NEWS & Notice

Automation of processes Helps Improve Chaiwan Syndrome

Issue Date :  2010.08.10  /  Reporter :  Lee, Hyungsoo /  goldlion2@etnews.co.kr

The old practice of the electronic parts industry that production in China and Vietnam is necessary to secure price competitiveness is being broken.

Although most parts manufacturers have focused on building overseas production lines as the No. 1 company in securing profitability, the number of parts companies that maintain cost competitiveness is not inferior to that of Tsai Wan (China and Taiwan) companies by developing process technologies and automating them while expanding investment in production facilities in Korea.

With the emergence of Korean parts makers that overcome the Tsai Wan parts syndrome through the development of their own equipment and process automation, they are having the effect of not only improving productivity, but also expanding domestic investment and creating jobs.

Yeonho Electronics (CEO Choi Yeon-hak) has grown into a company with sales of more than 400 billion won by steadily increasing its market share in the connector sector, a multi-species small-volume market. When other domestic companies moved their factories to China, the Yeonhwajangja rather invested in automating domestic facilities. It has secured cost competitiveness despite unfavorable conditions in which prices of raw materials such as resins and nonferrous metals have risen and set companies are cutting their prices.

It employs more than 1,800 people in Korea alone, and its efficiency per employee exceeds twice that of its competitors. The company has built production lines in Tianjin and Dongguan in China, but it only assembles semi-finished products locally and manufactures key parts domestically.

BSE (CEO Park Jin-soo), a microphone company for mobile phones, is also a small and medium-sized company that occupies 48% of the global market through process automation. Since last year, it has entered the mobile phone microspeaker and receiver market and recorded rapid growth. Although the microphone and speaker business is a representative processing industry that requires a lot of work, BSE is strengthening its competitiveness with automated production process technology. It has an overwhelming lead in the microphone market, and sales in the speaker division, which is a new business, are expected to reach 30 billion won this year from 9 billion won last year.

CoilMaster (CEO Cha Kwon-mook), a power inductor company, made a large-scale investment in domestic production lines last year. It is unusual considering that competitors are moving their factories to China to cut costs. Koilmaster is planning to develop its own ‘innovation line’, which is an automated equipment system, and increase production scale of inductors from 60 million to 100 million within this year.

Power inductors and transformer equipment have been supplied exclusively by Japanese companies, but CoilMaster has carried out its own development, significantly lowering the cost of facility investment and improving the cost structure. In addition, CoilMaster believes that domestic production is advantageous as front industries such as TV, audio, and mobile Internet devices (MID) are active.

An industry official said, In the meantime, process technology has been likely to be underestimated, and the general-purpose parts market has been perceived as the standard of management to hand over to Chaiwan company. However, more companies will shine due to process innovation and domestic production.

Staff Reporter Lee, Hyungsoo goldlion2@etnews.co.kr