Microcontrollers boost local distribution business in China
By Amy Wang, Contributing Editor -- EDN, October 11, 2007
Microcontrollers are gaining widespread attention in China; increased consumer demand for intelligent features in consumer and communications products is fueling this interest.
Microcontrollers are showing up in everything from rice cookers to joysticks. Although that proliferation opens up opportunities, it also makes it challenging for Chinese vendors to deliver the right reference designs and design support.
Chinese distributors and independent design houses have rushed to fill the void. The partnership is synergistic; design houses have product knowledge, and distributors provide sourcing expertise.
CEASC (China Electronics Appliance Shenzhen Co), a Chinese distributor with a franchise for Freescale microcontrollers, is a case in point. The company, which also has franchises for IDT, National Semiconductor, Zilog, Catalyst Semiconductor, Montage Technology, and AVX/KY, among other companies, has positioned itself as a provider for Chinese OEMs. Consequently, those turnkey systems use major lines that contributed to CEASC's revenue. According to Xun Liu, a vice president at CEASC, 80% of the company's revenue comes from design wins.
Local Chinese distributors started getting attention from international suppliers because of the diverse demand in China and increased design capability associated with the distributors. International suppliers are using international distributors to track transferred business to Chinese and Taiwanese distributors to serve Taiwan-based companies in China. Local distributors target local customers because of social networking and cultural concerns.
Though many consider Chinese distributors weak at supply-chain management, distributors do know how to serve their customers. One facet of that relationship involves technical support, which is why CEASC wants to be a provider rather than a trader. The company received its ISO9000 certification to improve its quality-control capability.
Based on research by China Outlook Consulting, orders by Chinese distributors accounted for 52% of China's distribution in the total market, and international distributors took 13% of local-order business in China.
