Mainland China's relay industry hit the 1.5 billion-unit mark set by the 10th Five-Year Development two years ahead of schedule. Supply from mainland China is forecast to maintain its double-digit growth over the next two years. Production of relays will increase by 15 percent in 2004, driven by demand from home appliances, industrial equipment, communications and automotive electronics.
The home-appliance sector dominates OEM/ODM orders in mainland China's relay industry. To keep up with demand, makers are expanding their product offerings and production capacities. In addition, the relocation of multinational companies to mainland China is stimulating demand.
Mainland China's 300- company strong relay industry currently supplies 20 percent of the world market — a share that is expected to increase to 25 percent. Largely composed of small-and medium-scale enterprises, relay makers are concentrated in Zhejiang, Jiangsu, Guangdong and Shanghai. About one-fourth of the companies are foreign-invested, mainly from Japan and South Korea.
Relay output is dominated by electromechanical relays; solid-state relays account for about 7 percent. However, in anticipation of stronger demand, companies are expected to expand their capacities for solid-state relays by 15 percent over the next two years.
In its bid to increase its stake in the international market, mainland relay makers are spending a significant percentage of their annual revenues on upgrading production equipment and automating manufacturing processes.
Domestic makers have begun manufacturing their own relay parts but are yet to produce key raw materials in-house. Most materials, particularly metal parts, plastic coils, copper strips, and copper wires, are still sourced from abroad, mainly from Japan, Germany and South Korea. Manufacturers are adopting higher-end materials, such as fire-retardant components and high-performance contact materials. They are also working towards minimizing the use of lead and cadmium in their relays.
In terms of product development, makers are improving their contact ratings, widening their operating temperature ranges and reducing sizes. Relay size is expected to become more compact in the next year or two, following closely the miniaturization trend of telecom products. To do so, local relay manufacturers are forging collaborations with research institutes and academic institutions.
Industry Overview
Sustaining its double-digit growth, mainland China's relay industry produced an estimated 1.5 billion units of relays last year, accounting for about 20 percent of the world's relay supply. Concentrated mainly in Jiangsu, Zhejiang, Guangdong and Shanghai, the mainland's relay industry is dominated by small- and medium-scale companies. Only about 10 to 20 are large-scale enterprises.
About a third of the companies are foreign-owned or foreign-invested ones, mainly from Japan and South Korea. The local relay industry, which is composed of 300 relay companies, is largely dominated by electromechanical relay makers. About 7 percent are in solid-state relay (SSR) production.
The top profiled relay companies in terms of sales revenues include Xinling Electronic, earning US$800 million; Shihlin Electric Engineering with US$400 million; Wujin Relay, US$130 million; and Guizhou Space Appliance Share with US$96.85 million. A majority of the relay makers in the mainland are exporters. Export orders account for 80 percent of the total output in mainland China, the Chinese Control Relays Industry Association (CCRIA) reveals. OEM and ODM orders accounted for a large portion of exports.
Raising Technology Levels
Mainland China relay manufacturers are spending a significant percentage of their annual revenues in upgrading their technology. Local makers are working toward fully automating their manufacturing processes, and more of them are adopting precision mold manufacturing.
Ningbo Shenle Relay Mfg will invest $120,000 in new coil winding, soldering and automated pin assembly machines. Shaanxi Qunli Radio Appliance plans to add mold processing equipment worth US$2.42 million.
Other companies installing additional equipment this year are Yuyao Huilongcang Relays, Ningbo Yinzhou Yonglin Electron Electrical Equipment and Rui'an City Huadian Engine Electric. For its part, Dongguan Sanyou Electrical Appliances has recently installed additional production and test equipment lines.
Dependency on Overseas Suppliers
Local makers have begun manufacturing their own relay parts but are yet to have the capacity to produce key raw materials in-house. Most materials are still sourced abroad.
Supplier Profile
Alion Electronics Co. Ltd
Established in 1999, Alion Electronics Co. Ltd is located in Liushi, Wenzhou and is known to be the largest low-voltage electrical appliance market in mainland China. Apart from manufacturing small-type electromechanical and time relays, the company also produces various control equipment.
Alion exports over 95 percent of its output to Europe, South America, the Middle East and Southeast Asia. Europe accounts for 40 percent of the company's export revenues; South America, 15 percent; the Middle East, 15 percent; and Southeast Asia, 20 percent.
Manufacturing Capability
Global Sources took a tour of the main building of Alion's factory. The first and second floors of the building housed the administration offices. Also on the first floor of the building was a 100-square-meter PCB soldering workshop manned by 20 workers. In the workshop, there was a wave soldering machine, a reflow soldering machine and one chip soldering machine made by Assure Ind. Co. Ltd.
On the third floor of the building was the workshop where electromechanical relays are assembled. A staff of 50 worked in this 500-square-meter workroom, which has 2 assembly lines. We saw 20 air desk punch machines; 9 manual punch machines; 9 press equipment; and 3 contact welding machines. Processes such as coil and pin rivet connection, contact welding, armature, yoke assembly, pin setting and assembly, are all done in this workshop. The semifinished products are inspected using 6 relay testers, curing equipment and an aging machine, which can process 4,000 relays at a time.
On the fourth floor is Workshop 2, where time relay assembly is done. The 500-square- meter workroom, which is run by some 50 workers, has 2 assembly lines. Processes in this workshop include PCB and mechanic gear assembly. The aging equipment in this workshop can handle 5,000 relays per batch.
Another workshop, where relay socket making and coil winding are done, is located on the fifth floor. We saw over a dozen coil winding machines — 2 of them are 6-axis CNC digital winding machines. We also saw a Keweitent-made ultrasonic plastic welder. Final printing and packaging are done on the sixth 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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