Case Studies

HK owned PCB Manufacturer (HKPCB)

It is a HK based PCB manufacturer of PCB. It has four factories in China, and another two in Asia Pacific. Per the interviewee, the company had constantly built new factory facilities in China in last decade (3 to 4 years to have one new factory in production), to expand its production capacity. Due to its high operating cost, the HK factory mainly focus in high‐value or rush orders. Similar to other players in the industry, the gross profit margin is around 7%, reflecting the keen competition they are facing in the industry. Their major customer is in the field of telecommunication (producing PCB for the equipment of cellular base station). Currently, they have the technical know‐how to build up to 44 layers of PCB, but right now, there is no practical commercial usage in the market, due to cost and product stability.

For new products developed, they may have 1200 each year. As they followed their customers’ specification to produce their products i.e. tailor‐made products, there may be a grey area to determine accurately the number of new products and product enhancement

The challenge being faced is the soaring cost in raw material and labor as well as the deteriorating market demand. To counteract this scenario, their tactics are as below:

  • Though the products depend a lot on the machinery for their production, there is still room for them to improve their production processes (more than 20 processes involved) to reduce the running cost (labor and raw material), product quality and production yield, so as to maintain low cost producers.
  • Constant investment in machinery is planned to reduce the labor force involvement in the production processes.
  • Tighter budget control is being exercised

As HKPCB is a subsidiary of XYZ Co. (which is also a major supplier of raw material), to the parent, the tactics in downstream acquisition is beneficial to itself in securing/ increasing sales and market share, in particular in view of its worldwide leading position in the PCB's raw material supply [facing barrier to further extend its market share].

As a side story, the flooding disaster happened in Thailand in a few months ago had given us a good understanding how the qualification program imposed by the major customers was working. HKPCB had a factory serving the big Japanese customer such as Toyota and Canon. Due to flooding, the factory operations were forced to halt for a while. Per interviewee, even there might be capacity in China factories, it was still very difficult or impossible to shift part of production from Thailand in a short of time, due to stringent qualification program imposed by the Japanese customers, which needed to re‐perform qualification program procedures such as factory audit again to the HKPCB China factories. It seems to be lack of flexibility, but it is only one of way for the big customers to ensure compliance of their qualification requirements. From this story, it reminds us how important and stringent the qualification program for the big customers to select their suppliers.

Mainboard manufacturer

The company produces mainboard for the mini-PC (very small size) which are new products in the market (1 to 2 years). Their two key customers are from Europe and Latin America respectively.

Capacitive Touch Screen manufacturer

The company is a division of a Chinese conglomerate, established one year. Its products are capacitive touch screens, used in flat panel devices such as ipad, iphone and other smart electronic devices.

Glass plate covering flat panel electronic devices manufacturer

The company is producing the glass plate covering the flat panel devices (e.g. mobile phones and flat panel computers).

Leading worldwide PCB manufacturer

It is the subsidiary of worldwide PCB manufacturer. Its major customer is notebook manufacturer (e.g. giant as big as Apple).

HK owned PCB Manufacturer 2(HKPCB2)

As other PCB manufacturers, the company produces PCB per customer specifications (i.e. tailor-made). Their most important customers are producing electronic circuit boards for automotive industry.

KC Ltd – Production of oil (Chemical) to protect the surface of PCB

The company business is to produce the oil (chemical) to provide protection and insulation for the surface of PCB.

SC Technology Co. Ltd – Production of plastic covering to protect the surface of PCB

The company business is to produce plastic covering material for the PCB, which is to provide protection and insulation to the exterior surface of the board.

RR – Production of liquid chemical to protect the exterior surface of PCB

The company business is to produce chemical (liquid form) used to protect the exterior surface of PCB, as well as to provide electrical insulation.

CTech Corporation

It is a FAB factory, specializing in IC chip (Silicon Wafer) production.

CM Ltd

It is an IC design house, just established in one year, with strong relationship with China government enterprise, in particular in terms of the source of capital.

EMT (Sichuan)

It is a privately owned material supplier with two factories in China, and listed in Shanghai stock market, specializing in insulating material (PET).

Castle Ltd

It is a joint venture with major stake from government-backed organization (Space China) which is also listed in HK.

Electronics Technology Co. Ltd

It is a privately owned supplier of transformers/ SMPS with one factory in China.

ZheJiang Electronic Co. Ltd

It is a privately owned supplier of electronic switches with one factory in China.

DongGuan Energy Co. Ltd

It is a privately owned supplier of environment-friendly battery with one factory in DongGuan China, established in 2007.

Hefei Inductors Ltd

It is a privately owned supplier of transformers/ inductors/ choked coil with one factory in western part of China.

ChangZhou Electronics Ltd

It is a privately owned supplier of audio/ video cabling connectors and connection switch/ hub with one factory in China.