Demand for mainland China-made power supplies is expected to increase by 25 percent in 2005 and by 20 percent in 2006. Demand is forecast to reach at least 4 billion units in 2005, and hit over 4.8 billion units, worth some US$30 billion, by 2006.
In anticipation of a demand surge, power supply makers are planning to ramp up their production output by at least 10 percent in 2005. Mainland China produced an estimated 3.2 billion units of power supplies in 2004 while Taiwan's output is about 16 million units.
Among the main findings of this report are:
• By 2006, it is estimated that mainland China's power supply industry will have grown by more than 25 percent. Mainland China is expected to overtake Japan, Taiwan and South Korea in power supplies production.
• Over 90 percent of Taiwan-based manufacturers have moved their mass production bases to mainland China in a bid to increase their profit margins and lower overhead costs. The majority of these Taiwan companies are now in Guangdong. In spite of the migration trend, 100 percent of Taiwan's power supply makers maintain some of their operations in the island.
• In terms of exports, Taiwan leads mainland China. Sales revenues of the Taiwan-based makers profiled for this report amounted to US$753 million, of which, 60 percent were generated from exports. For 70 percent of the surveyed Taiwan makers, over 60 percent of their total revenues are derived from exports.
On the other hand, less than 50 percent of the profiled mainland China-based makers derived half of their revenues from exports. Their total sales revenues reached US$1.12 billion in 2004. One-third, or US$376.1 million, came from overseas sales.
However, mainland China is trying to keep up with Taiwan's pace in terms of exports. Mainland China makers are upgrading their production technology to comply with international standards and expand their share in the international markets. More manufacturers are implementing lead-free production processes and using environment-friendly raw materials.
By 2007, most power supply makers in mainland China is expected to have completely adopted environment-friendly production processes.
Mainland China's power supply industry consists of about 5,000 companies and accounts for at least 40 percent of the world's supply. The industry is dominated by private companies; 200 of whom are foreign-owned. About 1,500 companies in mainland China cater to the export market. Makers are concentrated in Guangdong, Jiangsu, Beijing, Wuhan and Zhejiang.
Taiwan, on the other hand, has about 80 power supply companies, which are all locally owned. About 75 percent of Taiwan's power supply makers are exporters.
Mainland China's power supply industry grew by 14 percent in 2004, generating revenues of US$25 billion. Taiwan, on the other hand, earned about US$485.5 million, increasing slightly from US$479.4 million in 2003.
Industry Overview
Mainland China's power supply industry experienced a 14 percent growth in 2004, generating revenues of US$25 billion from US$22 billion in 2003. Meanwhile, Taiwan's overall power supply revenues amounted to 485.5 million in 2004, a 10 percent growth from the year-ago turnover of US$479.4 million.
Industry Makeup
Mainland China has about 5,000 power supply manufacturers. Their combined output accounts for about 40 percent of the world's supply for switching power supplies, power adapters, converters, inverters and linear power supplies. Mainland China's industry is dominated by domestic enterprises, with only 4 percent, or about 200 makers, being foreign-owned. Of the profiled mainland China-based makers in this report, 92 percent are private companies.
About 1,500 of the mainland Chinabased makers cater to the export market; one-third of them are based in Guangdong and Jiangsu. Other areas that are home to most of mainland China's power supply manufacturers are Beijing, Wuhan and Zhejiang. Mainland China's biggest power supplies makers include Emerson Electric, ZTE Corp., Beijing DPC and Wuhan Putian Telecom Equipment Groups.
In Taiwan, the industry tends to focus on a core of about 80 power supply manufacturers, 60 of whom are exporters. Notably, there are no foreign-invested makers in Taiwan. Although more than 90 percent of Taiwan makers have put up manufacturing facilities in mainland China, all of the companies have maintained operations in Taiwan — either for manufacturing or R&D purposes.
Guangdong is the Taiwan makers' primary choice to establish plants, largely because of its proximity to the island and to Hong Kong's international ports. The manufacturing shift is expected to continue as most Taiwan companies intend to boost their capacities in mainland China, rather than in Taiwan.
Leading Taiwan companies include Lite-On Technology, Delta Electronics, Phihong Technology, Sirtec and Leader Electronics. Most of these firsttier players are suppliers to multinationals such as IBM, NEC, Fujitsu, Compaq, Apple and Motorola.
Demand Drivers
Application segments driving demand for mainland China- and Taiwan-made power supplies are mainly LED TV monitors, notebook PCs, mobile phones, portable DVD players and security devices. For the past year, however, the strongest demand came from the telecom, particularly mobile phones, and the LED monitor segments.
In 2003, as mobile phone output soared to 60 million units, sales revenues generated from the telecom industry reached Rmb3 billion to Rmb4 billion (US$362.32 million to US$483.09 million at Rmb8.28:US$1). The sales turnover excludes export revenue.
Supplier Profile
Beijing Huizhong Co. Ltd
Privately owned Beijing Huizhong Co. Ltd was set up in 1986. It has four subsidiaries, namely, Beijing Huizhong Power Supply Equipment; Beijing Huizhong Electric Equipment; Beijing Huizhong Transformer; and Beijing Huizhong Heat Sink Processing.
Through the combined specializations of its subsidiaries, Huizhong offers communication power supplies, IGBT inverting solders, transformers and heat sinks.
Huizhong is operating at a utilization rate of between 30 percent and 40 percent. To meet increased demand from the communication and military sectors, Huizhong will try to raise its capacity utilization rate to between 50 percent and 60 percent in 2005.
With increased capacity, the company also hopes to achieve higher sales revenues from US$6.64 million in 2004 to US$ 8.45 million in 2005, as well as maintain an annual growth rate of 30 percent.
Huizhong's main export markets include Southeast Asia, Europe and the US. The company has no direct exporting rights but is confident it will be able to ship its products directly to their export destinations over the next several years.
Manufacturing Capability
The company's headquarters is located in the Haidian District, about a 45- minute drive from the Beijing city center. It has two buildings — a fivestory structure for power supplies production and an office building.
It also has a production facility in Xishan, about 10km from Haidian. This factory covers an area of 3,000 square meters and employs 70 workers. Among its facilities are an SMT machine and a wave soldering machine.
The Global Sources team toured the production area in Haidian. We first went to the dc/dc converter workshop, which is on the third floor and occupies an area of 1,000 square meters.
Mounting, testing, weld patching, assembly, debugging, filling, final testing and packaging are handled in this workshop. About five workers are assigned to weld patching, 10 to 20 to assembly, five to debugging, three to filling, five to testing and two to packaging.
In the SMT room, we saw two workers manning a Yamaha wave-soldering machine and an Ersa reflow-soldering machine. There is also a 27 squaremeter aging room on the same floor.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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