Overview of the perspectives of Chinese components on Russian electronics market
Not long ago it was looking like the only advantage of Chinese electronic components, along with many other products produced in China, is low price. Their quality and technical level were automatically causing doubts. Today China has achieved impressive results in various spheres of science and technology, Chinese companies are topping the ranks of telecom market, market of user equipment, IT. Crystals manufacturing is rapidly developing in the country.
Our editorial staff, together with ExpoElectronica exhibition, decided to talk to the representatives of the companies, including the distributors of electronic components, a manufacturer of electronic devices in Russia, and a Chinese company with products on the Russian market, to find out their opinion on what the Chinese electronic components are like today, what’s the demand for them on the Russian market, and what challenges of working with Chinese manufacturers are off the table, and which ones are not fully resolved yet.
Georgy Kon, Chief Product Manager in «High Frequency and Microwave Components» Department
It is quite obvious at the moment that the electronic industry in Russia should not depend on the manufacturers in the West, because of the ever changing politics and strategic goals of Russia. We’re talking about components from the USA, Europe and Japan (we’re arbitrary considering it part of the West here). Nevertheless, it is still impossible to stop using all the components and technologies produced abroad once and for all. It would take 5, maybe 10, or more years for the gradual transition to the home-produced element base with the simultaneous growth of its advantages over competitors.
Products manufactured by commercial companies in P.R. China, as well as the state institutes of the CETC (China Electronics Technology Group Corporation) structure and others, could become a compromise within future changes. The Chinese components are distinguished by comparatively high characteristics for various options of use, and their competitive ability is growing, closely following the analogues from the USA, Europe and Japan.
The companies within the structure of the CETC company have all the technologies, relevant to the Russian market, like 0,15 and 0,1 µm GaN HEMT.
The demand for these and other components is growing every year, which is caused primarily by the lack of any export restrictions on supplies to Russia.
The dynamics of the development of Chinese products is impressive, especially the microwave electronics. In the times of the USSR we were assisting with organising several productions in China, including the construction of several semiconductor components production facilities (for example, CETC29 in Chengdu). In the 2000s their products went for sale for export, but were way behind the characteristics of the Russian ones, and were still more expensive. In 2020 the microwave components produced by NEDItek, Metda and SIWI became competitors to the western analogues, and with that they are series-produced in great quantities.
Along with reducing the price, the Chinese also managed to increase the yield value, which improves the dynamics of the bad quality complaints rate. In the last 5 years our company hasn’t witnessed any critical for the customer mismatch of the specifications stated to the actual ones. Neither the reliability was questioned.
The key feature, or better said, problem of the Chinese products (primarily the ones produced by state-owned institutions) is the limited amount of technical documentation provided for a product. Though it doesn’t apply to all the components, the trend is noticeable. For example, in case the required graphs or some data in the documents are lacking, the Russian developer is to contact the distributor, who has to provide all required information in shortest time. However, the limitation of original documentation often makes companies and developers decline manufacturer’s products.
To be fair, most components come with just enough documentation to make a decision on whether they should be used. However, a number of characteristics still have to be double checked with the developers, and if needed, the tests and measurements are to be performed by the manufacturer.
For Chinese customers, unlike the Russian ones, the website of the manufacturer, the completeness of documentation and popularity of the vendor are secondary. A Chinese customer contacts the manufacturer and visits the factory. All questions are resolved in a private conversation, the customer meets the manufacturer in person. In China this kind of business is based on relationships, and not facts provided independently by various sources. Our goal is to smooth this barrier, to establish cooperation, win the favour of the customer and to concentrate the attention of the manufacturer on the project.
All additional services, in particular the delivery of free samples, evaluation boards and the like, are provided by Chinese enterprises. The problem of the minimal order does not usually come in the way, since Chinese manufacturer are mostly aiming at replacing the hard to supply products on the market, i.e. expensive and unique. The minimal size of a microchip order would then be important when it comes to comparatively inexpensive, mass produced components, which are freely supplied by the US companies to China and to Russia.
As for delivery time, it depends. Because of the US sanctions concerning the Huawei company, the leader of the telecom market of P.R. China, their production had to urgently look for a replacement of the element base among the domestic suppliers. Due to the big volume, the delivery time was temporary increased. The situation is changing, the delivery time is decreasing today and many components arrive on time.
