Exclusive

China a viable destination for small electronics firms

25 January 2013
By Edward Gent
Mobile version
Share |
ACW International's manufacturing facility in Zhuhai, China

ACW International's manufacturing facility in Zhuhai, China

China is a viable option for small business, says the chairman of an electronics manufacturer putting its facilities up for sale.

ACW International put its manufacturing facility in Zhuhai and its international purchasing operations in Shenzhen and Hong Kong up for sale yesterday, just weeks after most of its UK arm was sold to TT electronics

The firm was established and 1989 and had grown to become one of Britain’s largest independent contract electronics manufacturers, serving commercial, industrial, aerospace, defence and security markets

But it suffered serious losses in 2012 after a significant proportion of its customer base was hit by the economic downturn.

Chairman and founder Chris Woods said: “The down turn was something we could forecast for and we made adjustments and started restructuring to suit. But things just carried on plummeting downward and it just moved to a position where we didn’t have adequate funds to keep us going.”

Despite the fortune of his own company, Mr Woods is keen to champion China as a destination for smaller electronics businesses – though he says it is not a challenge for the faint hearted.

“It’s not an endeavor to be taken on lightly,” he said. “It’s nothing like setting up a business in the UK or US. The bureaucracy you are required to go through is enormous.

“Being a single party state the government is all important in a way you don’t experience anywhere else. It was an education in the way things are done that we had to get approval from 14 different government departments to get a business licence in the first place.”

Mr Woods initially attempted to set up the operations from the UK, but quickly realized he would have to go out to China to get things off the ground.

“Once you are there and you’ve gone through all the hurdles there are a lot of advantages in China,” he said. “The big thing is electronic manufacture. It’s very well supported, like nowhere else I’ve seen. You can go to ‘electronic city’ in Shenzen, where our sourcing company is based, and you could see multistory, big buildings crammed with electronic components.

“Suppliers could just walk in there and get just about everything you could dream of to make any prototype you wanted.”

With low labour costs and a strong work ethic Mr Woods believes even small businesses can flourish in China, though there are pitfalls.

He said: “You do need to make a significant commitment to it, which is what we did rather than entering into a joint venture with a Chinese company. There’s an apt saying, ‘same bed, different dreams’.”

When setting up their businesses in China ACW opted for a Western-managed structure, to ensure they could enforce their own standards of quality and management.

And in a country where corruption and loose attitudes to intellectual property are not uncommon, making a stand can present a challenge when starting out.

“There is probably corruption everywhere but it is pretty endemic in China,” he said. “When you are starting out it definitely does cause problems because you can meet resistance, but you just have to brave it out.”

Cultural and language barriers also present difficulties for new companies, but Mr Woods says the universal language of business overcomes most obstacles.

“I found I got on very well with Chinese people. I felt very comfortable with them and they are good businessmen,” he said.

“The language and the complete lack of transparency for non-Chinese speakers and writers is just unfathomable for most people, that really is difficult. But people in China, although there may be a different slant to it, have the same aspirations and desires as people around the world.”

With ACW’s Chinese operations up for sale Mr Woods is keen to promote the benefits of buying into a company already well-established in China. But for those thinking of going it alone he had three pieces of advice.

He said: “Everything will take longer than you think, and therefore will cost more. You need to be out there and build relationships and see for yourself what is going on. Deal directly.

“And finally, you need enough scale to justify it. People can’t understand why all electronics aren’t made in China because it is cheaper. The reason is you’ve got to justify the cost of setting things up.”

Latest Issue

E&T cover image 1607

"As the dust settles after the referendum result, we consider what happens next. We also look forward to an international summer of sport."

E&T jobs

  • Design Delivery Leader, Palace of Westminster Restoration & Renewal (R&R) - Engineering Lead

    House of Commons
    • City of Westminster, London (Greater)
    • Circa £65,000 (There may be more for an exceptional candidate)

    You will lead on a number of engineering infrastructure and associated workstreams under direction from the Deputy Director

    • Recruiter: House of Commons

    Apply for this job

  • Senior Engineer, Network Equipment

    Energy Networks Association
    • Westminster
    • £49-58k per annum, dependent on experience

    Manage issues and working groups relating to all types of equipment and assets used on the UK Transmission and Distribution Networks.

    • Recruiter: Energy Networks Association

    Apply for this job

  • Programme Manager, Network Resilience

    Energy Networks Association
    • Westminster
    • Competitive salary, dependent on experience

    Co-ordinate the network resilience, emergency planning and the Single Electricity Number (SEN) work in the ENA Engineering team.

    • Recruiter: Energy Networks Association

    Apply for this job

  • Assistant Professor (Tenure Track) of Smart Building Solutions

    Premium job

    ETH Zurich
    • Zurich, Canton of Zürich (CH)

    The successful candidate is expected to develop a strong and visible research programme in the area of control and diagnostics of building systems

    • Recruiter: ETH Zurich

    Apply for this job

  • Process Controls Leader

    Premium job

    Phillips 66
    • Humber Refinery, South Killingholme, North Lincolnshire DN40 3DW
    • £60k - 75k plus extensive Compensation and benefits package, dependent upon experience

    Experienced Process Control Leader providing leadership and technical support for Oil Refinery. Extensive Compensation and benefits package.

    • Recruiter: Phillips 66

    Apply for this job

  • Regional Technical Support Manager

    Premium job

    Siemens
    • Warwick, Warwickshire

    You will be required to lead the regional Customer Services strategy and resources to maximise Customer satisfaction.

    • Recruiter: Siemens

    Apply for this job

  • Communications Engineer

    BAE Systems
    • England, Hampshire, Portsmouth
    • Negotiable

    Communications Engineer Would you like to play a key role supporting the UK's Maritime Communications Infrastructure? We currently have a vacancy for a Communications Engineer at our site in Portsmouth. As a Communications Engineer, you will be carrying o

    • Recruiter: BAE Systems

    Apply for this job

  • MetOp-SG Receiver Project Manager

    Science and Technology Facilities Council (STFC)
    • STFC Rutherford Appleton Laboratory, Harwell, Oxfordshire
    • £37,213 - £50,926 (depending on experience)

    Project Manager to oversee the development, production and test of spaceflight components and integrated receiver systems

    • Recruiter: Science and Technology Facilities Council (STFC)

    Apply for this job

  • Financial Controller

    MBDA
    • Stevenage
    • Competitive Salary & Benefits

    An opportunity has arisen to manage a diverse range of financial controlling activities within the Equipment Team (ET) and newly Centres of Excellence (CofEx) function...

    • Recruiter: MBDA

    Apply for this job

  • Weapon System Product Support Manager

    MBDA
    • Stevenage
    • Competitive Salary & Benefits

    The Opportunity An opportunity has arisen within MBDA?s Customer Support & Services organisation for a strong competent leader to deliver a key Weapon capability primarily...

    • Recruiter: MBDA

    Apply for this job

More jobs ▶

Subscribe

Choose the way you would like to access the latest news and developments in your field.

Subscribe to E&T