China’s boardmakers focus on their domestic market

Exports have played a huge role in the growth of the Chinese circuit board industry, which was around $17 billion (118.8 billion Yuan) last year. Now, Chinese boardmakers are preparing to bolster their growth by focusing on a huge new market: China.
Frost & Sullivan’s latest analysis said that China’s board industry grew at such a heady rate during the first three quarters that even after the worldwide economy tanked during the fourth quarter, China’s overall industry grew 2.2%. This year, F&S predicts a decrease of 18.2 percent.
But next year, that decline will be wiped out as China’s revenues return to 2008 levels.
This escalation will be driven by four new markets.  Globally, third-generation (3G) mobile communications and netbooks will provide continued growth.
The development of a middle class in China provides huge potential. F&S noted that government support for the spread of digital TV could create a solid market. The government’s Appliances to the Countryside program hasn’t yet made much of an impact, but its potential is also large.
The fourth market, cars, is serving as a technology and volume driver while those markets simmer. In sharp contrast to other regions, China’s auto sales grew last year. The drivers were China’s local market and rapid overseas expansion through merger and acquisitions.
The report, released last week, noted that Chinese PCB manufacturers have remained conservative, cutting capital expenditures during the slump. This year, market demands for PCB production equipment is expected to fall about 18%.
The F&S study doesn’t paint an entirely rosy picture for China. Though volumes are huge, its industry still lags far behind Europe and U.S. in the development of PCB industry. China’s core production technologies for complicated multilayer boards are held by foreign giants. It suffers from a lack of matured industry standards and the coordination role played by industry associations is ineffective.
This report doesn’t hold any major surprises, but it quantifies the current status of a huge market player. The old “sleeping giant” nickname may only need upgrading to snoozing or drowsy, but any change in China can have a huge impact on any company’s long-term planning.

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