The first installment of this two-part series presents the province’s advantages as a key manufacturing base for lithium batteries and packs.
Guangdong province’s status as the largest electronics manufacturing hub in China extends to lithium batteries and packs. The area is responsible for more than 50 percent of the country’s aggregate output value for the line. In 2011, it exceeded the previous year’s $2.3 billion total by 10 to 20 percent, according to CCID Consulting. This growth rate will persist until end-2012, strengthening Guangdong’s key position in the category despite rising labor costs.
The coastal province continues to attract business owing to a strong industrial chain, which was established in its long manufacturing history dating back to the early 1980s. The area hosts providers of materials, components and production equipment. Various terminal device suppliers also congregate there, offering a captive market.
In addition, preferential policies remain in place. Strong local government support covers access to financial resources for domestic companies pursuing advancement in the line. As an additional impetus, there is the Medium- and Long-Term Science & Technology Development Plan in Guangdong Province (2006-20). Within its new-energy scope are high-performance yet low-cost lithium batteries and packs. The province’s proximity to Hong Kong is also a key advantage. This facilitates access to the territory’s research institutes and specialists. Companies with an exporting arm there can also ship products from Hong Kong.
Guangdong plays host to about 200 makers of lithium batteries and packs, or 60 percent of mainland’s China’s pool. They include local and foreign-owned businesses, with the latter mostly from Taiwan, Hong Kong and Japan. The majority of suppliers have an annual sales of $4.6 million to $12.3 million, while those of large operations can hit $15.4 million.
Most enterprises in the province will continue undertaking expansion to achieve a 20 percent boost in yield value.
Zhuhai Gree New Energy Co. Ltd, which currently churns out 500,000 lithium batteries monthly, expects to raise annual production by 30 to 50 percent by year-end. The maker entered manufacture in 2010. Howell Energy Co. Ltd eyes a bigger jump after posting a 10 percent increase last year.
Guangdong companies ship about 60 percent of output to North America, Europe, and East and Southeast Asia. Some export more than 80 percent or even the entire yield.
Makers are hopeful of better overseas prospects this year, counting on a 5 to 10 percent growth in revenue. In 2011, sales did not increase as expected due to the economic situation in major destinations the US and Europe.
Companies forecast product prices will stabilize in 1H12 after the previous year’s markups resulting from the 5 percent appreciation of the yuan.Any upward movement will be within 5 percent.
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All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
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