China's government, which is bent on forging world name brands, recently staged an event to benefit Chinese EMS providers. China EMS Forum 2004, sponsored by the Chinese Ministry of Information Industry, was an official step to give more attention to needs and issues of Chinese EMS providers, which at times seem to have second-class status.

The forum took Place November 16 at the immense Shanghai New International Exhibition Center, located in PuDong, Shanghai. In addition to broad-ranging presentations, some in Chinese with real-time translation, the forum provided a chance to meet and to develop perspectives on tier-2 and tier-3 Chinese EMS providers. Discussions at the forum led to the conclusion that many Chinese operations are hybrids.

China's top 100 electronics OEMs, for example, often mix OEM and EMS or ODM. Skyworth Technology Group (Shenzhen) runs global revenues of approximately $1.5 billion, based on selling around 9 million TVs and 3 million DVDs.ODM sales, focused on video technology, account for an estimated 25% of Skyworth's business.

Following a Taiwanese model, there are now Chinese ODMs that are adding OEM business. KXD Digital Entertainment LTD(Shenzhen) offers a new line Of branded LCD TV/monitor products, supplementing its design expertise in manufacturing DVD players. KXD revenues topped $132 million in 2003.

Scores of joint ventures(JVs), smaller in size and attuned to export markets, also provide contract services, but do not own a brand. A good example is Shenzhen Shinelong Electronics Industrial Company Ltd(Shenzhen), a JV of Hong Kong Wintech and Japan’s Ryusyo. SEIC generated $30 million in 2003 sales with 13% profit on production of power supply and frequency inverter controllers in 2003.

Finally, according to China-based researchers, there are dozens of quality EMS providers. These include larger Hong Kong and Taiwanese companies as well as emerging Chinese EMS providers such as Brio Technology(Beijing) with its $60 million in 2003 sales and 40% revenue growth in recent quarters. JVs in China comprise its primary customers．Kong Yue Electronics & Information Industry, Ltd(Jiangmen) is another quality-conscious Chinese EMS provider, developing manufacturing practices through several years of contracts with Japanese IT companies in the printer and monitor space.

There also are hundreds of smaller local Chinese EMS providers, ranging down to the job shop, centered in Guangdong Province.

Evidence suggests small-to medium-size Chinese EMS companies grew faster than China's top 100 electronics companies and global tier-1 contract manufacturers in 2004. According to the chief of statistics in China's Ministry of Information Industry (MII), China's electronics output grew 42% the first three quarters of 2004.While there may be some double counting in the totals, informed sources suggest MII percentage estimates are representative and probably reliable.

Sammy Yi, FIextronics VP, led off the event with an overview of IT convergence, total cost of ownership, and Flextronics global operations. Dr.Yongjiang Shi of the Center for International Manufacturing at Cambridge University spoke on global manufacturing networks. The author presented criteria used by OEMs in selecting EMS providers.

For lists of mid-size and smaller Chinese EMS companies and related information, contact Clive Jones at cjones@economicdataresources.com or 303-440-626.