Guangdong leverages location, supply chain

	The model GW-BT-H5 Bluetooth handsfree kit from Great Well has dual microphones with echo and noise cancellation. It comes with red, green and blue LED indicators.

Makers take advantage of the hub’s network of support industries and services.

Guangdong province is the biggest sourcing center for mobile phone accessories in China. It accounts for more than 70 percent of the country’s key products in this segment, including batteries, chargers, handsfree kits and cases.

About 1,500 suppliers have set up factories there to take advantage of its strategic location as an export zone. With 36 seaports, the area has established a convenient and efficient logistics system that makes overseas trade easier and less costly. This allows companies, which depend mainly on volume shipments to thrive in the cutthroat line, to sell products at prices within adequate margins. More importantly, the arrangement enables buyers to source devices quoted 10 to 20 percent lower than those from other hubs.

Apart from Guangdong’s geographical edge, its flourishing support industries, particularly electronics, telecom and textile, renders it an ideal base for mobile phone accessory manufacturers. These, in addition to a host of service providers, permit businesses to obtain components and materials locally and subcontract various processes when necessary.

The majority of suppliers cater to OEM customers, local agent companies and retail chains. Some also accept OEM orders from international mobile phone vendors.

In this regard, Guangdong’s position as China’s largest production hub for handsets directly benefits accessory makers since many such players cooperate with manufacturers of the former for OEM and ODM undertakings. Convenient access to the rest of the world allows design teams in the area to learn quickly the latest trends in key markets.

The majority of China’s 500 mobile phone battery suppliers, including key players BYD, Shenzhen B&K and Shenzhen BAK, are located in Guangdong. Small and midsize enterprises turn out 10,000 to 500,000 units per month. They usually outsource battery cells from leading companies and conduct assembly, QC and packaging in-house. In most cases, mold making and surface mounting are also subcontracted to battery housing providers with more than 1,000 designs.

Large enterprises can produce millions of mobile phone batteries per month, and handle cell manufacture, SMT and mold making in their own facilities.

A set of battery housing costs $0.20 to 0.30. New molds can be customized for $1,500 to $3,000, depending on the size, shape, detail and craft. Mainstream batteries have 600 to 1,200mAh storage capacity and are priced $1.50 to $3.20 based on materials and components.

A notable trend in some markets emphasizes security approval, including UN 38.3 and MSDS. The first costs $1,500 to $2,000, while the other runs up to $400 for each model.

Li-polymer is quickly rising among new products because of its smaller imprint and bigger capacity compared with cousin Li-ion variety. NiMH units, which may be 20 percent less expensive, however, are 30 percent heavier than Li-ion.

Some suppliers forecast that in the next three years, Li-polymer will level off with Li-ion in terms of prices, and begin overtaking the latter in both domestic and export sales.

Challenges encompass rising material outlay, the influx of foreign-invested battery companies in the country and the lack of added value.

The province, particularly the cities of Yunfu, Shenzhen, Dongguan, Huizhou and Zhongshan, gathers 70 percent of the country’s mobile phone charger makers.

More than 90 percent of the supplier base is composed of small and midsize operations with fewer than 300 workers and a monthly output ranging from 100,000 to 700,000 units. With strategies largely focusing on boosting exports, most businesses are set on implementing stricter processes for sourcing, manufacture and testing to meet stringent requirements from key markets such as Europe. Many ensure quality by carrying out OQA and IPQC for most products and maintaining zero defect and customer return rates. The majority of players are ISO 9001 and 14001-certified.

In-house laboratories are usually equipped with RoHS, temperature, leakage current and salt fog testers, digital LCR meters, transistor characteristic displays and industrial dryers. These are either imported or made by foreign-owned suppliers operating in China. While the bulk of materials and components are sourced locally, plastics and ICs for high-end models are from international vendors such as Freescale. Chips meet CEC and Energy Star specifications.

Improved chargers feature better protection against overcharging, -voltage and –temperature, and short circuit. Many are now equipped with temperature and voltage detectors, and able to maximize the battery capacity with more efficient charging technologies.

There are about 100 to 150 Bluetooth handsfree kit makers in Guangdong, located in Shenzhen, Dongguan, Zhongshan, Huizhou and Enping cities.

These are mostly small and midsize private companies that also offer wired headphones, electroacoustic products and other electronic devices. The first group has 200 to 300 workers and can turn out 10,000 to 20,000 units a month, while the other employs about 500 personnel and have a monthly capacity of 30,000 to 70,000.

Large operations can yield 100,000 units or more per month and have about 800 in their manpower complement. Regardless of size, businesses are heavily driven by OEM and ODM orders.

Generally, ICs from Taiwan’s ISSC and Terax are used in entry-level models. Midrange and high-end versions, meanwhile, adopt Broadcom and CSR chips, with the latter accounting for 80 percent of output. This trend is expected to continue in the next 12 months.

More than 800 of the country’s 1,000-plus mobile phone case suppliers, mostly mainland China-owned with a few Hong Kong-invested, are based in Guangdong.

Materials, including PU, PVC, EVA, genuine leather, silicone, textile and thread, are easily sourced locally, mainly from Guangzhou and Shenzhen, or from nearby provinces. The first four production inputs are used in 70 percent of shipments. Traditional enterprises tend to focus on designing techniques and prefer to outsource silicone and crystal cases because of expensive molds costing as much as $1,400 per model. Others, however, have ventured into specializing in these two materials and have acquired mold-making and injection machines.

Designs follow closely that of smartphones, which are currently experiencing booming demand and broadening applications. Form and functionality are given equal attention, and protection is emphasized.