Our company is working with many Chinese manufacturers. In 2019 at the ExpoElectronica exhibition in Moscow we shared stands with the Elite (microwave and infra-red components) (P.R. China) and Oupiin (plug connections) (Taiwan) companies. Surely, certain lack of trust of Russian customers towards Chinese products remains. Our goal is to overcome the suspicion, therefore we are focusing on the strong points of these products and sharing our experience of delivering it to the Russian market. For many the phrase «made in China» is still strongly associated with the lack of quality and low price, not hi-tech, and unfortunately, with the lack of responsibility of the Chinese manufacturer and support of the products. However, times are changing, and our aim as a distributor, is to establish a direct and fast connection between the client and the manufacturer for solving all the possible problems.
We are not changing manufacturers, we have been working with trusted vendors for years. This is to highlight our responsible approach to each project.
The language barrier is certainly there, when we’re working with Chinese companies, and it concerns primarily the technical issues, not mentioned in the documents. We provide efficient support and organise conference calls to connect clients and manufacturers, if needed. In certain cases a possibility to visit the product supplier is provided.
Svetlana Peskova, Head of Marketing Department, LLC «Platan»
Chinese manufacturers of electronic components are widely represented on the Russian market today. Chinese brands are included in distribution lines of almost all big suppliers of electronic products in Russia. The demand for the Chinese diodes, resistors, switch boxes is obvious, especially in the areas of use, where the price segment for decent quality is prioritised over long-term stability.
Chinese products on the market in the sphere of Electronic Component Base, have changed a lot in the recent years: more often the passive components are offered, whereas the microchips, transistors and the in-house developed modules are not. HTC Taejing Korea, SG Micro, BPS, Ebyte, Espressif, Netsol and other brands are in the supply plan of our company. Business models of such companies are more or less the same: the engineering centres are based in South Korea, whereas the production facilities are in China. Offices of many companies are in the USA.
The popular lines of microchips for power management, LED, FET of general use are in the focus of interest of such manufacturers. The quality of their products is quite high. The fact that some global distributors include such brands in their supply lines speaks for that.
We should take note of the special aspects of working with Chinese manufacturers, their differences from the manufacturers in Europe and the USA.
Firstly, the attitude of the Russian manufacturers of electronics to Chinese products is ambivalent. The commonly used components feel safe, whereas the implementation of microchips and transistors in the domestic Russian developments is hampered. For some manufacturers the reason is related to the long cycles of testing and approving, for others - to the resistance to any changes as long as, for example, the TI originals are available on the market.
Secondly, the wide implementation of Chinese components in the domestic developments is disrupted by the lack of full technical documentation. On the one hand, big manufacturers publish catalogues, provide datasheets and certificates, however, often they would be incomplete or insufficient to the Russian developers. On the other hand, it is compensated by the availability of samples, possibility to place a test order and return the products. Additional benefit is the manufacturing and delivery times of the component parts, which would usually not exceed 4-6 weeks with delivery directly from the enterprise.
The difficulties of implementing semiconducting components of Chinese companies on the Russian market is, in our opinion, related to the side effects of the «transition period». Soon enough big Chinese microchip and transistor manufacturers will make part of the market, which currently belongs to such global giants like TI, On Semi, NXP and others.
Sergey Gushin, Chief Sales Specialist of «Simmetron» group of companies
In our company we’ve been discussing the topic of distribution of components produced in China several times in the last years. After witnessing the increasing interest of the clients and offers of Chinese manufacturers, we decided to develop this line in a consistent manner. We focused on those parts from the delivery catalogue of our company, that were not represented widely enough by manufacturers in Europe and the USA.
Today, with the dynamics of the demand, a certain shift is seen (on the market and in the mindset of the developers) in how the customers, i.e. manufacturing companies, perceive the products of Chinese suppliers. It shows clearly in the segment of project-oriented customers, which are in competition with Chinese manufacturers in their spheres. As the tests at the customer level show, the quality of the power-operated discrete components is in line with the traditional brands and their characteristics conform to the documentation. There are still some problems with the technical documentation regarding its completeness, content and translation, which is causing certain difficulties. At the same time a much quicker delivery and price gap of around 20-30% is a very noticeable strong point for the customers.
