| The China Syndrome |
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| Written by Phil Zarrow | |||
| Saturday, 31 May 2008 19:00 | |||
Mere mention of it can set people off, but there’s reason to be wary.One reader took umbrage at my mention of substandard gold deposits – the so-called “finger on the scale” approach by fabricators. The line in question was, “Sadly, this is particularly true (though not exclusively) with PCBs coming from China.” I followed that by urging “strong Certificates of Compliance coupled with batch testing of incoming PCBs to keep them honest. This is always a best practice.” These best practices apply to any supplier, but, having specifically cited China, this reader took vehement offense. This raises a larger point. It’s clear investment in bare-board facilities in Southeast Asia during the past decade has been both significant and unprecedented. Nevertheless, there is clear evidence of shenanigans. Did you know, for example, the vast majority of counterfeit components originates in China?1 Or that in one brazen case, there was a complete knockoff of NEC – including some 50 products.2 When, for instance, a customer orders bronze fittings and receives steel painted gold to make them appear bronze, that’s a problem. Suffice it to say, one of the biggest problems facing those doing business with China is the supply chain. Add to that the – bad pun alert – wanton disrespect for the sanctity of intellectual property, and it adds up to severe challenges for those who do business in the emerging giant. These are key reasons why quite a few companies, including the largest EMS firms, are looking for alternative sites for manufacturing. Before you shower me with hate mail, understand I’m not taking the proverbial moral high ground here. There have been ongoing and consistent problems with PCBs fabricated elsewhere, including North America. But the sheer volume of material coming out of China makes it conspicuous. China has come a long way very rapidly, and with that comes growing pains. By comparison, those of us who grew up in the 50s and early 60s will recall the terrible quality of Japanese products. Today, Japan can look back on a long reputation for quality when it comes to consumer electronics, automobiles and optics. (Some of its electronics manufacturing equipment is really damn good, too.) Likewise, we were wary of quality from Southeast Asia – Singapore, Malaysia, Thailand, the Philippines – but that has pretty much passed, and there is no stigma with goods manufactured there. In fact, manufacturers are migrating from China to Malaysia, Vietnam and Thailand, as well as Mexico. Returning for the moment to fabrication, Taiwan, once known for dubious quality, is believed by many to produce the highest quality PWBs in the world. Years ago, I stopped by an auto wreck yard in search of parts for one of my projects. One of the sights I beheld was a row of Hyundais. Not all of them were actually wrecked, just broken or rusted and thrown away. Now Hyundai has a better warranty than BMW, evidence of how far Korea has come. China has transformed from inward-looking Maoist communism to one of the major players in the world market. The nation has evolved from companies with names like “Peoples Radio Factory No. 22” to become home to all the top-tier EMS firms (at least for now). A few years ago, I was troubleshooting at a major Taiwanese ODM facility in Shenzhen, which built the company’s own branded PC, along with those of a major Japanese and American OEM, respectively. Each line was comprised of a DEK Galaxy fully automatic printer, feeding into three Fuji CP-8s and a Universal GSM-2, followed by a Heller reflow oven, which fed into a manual component “stuffing” line, and finally, a Vitronics-Soltec wave solder machine. There were 100 of these lines. It was astounding. I lived through the heyday of the big OEMs – Motorola, IBM, H-P, AT&T – and never saw a facility this immense. And the capacity was scheduled to double within the next year. Cheap labor does not a permanent manufacturing paradise make. With its built-in mega-market, the byproduct of its mega-population, China will prevail as a manufacturing power. Supply chain, IP and the inherent language differences will be dealt with. This is not the forum to discuss China’s political machinations. Taken together, however, China is in line to gain another, non-coveted title: the country everyone loves to hate. Remember, though, we’re all in this together. References
Phil Zarrow is president and a principal consultant at ITM Consulting (itmconsulting.org); This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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