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Guangdong rising hub for Android phones

 

Makers in the province are benefiting from its strategic location and rich supply chain.

Guangdong province’s established support industry for mobile phone production is bolstering the manufacture of Android handsets in the area. Still the country’s largest sourcing center for cell phones, the province accounts for more than 70 percent of the total output and exports for the line. In 2011, shipments surpassed 638 million units, a 23 percent increase YoY.

 

 

Taking advantage of the rich upstream network for raw materials and components, Android handset makers in the coastal hub can easily obtain chipsets, modules, sensors, panels and even housings from local and foreign partners. The proximity of input providers enables companies to reduce transportation and storage costs.

Technical support is likewise readily available. Key chipset suppliers such as Broadcom, MediaTek, Qualcomm and Fuzhou Rockchip have R&D centers in Guangdong. Phone manufacturers can also tap the area’s mature EMS industry to outsource solutions and subcontract plastic injection, SMT and mold tooling.

Guangdong gathers 80 percent of China’s mobile phone maker pool, with more than 500 focusing on Android variants. This handset type constitutes 80 percent of interviewed companies’ smartphone yield. Gartner estimates units running on the Google-based OS will take up 50 percent of global sales this year. The remainder is split between Symbian and BlackBerry phones.

Shenzhen remains Guangdong’s leading production center. The city accounts for 80 percent of the province’s exports. Large enterprises such as Huawei, Yulong and ZTE are based there. Factories are also found in Dongguan, Guangzhou and Huizhou.

China’s mobile phone shipments rose 16 percent to 875 million in 2011. The upswing reflects strong global exports, which surpassed 1.6 billion units during the same period to represent a 14 percent YoY increase, according to Strategy Analytics. Smartphone deliveries hit 420 million units or one-fourth of the total, said IMS Research.

Despite the category’s rapid growth, manufacturers are experiencing falling margins due to tightening competition. To grab more orders, many were forced to lower quotes by 5 to 10 percent in recent months. The downward trend is forecast to continue as makers strive to stay afloat amid an expanding industry.

Steep labor outlay is likewise eating into companies’ profits. Manpower-related expenses are 15 to 20 percent higher in Guangdong compared with inland provinces. Nevertheless, many suppliers still prefer to carry out manufacture there. Some, in fact, have raised wages by 10 to 20 percent to retain workers.

Product homogeneity is another challenge. Android phones from Guangdong basically incorporate the same solutions and designs. Some makers are using in-house molds and bundling accessories to diversify selections.

 

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Note: This article "Guangdong rising hub for Android phones" was originally published by Global Sources,a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through e-magazinesand trade shows

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.

Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.

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