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China: opportunities and challenges

This morning’s executive panel focused on the realities of doing business in China. Adonis Mak of Laser Focus World China, which is published out of Hong Kong, highlighted the opportunity for companies in the West to supply laser products to scientific research institutes in China.

“All colleges in China have physics and optics departments,” he said, “and in many cases they have abundant budgets to buy high-end devices and equipment.”

Within the industrial sector, Mak identified four key markets in China that rely on laser technology: consumer electronics, car production, semiconductor manufacture, and optical communications. Car manufacturing and to some extent semiconductor fabrication have benefited from inward investment from leading overseas firms, while China is now the largest manufacturer of consumer electronics in the world.

Laser manufacturers have not been slow to recognize this opportunity. Newport-Spectra Physics established a presence in China 25 years ago, while Coherent has been in the country for the past decade. More recent arrivals have been big hitters such as Edmund Optics, IPG Photonics, Dilas and Ocean Optics.

But Mak acknowledged that many challenges remain for Western firms. “Guan-zi [relationships] still play an important role when doing business in China, which means that you need a local partner,” he said. “Most research institutes are also controlled by the government, and that can make buying behaviours difficult to predict.”

Robert Huang of Wavelength Technology (booth 6247), a company based in Singapore that established a Chinese facility in 2003, highlighted the problems associated with IP piracy. When asked how companies should protect their intellectual property, he said: “You’ve got to be fast so that no-one has a chance to copy you.”

But Huang said that photonics firms should not be scared to invest in China. “The technology and quality of Western suppliers is welcome in China, but price is also a key issue.”

Posted by Susan Curtis on January 24, 2008 9:23 PM | Permalink