The surge in foreign trade orders for consumer electronic accessories: a surge in organic silicon, tight supply of chips, and factory market differentiation due to the pandemic

Zhang Jilin, the e-commerce manager of Ruihe Technology Co., Ltd., told the Daily Economic News reporter: Previously, charger factories rarely matched Apple's new 20W chargers. After Apple suddenly announced that they would not include chargers, various distributors, wholesalers, and retailers rushed in, and orders suddenly increased. However, the problem at that time was that the production capacity of each factory was not able to keep up so quickly, as the new charger models needed to match new circuit boards, chips, and shells. In a short period of time, many factories' production capacity could not keep up with the order volume After gradually increasing the production capacity of 20W chargers in the factory last month, the supply was basically met

Samsung has also announced that its new devices do not come with power adapters and headphones. A person in charge of a charger manufacturer told reporters that for third-party fast charging manufacturers, it may bring a new round of market demand.

Factory workers of Shenzhen Feixin Intelligent Co., Ltd. are rushing to provide pictures for the company

Enterprises saw a 300% increase in orders in the fourth quarter

According to the analysis of Guoyuan Securities Research Report, the global fast charging market is expected to reach 300 billion yuan in 2021, with broad market space. Due to the positive impact of global economic recovery and the cancellation of standard charging heads for iPhones, third-party manufacturers will face significant development opportunities.

The latest move by mobile phone giants has intensified the demand for foreign trade orders in the fast charging market. In fact, for consumer electronics foreign trade enterprises, in addition to the charger category, Bluetooth earphones, data cables, tablets, smart wearables, and other categories that have seen a significant increase in orders due to the global pandemic.

Just under this strong cycle, not all consumer electronics foreign trade enterprises can enjoy dividends, and the Matthew effect of the global industrial chain is also emerging. Tracing back to the upstream and downstream, labor shortages, rising raw material costs, a surge in some chemical raw materials, and tight supply of chips have also hindered the release of enterprise production capacity.

On December 7th, according to the General Administration of Customs, the total import and export value of China's goods trade in the first 11 months of this year was RMB 29.04 trillion, a year-on-year increase of 1.8%. In terms of RMB, in the foreign trade data from January to November, exports amounted to 16.13 trillion yuan, a year-on-year increase of 3.7%; From January to November, exports of mechanical and electrical products, textiles, and plastic products increased in terms of detailed categories.

Due to the impact of the epidemic, multiple electronic parts foreign trade enterprises have stated that many buyers have placed orders through e-commerce channels this year. According to data from Alibaba International, the flow of consumer electronics products has been increasing since September, and it reached its peak due to the purchase festival in September. The total transaction amount has increased by 237% year-on-year, and the number of payment buyers has increased by 126% year-on-year.

Ruihe Technology Co., Ltd., where Zhang Jilin works, mainly produces independent brands for foreign trade. Its main products include not only chargers, but also accessories such as data cables and Bluetooth headphones. The main customers include B-end buyers and large chain C-end retailers, such as E-mart in South Korea, 7-11 in Thailand, and Martha in the UK.

Zhang Jilin said, "Currently, the company's order volume is basically scheduled until March next year, with buyers mainly from developing countries. In addition, the order volume in Europe, Japan, and South Korea is also gradually increasing this year. According to the scheduling situation, the company's order volume in the fourth quarter of this year increased by 300% compared to the third quarter

Compared to Ruihe Technology selling its own brands through cross-border e-commerce channels, Rong Ziang, the foreign trade director of Shenzhen Feixin Intelligent Co., Ltd., another large-scale OEM enterprise in Shenzhen, told the Daily Economic News that since April and May, the company's orders have been relatively full, and the current period is almost until February or March next year. The company's foreign trade mainly receives orders through cross-border e-commerce platforms, and this year's cross-border foreign trade order volume has increased by 6 to 7 times compared to last year. Customers include ODM and OEM outsourcing enterprises, and foreign trade orders mainly come from countries such as Europe and America. The categories with a significant increase include tablets, headphones for esports games, and home devices, which may be affected by the epidemic. Consumer electronics products related to the 'home economy' are more popular

However, for most enterprises, when orders skyrocket, production capacity and labor issues always come first.

An electronic parts company has stated that there are currently over 3000 employees in the factory, with workers working overtime and two shifts. The factory operates for 16 hours a day, but the production capacity still cannot keep up, making it difficult to find employees at the moment. Additionally, it is approaching the end of the year, making recruitment even more difficult. So we can only adopt a two shift approach, allowing employees to work overtime while hiring.

One of the bottlenecks in chip production capacity release

If the enterprise's order schedule is very full and there is a shortage of labor, will some orders be diverted to some small factories? "The reporter asked.

Consumer electronics production enterprises, both formal and large, have a relatively high order volume, while small factories may not necessarily be. For example, our customers are also large overseas, and although they have been affected by the epidemic, they have strong risk resistance. Most small factories may accept orders from small buyers, and under the impact of the epidemic, some small buyers abroad may face bankruptcy or business stoppage, so the foreign trade market of small factories may not be very good The person in charge of electronic accessories stated that large purchasers usually seek cooperation with factories, have a complex and complete set of audit procedures, and will not easily change suppliers. If the purchaser wants to update the supplier, the general assessment process takes six months to one year.