The «Simmetron» group of companies is the official distributor of several Chinese manufacturers of components and modules in segments like powered MOSFET, memory storage of various kinds, wireless modules. Technical support, samples and documentation are provided for project work. Most popular items are in stock. At the ExpoElectronica exhibition in 2020 in Moscow the whole product lineup from Chinese manufacturers, provided by our company, will be on display. We choose and check our partners in China carefully. The companies that we keep working with are large manufacturers, which have been known on the market for 15 years. Many of them are receiving state support, sometimes in the way of shareholding.
All the business correspondence, documents and communications are conducted by us in English. There are no communication problems, except for the time difference. Before starting work we visited the factories in China, and the Chinese regional representatives come to visit us and our customers in Russia on a regular basis. The crisis that began to show on the components market is stimulating the further development of distribution directions and is giving a chance to new suppliers. It is our priority to further expand collaboration with Chinese manufacturers.
Nikolay Dmitriev, Head of Purchase Department, Scientific Development and Production Center «StarLine»
Scientific Development and Production Center «StarLine» is the leader on the Russian market of automobile security with expertise in automation, robotics, telematics and development of unmanned driving technologies. The company is performing contract orders of any level of complexity in the sphere of producing electronics, press dies, plastic casting, cable assembly and others. The priority of «StarLine» in work with suppliers is the long-term stability of quality, ensured by sustainable technological processes. The company is looking up to the technologies of the international level and has the same requirements for all the manufacturers — Chinese, Russian and European. «StarLine» is a high-volume manufacturer, that’s why it’s important to make sure that it can not only make high quality samples, but also provide stable quality for the big volume of products. Constant audit of enterprises is required for that, even if it is a world-famous brand.
The key problem of Chinese manufacturers of electronic components is bad technical documentation. The enterprises in China are not always following the global guidelines. It can make the element base choice more complicated. And then you have to make enquiries for the test results, use recommendations and other documents which the European and American manufacturers would provide on the websites. Domestic Chinese manufacturers, not known globally, are making documentation only in the Chinese language, and it is quite difficult to translate it into Russian or English. It takes time to clarify the technical characteristics.
It is important to keep an eye on the quality of the materials and include strict responsibility instructions in contracts with manufacturers. If manufacturers alter the technological process, they have to be financially liable. It concerns all the manufacturers, not only those in China. We recommend visiting the manufacturing and see what norms of control are implemented, what kind of equipment is used, how they go about nonconforming products. And only after that a decision should be made, whether to collaborate with this manufacturer, or not.
The Chinese electronic components manufacturers have gained experience with certain products and are now entering the global market with them. These are passive components, cordless modules, adapters, electromechanics, and connectors. With these products they compete with European and American suppliers. However they still keep mastering sophisticated electronics.
It should be mentioned that manufacturers from China are always client-oriented. There are no problems whatsoever with providing samples, debugging sets or customising products. Even if the change of adapter or discreet diode is required, they would do the fitting and can produce a customised item, with the fittings fee already included in the item’s price. The manufacturers in other countries would usually issue a separate invoice for the fitting, which can impose certain limits on collaboration. The samples might not survive the tests, or the big batch of items might not go into manufacturing, so the customer is not always ready to pay for the fitting, The Chinese manufacturers are more client-oriented and would cooperate.
We do not experience language barrier with Chinese companies. Big manufacturers on the global market have the sales department and the technical support in English. Even smaller niche manufacturers, mostly speaking Chinese, have a staff member fluent in English. Big Chinese manufacturers, partnering with the Russian companies, also have Russian-speaking specialists in their team.
If logistics is smooth, a manufacturer in China does not violate the manufacturing and delivery times for components. Overall, with due control and auditing, the Chinese manufacturers of electric components are reliable suppliers and deserve a spot on the market.
Tiger Li, Vice President of International Marketing, Mornsun company
We have been supplying Russian clients with our products for over 13 years. The Russian market is quite big and has great potential for many manufacturers. For us it is one of the key markets.
From my point of view, the Russian and Chinese markets have more similarities than differences. For example, the same spheres in these countries are considered to have high potential: automation, alternate sources of energy, manufacturing excellence. In all these spheres modern technologies and new products are equally in demand. In other words, we could say that the requirements of our markets are similar. It allows us to supply the Russian market with our successful and economically viable solutions and services.
