivering more solutions to emerging, high-profit application markets including:

• control, security, test and medical equipment;
• computer and peripherals; and
• automotive, avionics and military electronics.

Distributors have also implemented a number of steps to ensure the quality of their components in reaction to the demands from both the mainland China and global consumer market. These include strict supplier approval; employee training; third-party testing; purchase testing equipment and ISO certification.

Mainland China manufacturers vote for their most preferred distributors

As part of the Survey, mainland China manufacturers were asked to vote for their most preferred distributors in five different categories. Winners of each category are (in alphabetical order):

• Most Preferred Overseas Franchised Distributors:AECO Technology, Arrow Electronics, Avnet, Cytech Technology, Excelpoint Technology, Future Electronics, Nu Horizons Electronics, Richardson Electronics, WPG Holdings and Yosun Industrial Group.

• Most Preferred Local Franchised Distributors:Asiacom Technology, Baite Electronic, China Electronic Appliance Shenzhen, Comtech Communication Technology, Honestar Technologies, Linpo, LSD Science & Technology, Road-Well, Secom Telecom and Seed Electronic Technology.

• Most Preferred Independent Distributors:America II, Chitron Electronics, Compo Electronics, EVERY, Interine Electronics, Mission Electronics, Mogultech International, Pioneer Electronics, Smith & Associates and Times Brilliant Electronic.

• Most Preferred Small-to-Medium Sized Distributor:Ampro Microelectronics, Burnon International, E-Shine Digital Technology, Incel Components, Jcmicon Enterprises, KuanHeng Industrial, G&T Industrial, Mornsun Electronics, Pace Electronics and Shenzhen Cestar.

• Most Preferred Catalog Distributors:Mouser Electronics, P&S Information Technology, Premier Electronics and RS Components.

For more information on the ninth Annual Electronic Components Distributor Survey, please contact Major Lee, Chief Analyst of ESM-China, atmajorlee@esmchina.com.

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