Rong Ziang also stated that from the perspective of the same industry, not all of them are in a state of full orders, especially from April to October this year. The industry's status was not very good, and some companies were even in a state of no orders or customers at one time.

In addition, Zhang Jilin mentioned a change in customers this year, Due to the impact of the epidemic, overseas orders now mainly come from e-commerce channels in various countries. This year, 60% of our company's new customers have approached us through the Alibaba International platform. Many foreign small B buyers have approached us through Alibaba International to seek cooperation. Previously, small B buyers may have been retail stores or retail enterprises, but now many of them are foreign or domestic e-commerce customers

On the other hand, for electronic parts factories, they still face many constraints, with chip supply being one of the most challenging issues.

The head of an electronic accessories company specializing in intelligent wearables said that the factory's production capacity was once "choked" by chips. The person in charge revealed that due to the majority of factory production being OEM, chip procurement is mainly based on customer needs. From the perspective of procurement proportion, the current proportion of domestically produced and non domestically produced chips is fifty-five. But before, the supply of chips was relatively tight, and later a new model was replaced, which solved the supply problem of chips.

The head of a charger electronic parts company in South China told the Daily Economic News that orders are currently in line, but due to tight chip supply, it is difficult for the factory to ship. As far as we know, chip supply is expected to return to normal after April next year. Once chips cannot be supplied, it will affect the supply capacity of some electronic components

The person in charge also stated that the current shortage of chip supply in the industry is mainly due to the shortage of upstream raw materials such as wafers. In addition, due to the imbalance between supply and demand, chip prices have also increased to some extent.

Some chemical raw materials skyrocketed

Zhang Jilin mentioned that the new orders received by Ruihe Technology currently mainly focus on new products. The upstream raw materials for the products produced by the company include not only chips, but also spare parts interfaces, raw materials for making skins, etc. Since the beginning of this year, the prices of raw materials have increased. Based on this situation, the company's strategy is to basically not increase the price of old products, while the price of new products is determined based on the cost of the product and reasonable profits.

A person in charge of a consumer electronics company revealed that due to fluctuations in the RMB exchange rate, raw material prices, and labor costs, the cost of electronic products produced by the company has increased by 20% compared to last year. The cost increase is directly reflected in the increase in purchasing prices of buyers, who are mostly B-end enterprises. Therefore, they further transmit changes in product prices to consumer terminals.

The Daily Economic News reporter learned that for consumer electronics products, there are many upstream raw materials such as chemical products, such as organic silicon.

It is understood that organic silicon is used in the manufacturing of mobile phones, wireless computers, and smart cards. High performance materials made using organic silicon technology are entering the increasingly demanding electronic and electrical fields today. Organic silicon can seal and protect extremely sensitive circuits, semiconductors, and equipment from heat, pollution, and accidental damage, and help ensure the continuous supply of electricity.

According to monitoring data from the Business Society, as of November 30th, the average quoted price of organic silicon DMC market in mainstream regions under data monitoring was 33333 yuan/ton. Compared with November 23rd, the average price increased by 7567 yuan/ton, an increase of 29.37%; Compared to November 1st, the average price increased by 12933 yuan/ton, an increase of 63.40%; Compared to October 1st, the average price has increased by 15533 yuan/ton, an increase of 87.27%.

According to analysis by Zhuochuang Information, the surge in organic silicon in this round is supported by strong terminal demand. In addition, the continuous return of overseas orders is also a major reason for the explosion of orders from domestic manufacturers. In many overseas countries, the production cost of organic silicon is quite high, and before this year, overseas production capacity began to shift towards domestic production.

Looking ahead, Zhuochuang Information believes that long-term demand continues to be optimistic. Semiconductor, 5G technology, photovoltaic power generation, and new energy vehicles are all popular sectors that are important terminals for organic silicon, and related industry chain supply leaders are expected to benefit.

On December 9th, the relevant person in charge of Xinan Co., Ltd. (600596, SH; yesterday's closing price was 12.71 yuan), a leading organic silicon enterprise, stated in an interview with a reporter from the Daily Economic News that there are currently sufficient orders from enterprises in the industry. Factories need to ensure safety while also ensuring timely delivery as much as possible, in response to customer needs, and have put forward higher requirements for the supply chain.

Regarding the current scheduling situation of the company, the relevant person in charge of Xinan Group stated that the company's overseas direct orders are gradually recovering, with indirect exports being the dominant factor. Enterprise orders mainly come from domestic sources, but overall foreign demand is showing a recovery trend. From the company's perspective, exports have returned to pre pandemic levels. This round of overseas demand is actually more reflected in the growth of indirect exports, that is, organic silicon exports are growing rapidly in categories such as small household appliances, laptops, textiles, and medical devices. In addition, due to the unstable operation of foreign devices, there have been certain supply problems, and exports are showing a growth trend. Multinational companies have also increased their efforts to outsource their products in their domestic installations.

From the supply side perspective, although the overall production of domestic individual enterprises has increased this year, the demand growth has still exceeded the supply growth. China's successful control of the epidemic has brought opportunities to the industry, which is a 'China opportunity' under the epidemic, "the person in charge emphasized.

Daily Economic News

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