Shanghai: gateway to the future: want to understand what globalization means? Come to Shanghai.

It used to be that only the true pioneers were here. Hell, some of us were here before there was a show. Now we try to figure out who is not here and ask, where are they? What's wrong with them? Maybe they're not the players we thought they were.--Don Watt, Arlon

People are here to create partnerships, to develop strategic alliances and joint ventures; they are here to sell something. A few years ago, they were at this show to see if they wanted to do business in China. Now, they are here to figure out how to do business in China.--Yuan Xiao Yah, CPCA 

If you want to see the face of globalization, come to Shanghai. The guidebooks say that Shanghai is the biggest city in the biggest country in the world. And the CPCA Show is fast becoming the largest printed circuit board trade show in the world. This year there were 150 more exhibitors than last year, and 520 more exhibitors than in 2002. That means that in just two years this trade show has nearly doubled, from 600 exhibitors in 2002 to 1,120 this year. I cannot recall any industry (or non-industry, for that matter) expo that has seen this kind of growth. A few weeks earlier, we were pleased to report renewed activity at IPC Expo--and that was due to the merging of Expo with Apex. I don't even want to contemplate the magnitude of the CPCA Show if it were combined with an assembly expo. Scary!

Several of the exhibitors I spoke with, some from Europe and some from the U.S., said the same thing: the CPCA Show has become the true international industry trade show. Compared to CPCA, IPC, JPCA, HKPCA, KCPA and yes, even Productronica, have been reduced to regional shows. This is where you come to conduct serious business. This is where you come if you want to sell to the fastest growing PCB market.

Besides the sheer magnitude of the show, one has to be amazed by the energy exuded. The elbow-to-elbow, walking sideways-to-get-where-you are-going effervescence makes this such an exciting venue. People from all nations are mixing it up, trying to sell something at a fast and furious pace. In one corner a blues band plays all day long; in another, a huge plasma TV loudly loops that chocolate factory assembly line episode of I Love Lucy (I'm not sure of its significance, except that it was fun to stop and watch with people who had never seen it). Then there is the noise, the show noise, the sound of people talking, negotiating, selling in a cacophony of languages, a weird high-tech tower of Babel kind of thing that just makes you want to stop in the middle of the aisle and absorb ... but be careful, you might get run over: this is a show for those who know where they want to go, and fast. No window shoppers need apply. You either want to buy something, sell something, meet someone or make a deal or move on; other than that, get the hell out of the way. The pace of this show was so accelerated that most of the interviews I did were on the run, or squeezed in between ongoing sales meeting. One of my interviews (I won't tell you which one) took place a week after the show: the subject was so busy that after four or five failed attempts to talk, we agreed to try it another way.

The major companies were all there--Camtek, Orbotech, Kodak, Pluritec and the rest--and by the size of their booths and number of staff on hand they have obviously decided this is the show to invest in. The booths were the largest I have seen in years, huge two-story monsters complete with meeting rooms on the second floor. More importantly, all of them were crowded every time I stopped by (and I made a point of checking). The space provided was the largest yet by far, two buildings, multiple floors, and still yon had the feeling that it was not big enough.

The CPCA thinks, and is not embarrassed to admit it does not know for certain, that there are now about 1,000 PCB shops in China. Last year (when it also said it did not know) they thought it was about 800. Many of them are very small.

This city has about 1% of the country's population and accounts for 4% of the country's GDP, 11% of financial services and 12% of total industrial output. Volkswagen and GM build cars, Mary Kay sells cosmetics and Amway has over 70,000 distributors here. Coca-Cola has been here since 1933. The per capita annual income is about $3,000 and those in management positions earn about $10,000. A plant manager for a PCB plant will earn about $15,000 a year plus housing. Living space is about 140 [ft.sup.2] per person. A Big Mac, fries and a Coke at McDonalds will cost about $1.20.

The culture demands hard work. People do whatever it takes to make a living, working long hours to feed their families. This country practices a very funny sort of Communism. Indeed, China is without a doubt the most capitalistic and entrepreneurial Communist country in the world.

What does all this mean? Does it spell doom and gloom for American, European and other Western companies? Does it mean all the circuit board business will come to China? I don't think so. I think it means that we all have to be very sensitive to what is going on in China, just as we have to be sensitive to the situations in India and Vietnam and Thailand. These countries and their economies are coming into their own, and have become a factor in the worldwide PCB economy, but it does not mean the end for the rest of us. What it does mean, though, is that we need to do things differently, to know, understand and appreciate the evolution of our marketplace, and learn to do something about it. We need to figure out how to work the situation, how to take advantage of it and how to make money in it.

If you were not in Shanghai last month, you should have been. You should have been there with those other entrepreneurs wheeling and dealing, making sales, creating JVs, partnerships and strategic alliances with people not just from China but all parts of the world. Whether you like it or not, this is the industry today: figure a way to deal with it or be left behind. while some of us get angry and complain about the unfairness of it all (and it probably is unfair, but then so is life), others are finding partners, reps and brokers to sell their PCB equipment to those 1,000 Chinese board shops. And while some of us are sitting on committees trying to figure if we should call ourselves "shops" or "fabricators" or "interconnect device experts" or basically rearranging the deck chairs on the Titanic, other Western shops are taking business away by convincing customers (read: your customers) to let them handle all their board requirements from womb-to-tomb, the prototype and pre-production quantities in their American shops and the mega-volume with their Chinese partners. This "Asian thing" is not about politics, it's about economics and economics are not swayed or spun or determined by political arguments.

