It is common knowledge that China’s burgeoning electronics market is enjoying unprecedented growth. In my line of work I often face questions from companies and individual designers as to China’s potential market for electronic goods and industry expertise. My questioners’ attitudes range from optimism among those who view the China market as an opportunity, to downright pessimism among those who see it as a threat. How should the region’s electronics design community view the phenomenon of China’s electronics industry? My visits to exhibitions and semiconductor factories in mainland China have given me some insight into this question, which I have augmented through conversations with experienced industry experts and designers.
First of all, I would caution you to keep generalizations on hold when you approach China’s electronics market, as circumstances vary greatly. However, there are a few ground rules. According to Paul Chan, Altera’s Asia-Pacific product manager, any company wanting to unlock the China market has to adopt a policy of using local people to run a local business. In Chan’s opinion, customer training is an important issue for a semiconductor vendor: The company can sell more products if it ensures that the local design house follows good engineering practices. And when it comes to a distributor, those with local business contacts and knowledge of the local industry are invaluable.
Just how seriously training is taken was driven home to me on a recent visit to Suzhou in Jiangsu Province, where I attended the opening of Universal Instruments’ Technology Excellence Center. Universal Instruments is one of the world’s leading semiconductor assembly technology makers. Universal’s tech center provides hands-on process and manufacturing training support for its existing and potential customers in China. I spoke to Ian McEvoy, president of Universal Instruments, who said that his company is preparing for the future by imparting to Chinese engineers valuable skills in the latest semiconductor assembly processes. According to McEvoy, Asia is set to become the world's largest producer of manufacturing equipment for the electronics market in the next five to ten years.
How can Asia-Pacific design companies compete or take advantage of the China market? According to experts familiar with Chinese design prowess, local engineers are very good at hardware implementation. For example, “If you need to do some Viterbi decoding in an FPGA, no problem. The local designers can do it,” says Chan. “If you were to build a 3-G base station, then it’s a different issue.” For all their hardware ability, local designers tend to lack systems design expertise, explains Chan. This is one of several areas where Asia-Pacific design houses can contribute their expertise, although tapping this potentially lucrative design market is a little tricky. This is because China is a vast country with no single-entry point into its design markets, unlike Taiwan and Korea with their science parks and industry-friendly consortiums. However, by attending China-based tradeshows and seminars you can meet potential design customers. Print advertising, Webcasts, and other online activities also help you tap into the China market.
China’s entry to the WTO will bring more competition in the local market and put pressure on local design houses to compete with international companies. Asian design houses can take advantage of cheap local labor costs and offer product differentiation through creative designs employing programmable logic devices and flash memory. This approach will reduce time to market and help you compete successfully in the market. If you want to get into the consumer electronics business, you can think about setting up a contract design house with a mainland partner.
Engineering management is another area that can benefit from outside expertise. There is a demand in China for talented designers with a strong technical background and advanced leadership skills. The local design industry needs good engineering practices and business acumen to succeed in the demanding international market. Particularly Asian designers who are proficient in Chinese can build a rewarding career on the mainland.
So should you be optimistic or pessimistic about China’s increasing visibility in the electronics industry? That all depends on what position you take; but if you find the right niche, you might be part of the upsurge.
---------------------------------------------------------------------------------------------------------------------------
What do you think? Send me your comments at
nsmanjunath@rbi-asia.com.hk.
