China’s electronics manufacturers are expected to purchase US$34 million worth of components on average in 2014, representing a substantial increase of 26 percent from US$27 million in 2013.
Manufacturers purchased 60 percent of components from distributors last year, and 51 percent of them planned to raise the proportion of components from distributors. Local distributors are gaining popularity, with 41 percent of manufacturers saying they preferred China distributors (2013: 25 percent), while 22 percent had no preference by distributors’ headquarters location (2013: 12 percent). Proportions of respondents preferring international, Hong Kong and Taiwan distributors have dropped.
These are among the findings of the 14th Annual Electronic Components Distributor Survey announced today by Electronics Supply & Manufacturing-China (ESM-China), China’s leading electronics management title published by Global Sources’ (NASDAQ: GSOL) joint venture, eMedia Asia Limited.
Components distributors seem bullish about the China and Hong Kong markets and anticipate revenue growth of 22 percent in 2014 on average as the global economy slowly recovers. They put their 2013 revenue growth at 19 percent (2012: 17 percent) on average, with the top three markets remaining the same as the previous year: consumer electronics, industrial electronics, and network and communications systems. The average profit margin was 18 percent, which was 5 percentage points higher than that indicated in last year’s survey, although 31 percent of distributors stated shrinking profit margin as one of the top three challenges they faced.
“By revamping business operations and strategies, some surveyed distributors have successfully differentiated themselves from the competition as well as expanded into new markets. As many as 8 percent of distributors surveyed this year had profit margins of 40 percent or higher,” said eMedia Asia President Brandon Smith. “ESM-China’s annual Survey aims to identify distributors’ business challenges and manufacturers’ difficulties when sourcing for components, as well as ways they can overcome these, in order to help both parties fine-tune their strategies for greater success.”