The CPCA will be held again next year, same time, same place. I guarantee that it will be bigger, more vibrant and entrepreneurial and even more of a trade venue for East to meet West. If you arc serious about staying in this industry, book your ticket now. PCD&M

ACKNOWLEDGMENTS

Special thanks to Sarah Ni, my assistant in Shanghai who contributed to the data gathering and translation needed to write this article.

RELATED ARTICLE: The Chinese view.

WE SPENT MUCH of the show talking to Asian companies there. Some of the comments and ideas we gathered:

We have grown over 30% in the past year. The European and American markets cannot compare with China in terms of price, scale and production ability. Right now Westerners should be looking to "Asianize," not globalize. The market is right here and we are growing by taking advantage of that.

Mike Na

Marketing Manager, Dalian Pacific Multi-layer PCB Co.

I see a growing demand for and from the global market. More factories are growing in Asia. Globalization means to me that we must all cooperate. Asia has the production power, and Europe and the U.S. have the technology and demand; if we put them together, everyone wins.

Anni Wang

Nan Ya Materials Corp.

I have been to the TPCA Show but this is definitely bigger. There are more customers from the mainland here. The Asian market is the biggest in the PCB industry. I see more overseas companies opening factories here and the rest of Asia. Globalization is necessary for the industry. It will standardize products and measurements, facilitate the supply chain and enable technology and profits to be shared. There will be much more competition, but if all companies participate they will create win/win.

Danny Sun

Ya Hsin Industrial Co. Ltd.

The movement to Asia has certainly brought costs down. But Europe and the U.S. still own the best technology.

F. W. Lee

MFS Technology Group

China is a great source for medium- to low-level products. The advantages here are low costs, materials and resources. Where they are still weak are in the areas of technology, equipment and R&D. Japan and the U.S. still have the best technology, but production moves to Asia, to the benefit of both sides.

David Xie

China Circuit Technology Corp.

I see Asia as a growing market, causing a large number of new companies to come here. There are some definite advantages that have made it difficult for companies from the West to compete; among them are location, costs and price, government support (tax regulations, facilities and factory locations), cheaper labor. I see one of the main issues between the East and West at this time is that of trust. There are trust problems between companies and consultants and agents. We do business only with existing, long-term-relationship buyers.

Jobs Zhong

PCB Singapore

One of the biggest needs at this time is to bring companies together as well as their cultures. People are coming to this show to create partnerships with each other. Asian companies want to create alliances with companies from the U.S. and Europe and companies from those places want to work with Asian companies. So you have a situation where both parties do want to work together but they do not know how. This is a challenge that the CPCA wants to take an active role in solving. We have decided to work on strategies that will not only introduce companies but also teach them how to work together as well. I see this as one of our most important functions in the near future.

Yuan Xiao Yan

Exhibition office director, CPCA

RELATED ARTICLE: From tel avil to Shanghai.

LAST YEAR ISRAEL ENDE was named president of Camtek Asia. About four months ago he relocated his family from Israel to Shanghai. We caught up with Ende to get his insight on doing business in China, from both a business and a personal perspective.

PCD&M: You came to China from Israel only a few months ago. What is your impression so far of doing business here? Is it very different from other parts of the world?

Israel Ende: Even though I had some business experience in the Far East, it was a big change. Doing business here is totally different than what we are used to in the West. I don't want to say it is better or worse, but it is different. The culture is different, the behavior during meetings is different and negotiations are different. During the past two years I was working in the U.S. and Europe. It was very slow and the number of companies [dropped] dramatically and those that survived had many difficulties. In China it is totally the opposite. New facilities, expansions and lots of activity.

PCD&M: As president of Camtek Asia, how do you see the PCB economy at this time?

Ende: The situation here is pretty good. The most important thing is that there are many foreign-owned PCB facilities in China--Taiwanese, Japanese, companies from Singapore and others. The expansion of China is coming as an alternative for all facilities that are closing or reducing capacity [elsewhere]. China is now producing standard products while high-end PCBs and substrates are being built out of China, but I think they will be moving here soon as well.

One of the things to look into is supply-and-demand balance. Many companies are now about to expand capacity. The question to ask is, Is demand going to grow? In which segments, and how much?

PCD&M: How would you rate this show?

Ende: We can feel the good atmosphere. People are really talking business. They have real needs and we have closed a number of deals. I am told that this is one of the busiest shows that Camtek has been to in a number of years, and one of the best.

PCD&M: You recently moved your family here from Tel Aviv. What do they think of Shanghai?

Eerie: The city is very much cosmopolitan and it's very easy for Westerners to get used to living here. In any case, the reaction to another country is never easy, especially China. Nevertheless, after half a year we are starting to get used to it and really enjoy it. My wife is taking Chinese language lessons and my son has taken up table tennis, which is a passion here. Overall we are all finding it enjoyable.

DAN BEAULIEU is a PCD&M columnist and founding partner in D.B. Management Group (dbmpcb.com). He can be reached at 207-873-0793; [e-mail]. His just-published book, Printed Circuit Board Basics, is available from UP Media Group.