Reliable exporters: find them and meet them

SHENZHEN, June 3, 2010 - Mainland China's electronics manufacturers are showing no ill effects of last year's economic downturn, with 60 percent planning to increase their orders from component distributors in response to growing customer demand. The results were revealed today in the tenth Annual Electronic Components Distributors Survey, conducted by Global Sources' (NASDAQ: GSOL) electronics management title, Electronics Supply & Manufacturing-China (ESM-China).

This has resulted in the improved fortunes of mainland China's component distributors, with 61 percent expecting double-digit revenue growth in 2010, with a forecasted average increase of 23 percent from 13 percent in 2009.

This year's Survey polled 249 senior managers working for mainland China's leading component distributors, and 1,674 corporate, purchasing or procurement managers from electronics manufacturing companies operating in mainland China, about their current challenges and plans for the future.

Manufacturers prefer purchasing components from distributors

The Survey revealed that on average, manufacturers purchase US$35 million worth of components, 55 percent of which are ordered directly from distributors.

Other key Survey results include:

• Half of manufacturers' approved vendor lists are made up of component distributors
• 52 percent of manufacturers have shown a strong preference to work with Hong Kong, Taiwan and international distributors, a 20 percent increase from last year
• When working with distributors, manufacturers focus on their capability to offer technical support (40%), small-volume orders (32%) and logistics services (28%)

ESM-China Publisher Mark A. Saunderson said: "The results all but confirm that mainland China's electronics industry is back on track. Manufacturers have shown their resiliency and confidence by ramping up their production lines.

"ESM-China's annual survey also gives distributors a better insight into what manufacturers are specifically looking for and helps them adapt their business strategy now and in the future."

Distributors report shortage of key components

The surge of electronics production has impacted the inventory of mainland China's distributors, who now require an average delivery lead time of 41 days, up from 31 days in 2009, to cope up with orders. They are working to overcome this problem by carrying more brands and expanding their relationship with their customers and principals.

Distributors are also looking to sustain their growth by working closely with large- and medium-scale mainland China manufacturers, especially in key application markets such as consumer electronics, communication systems, industrial electronics, and computers and peripherals.

The best distributors to work with in mainland China

The Survey also reveals the most preferred component distributors, as well as the most influential persons in the distribution industry, as voted by mainland China's electronics managers. Winners of each category (in alphabetical order):

• Most Preferred Overseas Franchised Distributor: Alltek Technolgy, Arrow Electronics, Avnet, Cytech Technology, Excelpoint Technology, GMI Technology, Nu Horizons, Richardson Electronics, WPG Holdings and Zenitron

• Most Preferred Local Franchised Distributor: Asiacom Technology, Baite Group, China Electronic Appliance Shenzhen (CEASZ), Comtech Communication Technology, Honestar Technologies, LSD Science & Technology, Linpo Industrial, Secom Telecom, Techtronics Technology and ZLG-MCU

• Most Preferred Independent Distributor: Advanced MP, America II, Beijing Spaceflight Rising Technology, Chitron Electronics, Compo Electronics, Jcmicon Enterprises Beijing, Keweiqi Electronics, Meierda Electrical, Mogultech International and Times Creation – Beijing Zhaochen Technology

• Most Preferred Combination Distributor: Interine Electronics, Mission Electronics, Peng Li Da Electronics, Pioneer Electronics and Vadas International

• Most Preferred Fastest Growing Distributor: Burnon International, E-Shine Digital Technology, G&T Industrial, Incel Components, Mornsun Electronics, Seed Electronic, SKYSOON Communication, Shenzhen Cestar, Texin Electronics and Weltronics Components

• Most Preferred Catalog Distributor: Digi-Key, Mouser Electronics, Premier Electronics, RS Components and Wuhan P&S

• Most Preferred Passive Components Distributor: Holy Stone Enterprise, Powertek Technology, Runsheng, Suoer Electronic and Zetron

• Most Influential Executives in China's Distribution Industry: Cui Wei (Richardson Electronics), Wang Laobao (Interine Electronics), Wu Zhenzhou (Chitron Electronics), Yuan Yi (Comtech Communication Technology) and Zhou Jiguo (CEASZ)

For more information on the tenth Annual Electronic Components Distributor Survey, please contact Jake Chen, Chief Analyst of ESM-China, at jakechen@esmchina.com.