On the road to repair in China: Solectron bolsters Chinese after-sales capabilities - News

Electronic News, May 13, 2002 by Bernard Levine

Contract manufacturing's push into China accelerated last week with a major expansion by Solectron Corp. And it's not just manufacturing; now it's repairs.

The Milpitas, Calif.-based contracting leader increased its repair and related after-sales capabilities in Beijing, Shanghai and Hong Kong by acquiring the assets of NC&C, a leading Chinese component repair company. Solectron's Global Services business unit, which offers a range of after-sales services, already has a Chinese operation in Suzhou, China.

"Solectron is trying to be more of a full-line supplier in China, and it goes with their overall strategy to do more after-market services," said analyst Jim Savage at Thomas Weisel Partners LLC.

The contractor already has sizable manufacturing in China. Many leading electronic manufacturing services (EMS) companies and OEMs have been pursuing China as a low-cost production site to build goods for sale worldwide, with the Chinese home market also a strong potential draw.

Also like other EMS companies, Solectron's expansion in China and other low-cost production centers has come in step with contraction in higher-cost areas. "Solectron has closed down a lot of U.S. and western European facilities but is rapidly expanding in China," said Scott Hudson, principal analyst at iSuppli Corp.

"This transaction quickly expands our presence in one of the fastest-growing electronic markets in the world," said Bill Mitchell, executive VP and president of Solectron Global Services. "NC&C has a strong history in delivering high-quality component repair services, customer satisfaction and has a very good technical workforce. This will enable us to meet the growing customer demand for product support and service delivery in China."

Solectron will initially provide component repair services for computing, peripherals and point-of-sales equipment, including servers, desktop PCs, notebooks and workstations. In the next few months, Solectron will expand these services to areas such as the cell phone, telecom infrastructure and LCD markets. Over time, Solectron will also develop other value-added services, such as systems-level services, logistics and call centers to provide end-to-end solutions with leverage from Solectron's manufacturing operations in Suzhou, Shanghai and Shenzhen and strategic partners, the company said.

NC&C was a privately owned company established in 1996 in Beijing. Current customers include BlueExpress, IBM, Hewlett-Packard, Compaq and Apple Computer. Financial terms of the deal were not disclosed.

"Expanding our after-sales service presence in China positions us as the only electronics manufacturing service company in China to offer a complete one-stop solution for our Chinese and global customers," said Kent Chen, VP and general manager of the contractor's electronic manufacturing and test solutions group. "Solectron now has 10 sites in China offering integrated solutions, including new product introduction services, full product manufacturing and systems integration, sheet metal manufacturing, enclosure design and manufacturing, backplane assembly and repair and recycling services. In addition, Solectron provides distribution services through our partnership with ECS (formerly PCI), China's third-largest electronics distributor."

The Solectron Global Services site in Suzhou offers repair services for telecommunications, computing and networking equipment. The site is co-located with Solectron's manufacturing headquarters in Suzhou. The manufacturing site offers new product introduction, design and manufacturing for telecommunications, networking, computing and industrial instrument products. A new manufacturing and warehouse building of 252,000 square feet is currently under construction.

Solectron Global Services provides product repair, upgrades, remanufacturing and maintenance through factory and fast-hub service centers located around the world; help-desk support through customer call-in centers for end-users; logistics and parts management; asset recovery; returns processing; warehousing; engineering change management; and end-of-life manufacturing.