However, the differences are also there. First of all, certainly the volume of the market. Another difference is in how big these sectors are in our countries. However, since our goal is to produce high-quality reliable units, and in Russia the solutions for industrial electronics and telecommunications, i.e. the spheres that require special attention to quality and reliability, are in higher demand, the Russian market is very good for us.
The Mornsun company has been participating in the ExpoElectronica exhibition in Moscow for over 10 years. ExpoElectronica has been organised every year for 23 years and is the biggest in Russia and Eastern Europe exhibition of electronic and radioelectronic industries. Taking part in this event is a powerful marketing move for Mornsun on the Russian market, increasing brand awareness, showing our latest products and solutions to the industry representatives, and allowing us to establish relationships with new partners and further develop collaboration with existing clients. Moreover, it is an effective way for a Chinese company to get to know the trends in Russia and to get access to valuable information.
This year we are going to introduce our latest products line to the Russian market — packaged static power supply units with a capacity of 35-350W. This family of units includes a wide range of products, which have gone through all the required EMC tests, with the protection functions and high efficiency, which makes them an excellent choice for various way of use, including the control of industrial processes and industrial automation, cars and equipment, intellectual security, smart grid, Internet of things, mechanical and electronic equipment, electronic devices, smart buildings and home appliances.
The strengthening of the Mornsun’s position on the Russian market together with the leaders of the domestic electronic market is a strategy of our company. At the moment we have 3 wonderful partners - «ECO Power», «Compel», «MicroEm», that are helping us to work for the benefit of our clients in Russia.
Mornsun has high potential in development, economically effective products and automation opportunities, but we are not competent enough when it comes to sales in Russia. However, we are partners with well-known distributors of electronic components in Russia with a fully functional sales network, professional marketing team, strong application engineers and smoothly running system of logistics. We are convinced that our close collaboration is a good decision and it mutually complements our opportunities. It shows in the combination of high-quality products and tech support of Mornsun, including customisation, special developments for particular ways of use, solutions in the sphere of electrical power distribution systems, and the local Russian platform of professional service, aimed at including more services for the clients, concerning products and technologies.
The quality of products is vitally important for an enterprise. As a result of 20 years of efforts, Morsun has achieved great results in the sphere of development, automation, system control, with which the high quality of the products is ensured.
The company has established high exhaustive standards of the products, covering all the stages — from development and production to control and client service. Engineering is strictly controlled according to the IPD (Integrated Product Development), strict reliability tests are conducted. To provide constant improvement and high reliability of the items, the company is using strict evaluation system for suppliers, incoming quality control for constituent parts and materials, as well as outcoming product inspection. Moreover, the 60% automation level of production has allowed Mornsun to achieve a truly outstanding stability in the quality and reliability of products.
In my opinion, more and more Chinese manufacturers are putting the goal of increasing the quality of the products higher on the list. Though it cannot be said about all the Chinese manufacturers, the sphere of electronic components in China has definitely made a big step forward in the last decades.
Our company is producing various high quality products, including AC / DC and DC / DC transformers, packaged static power supply units, adapters, iso-amplifiers, IGBT and LED drivers, IC, submersible transformers, and others, with most of them holding UL, CE, CSA, CB and DOE Level VI certificates. Moreover, we have our own laboratory, constructed according to the ISO 17025 standard and approved by organisation like UL, CSA, TÜV, DEMKO, that is why we can provide test protocols and CE, UL, CB certificates ourselves.
We provide certificates, test protocols and technical documentation for all our products in English. Clients can download them from the website or receive them through contacting our sales department.
Apart from over 5000 standard products, we are offering customised solutions and strive to provide such services to clients all over the world, including Russia. We are collaborating with our clients on many projects every year to cater to their specific needs. In business the Mornsun company has always complied with the client-oriented philosophy, and has been doing its best to provide the most satisfying service to our customers.
Are there any difficulties in working with the Russian market, related to the language barrier? Sure, the language barrier is there in any kind of international cooperation, though it is not a problem for us. We do not only have local distributors with employees, for whom Russian is a native language, and who are fluent in English too. We also have people in our own team who speak both Russian and English. They all can talk the clients through the details, solve emerging questions or pass on the info from the clients with no omissions or mistakes. Apart from that, we are organising tech workshops online and offline.
Text prepared by I.V. Kokoreva and Y.S. Kovalevsky