Saving the best until last
Oct 28, 2005
Those that left the EIPC/IPC TMRC before Friday morning lost out - it seemed that when the conference schedule was planned some of the best speakers and papers were left until the last morning.
The morning was divided into two sessions: the first entitled 'Management Issues' was heavily focussed on China; and the second entitled 'Disruptive Technology - Dangers and Opportunities' explored new technologies and their impact on the bare board industry.
Words of enthusiastic caution
David Everhart, Executive Director of Ionis International has been involved in US-Asian relations for more than twenty years. David's paper, which as he said is a two day event scaled down to 30 minutes, was entitled 'Doing Business in China: The Risks and Rewards'.
David explored all the strategic issues that relate to planning business in China, illustrating each point with examples and personal experiences. He reminded the audience that this should not be considered as one country or one culture. It is a very large region and in many ways is a confederation of regional states, with differing cultures and differing aspirations. Expansion is uneven from region to region, we all know about the areas around Beijing, Shanghai and Shenzhen, but what about the areas inland?
David's presentation contained many words of caution. Caution about currency valuation - this David expects will change by a few percent rather than by larger amounts. Caution about infrastructure - some companies are experiencing scheduled weekly power blackouts. And caution about social issues - what if a stall in the economy causes massive unemployment leading to social unrest? David describes this as his biggest concern, and the greatest risk.
Intellectual Property (IP) is probably one of the main worries that many people have about manufacturing in China. According to David, this fear is entirely founded. The Chinese find the concept of IP foreign. There was no private property in China 25 years ago, so the ownership of ideas is even further distant to them. Add to that the fact that they have little incentive to comply, because they have little of their own IP, the poor legal protection and spotty enforcement, and it is easy to see that IP should and will remain a major concern.
David also explored the importance of relationships in working in China. If the legal system cannot protect you, you need to be very close to your partners and/or key employees to make things work in China. To this end David advocates building close relationships, spending plenty of time in China, developing good key staff in China, understanding their priorities and difficulties and providing incentives for results.
The above description only skims the surface of an excellent presentation that was full of useful and important advice and information. I hope David will be sharing more of the detail on www.emsnow.com soon.
China for China
The second paper of the morning came from Paul Murphy, Director of Global Sales and Strategic Accounts for CTS. Paul has been in the EMS industry for many years and has a great deal of first hand experience of manufacturing inside and outside of China.
Paul set out to define the relationship CTS enjoys with China and how he has leveraged that, along with a global footprint to benefit CTS's client base.
As a Tier Two EMS player with manufacturing in China, they are acutely aware of the domestic demand of the region and of course of the cost benefits of manufacturing there. They do not, however, want to build everything in China. They are advocating a 'China for China' policy, which to me suits the 'nearness to end-user' demand we see from OEMS. CTS also has OEM business activity in the automotive business and because of IP issues, these products are not made in China.
Paul outlined the developments in China. How every time he visits the region, probably every six o seven weeks, they seem to have learned something new. Paul describes their ability to learn as 'outstanding'. He also outlined the investment that European and USA companies are making in China, testament to the long term future of the region as a manufacturing base and as a market.
Paul went on to describe the companies 'Product Optimisation Strategy', a strategy that defines a production plan based on a number of criteria. It is not just about price, issues like volumes and batch size, product mix, complexity, distribution channels, lead time, materials content and potential gates, and repair and warranty considerations all contribute to the decision.
Paul set out superbly a tier two strategy towards China, with a great deal of detail, we asked Paul to share his presentation as an article and hope to see that on www.emsnow.com very soon.
The second session was equally valuable, with some excellent discussion on new technologies, all of which provide some great opportunities to those in the room. You could not fail to leave this morning conference without an impression that you had received huge value from this IPC/EIPC collaboration.
We will explore the second session in a subsequent article.
Today showed me many of the reasons I never tire of these events; excellent, well presented papers, bright and exciting new ideas and challenges, and plenty of food for thought.