Chinese electronics manufacturers' average spend on components up 26 per cent to $34 million

Will Green is news editor of Supply Management
3 June 2014

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3 June 2014 | Will Green

Electronics manufacturers in China are expected to buy an average of $34 million (£20.3 million) worth of components in 2014 – up 26 per cent on the $27 million (£16.1 million) spent in 2013, according to a study.

The 14th Annual Electronic Components Distributor Survey, produced by Global Sources, showed suppliers anticipate revenue growth of 22 per cent in 2014, against 19 per cent in 2013, with the top three markets remaining consumer electronics, industrial electronics and network and communications systems.

The average profit margin was 18 per cent in 2014, up 5 per cent on the year before, though distributors said shrinking profit margins was one of the top three challenges they face. Some 8 per cent of distributors had profit margins of 40 per cent or higher.

Price, cited by more than 70 per cent, was the top consideration for manufacturers when buying components, while the main challenges were inaccurate demand forecast (61 per cent), product quality (35 per cent) and delayed delivery (34 per cent).

In response, manufacturers are strengthening partnerships with suppliers (58 per cent), building stock (32 per cent) and “working with strong and all-round distributors” (30 per cent).

Manufacturers bought 60 per cent of components from distributors in 2013, and 41 per cent said they preferred Chinese distributors in 2014, compared with 25 per cent in 2013, while 22 per cent had no preference about supplier location.

A total of 179 managers working for leading components distributors and 2,260 managers and engineers from electronics manufacturers, all in China, took part in the survey.

 

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