EXPORT MANAGER
China, the second largest economy in the world, has a significant potential in this regard. China, which is also the first country that comes to mind when it comes to electronics, is an attractive market in the field of components. When we assess the market, we see that many global brands have shifted their production to China in the recent years. The most important reason for this was the cheap labor costs and the attractiveness of the ease of access to raw materials. Today, on the other hand, we can say that China is gradually losing its old charm. The fact that the country’s labor prices are rising is one of the most important reasons for this. However, many brands continue their production through EMS (Electronics Manufacturing Service) companies in China. We associate this to the fact that this market still retains its attractiveness in terms of components.
“Ozdisan estimates that it will make 10 percent of its total export to the Chinese market.”
The most difficult market in the world: China
It is a fact that China, which is perceived as one of the most difficult markets in the world, bears a fierce price competition. Manufacturers always offer their lowest prices to the Chinese market. When you compare it with Europe, this becomes even more obvious. We see that the prices of many brands are reduced almost by half when they are offered to China. When Ozdisan Elektronik’s export targets for 2018 are taken into consideration, the Chinese market has an important share. Ozdisan estimates that it will make 10 percent of its total export to the Chinese market.
Allocation is on the way
There is an allocation (material separation/allocation) condition in the sector, the impact of which we have started to feel since 2017 and which is expected to reach the highest level in 2018 and will continue throughout the whole year. If we need to detail this a bit more, there is a serious fluctuation in the supply and demand balance in the market. On this balance, the momentum is currently on the manufacturers’ side. We can say that global component production cannot meet the current demand. We can attribute this to several reasons. One of the primary reasons is the “raw material shortage” condition in the market. Since there is a significant shortage in the raw materials of IC integrated group products, this affects all related sectors and the production of products using this material group.
Electric vehicles will change the fate of the industry
The increase in production in the electric vehicle market also affects the electronic component sector in terms of increasing material demand. Also, in 2018, the production of new generation smartphones is continuing its upward trend. There is a serious difference in the number of components used in older model phones and new generation smartphones. On average, smart devices need 10 times more components.
The correct stock management provided an advantage
When assessed on a material basis, these developments on the production side also affect the component market. Component demand has increased rapidly since the first quarter of 2017 compared to previous years. It is necessary to closely follow these developments that will also cause the delivery times, which are the next stage after the ordering process of the products, to be extended. Because, some component manufacturers have indefinite approved terms such as “99 weeks delivery times”. At this point, the most important advantage of Ozdisan was that it managed to analyze the dynamics of the market correctly. Since we operate on “stock” basis, we are able to manage this new process correctly in terms of both the domestic and foreign markets in 2018. We can claim that we managed to enter the “Shortage” process preparedly.
“Sektörde 2017 yılından itibaren etkisini hissetmeye başladığımız, 2018 yılında en üst seviyeye ulaşması beklenilen ve tüm yıl boyunca da süreceğini öngördüğümüz bir alokasyon durumu mevcut.”
