Chinese market shows phenomenal growth

EMS stands for Electronics Manufacturing Services, while ODM is an acronym for Original Design Manufacturers.

The 69 page report assesses the rise of mainland China as the "main engine" of global electronics manufacturing.

That trend is fuelled by unlimited cheap labour, 1.4 billion consumers, and what it describes as a booming economy ripe for development.

The report says that for the foreseeable future, China has the right combination for success, and that will help it successfully compete against India, Vietnam, Indonesia and Brazil.

Provided, that is, that the pro-business attitude of the current government continues, the report warns.

But there are also dangers in the market, due to widespread counterfeiting, financial scams, protectionism, government corruption, poor law enforcement and copy protection problems, iSuppli warns. The sabre rattling with Taiwan is also a problem, and although the cheap labour appears attractive to the plutocrats, there are hidden costs, and a huge contrast between rural poverty and the big cities.

Most top tier EMS providers are pushing fast in the Chinese market by acquisition, expansion and new projects, say iSuppli.

Meanwhile, Taiwanese ODMs are expanding rapidly into the Chinese marketplace, with those makers being particularly successful in the PC and peripheral sectors. Mobile phones and networking/access gear are also likely to be successful.

The report estimates that total "Greater China" EMS and ODM production will soar from $40.1 billion in 2001, to $156.6 billion by 2006.

OEMs need to establish procurement offices in the region, including Hong Kong, while an office in Beijing is necessary when contact with the government is required.

This chart shows how the two different areas perform.

The report outlines the major ODMs and their particular areas of revenue, and analyses their business models, performance, and product areas. All very illuminating. You can find iSuppli here µ