Questions & Answers Section Given in HKICPA Seminar on 23 Jun 2012

Question 12:
On technology and research and development – The product life cycle is getting shorter and shorter (eg. Apple, HTC and the like have very short product life cycles). How will that change the dynamics of the value chain?

It will make it even more of an imperative for Chinese suppliers to focus on making the best component and developing the capacity and technological capability to support the fast changing future product roadmap. This is what the large buyers are looking for. Suppliers with strong CEOs in terms of having a vision for the firm to be the best in the world will win out. I found from numerous interviews that suppliers who had CEOs with overseas experience in terms of work and/or education appeared to have the necessary foresight to execute on this type of strategy. So the overseas education and work experience can help to drive the value of research and development – it’s a mindset that is critical. Furthermore there are a lot of technology parks being set up in China and with government support have the chance to execute. There are pockets of riches among suppliers in China – we need to find them as buyers. As suppliers hopefully these firms will become role models that can spur future world class development of Chinese suppliers.