THE ELECTRONICS INDUSTRY has followed the example of many other industries in relocating its production lines to factories in mainland China. This is evident not only in the manufacture of consumer electronic items, but also of semiconductors and hi-tech information technology items.
This has made mainland China a vital supply base for the industry. Hong Kong also plays an important role, especially in operations and managing international supply chains. Many big players still use Hong Kong-based firms to handle the importing of components, the distribution of semiconductors and the exporting of finished products to world markets.
'The challenges in managing distribution on the mainland are constant because of factors like the currency control structure, export regulations and import policies,' said Kelvin Kam, director, supply chain solutions, Arrow Asia Pac.
The parent company, Arrow, is a Fortune 200 company and a major global distributor of semiconductors, or integrated circuits (ICs), and passive components for customers such as Intel and Motorola. Their clients include original equipment manufacturers (OEMs) and original design manufacturers (ODMs), plus contract equipment suppliers.
Areas within the mainland can have different regulations and procedures relating to the movement of goods, and this constitutes part of the challenge. For example, shipping components from Shanghai to nearby Suzhou will add to the cost of doing business and possibly extend delivery times as well.
Things can get more complicated when delivery deadlines, customer demands and specific regulations governing the type of materials used in manufacturing and packaging also have to be taken into account. This applies especially to exports destined to markets within the European Union.