Whither Kaifa?

Should Shenzhen Kaifa Technology be included in EMS Top 50 lists?

It’s not an easy question to answer. On revenue alone, perhaps: Kaifa, as the company is known, had sales of about $4.4 billion last year. Using that gross number would place it squarely between Sanmina-SCI and Cal-Comp in the Top 10.

But there’s more to it than that. Kaifa generates an extraordinary amount of its revenue from making and selling hard disk drives to Seagate. In fact, under most classifications, Kaifa would rank as an ODM, and not just of printed circuit board assemblies.

Then there’s the confusion of what, exactly, is Kaifa.

The company, which is supposedly traded under the ticker symbol 000021 on the Shenzhen Exchange, has no current listing. However, it is also apparently a subsidiary of China Electronics Corp.

CEC is giant: the conglomerate says its annual revenues topped $8 billion back in 2006 and it employs more than 70,000 workers across some 61 subsidiaries, including 13 listed holding companies. Among them are cellphone and datacom OEM Panda Electronics,  computer and TV manufacturer Greatwall Technology, and yes, Kaifa.

It also is state-owned, and operates directly under the administration of China’s central government.

Forget, for the moment, how strange it is for what is essentially government entity to be publicly traded. Consider instead whether a government business can be considered a contract manufacturer, especially in China, where the Communist Party still holds sway over most economic policy and can pick the winners and losers at the drop of a hat.  Want to get a government contract? Use a government provider. It becomes hard to distinguish between what is competitive bidding and what is political.

Then there’s the matter of CEC’s financials. They are dense, to be sure. It’s hard to tell what revenue comes from external customers and what is just “padding” from its own pyramid. Among those that can be discerned, Great Wall alone made up $1.6 billion in revenue last year. Read the fine print and you’ll see the company has several “deals” in place to buy components and services from other CEC subsidiaries.

So should Kaifa be listed on the Top 50 EMS charts? Because it is next to impossible to know what its true revenue from EMS related activities is, I say no, while respecting the decision of others to disagree.

This entry was posted in Hot Wires and tagged , , , , by Mike. Bookmark the permalink.

About Mike

Mike Buetow is editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He is also vice president and editorial director of UP Media Group, for which he oversees all editorial and production aspects. He has more than 20 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow

1 thought on “Whither Kaifa?

  1. I remember when it was hard to explain to “regular” folks..It is hard to define a specific car as “domestic” or “foreign” (70s-80s)… (only an issue when being told by someone why you should only buy domestic cars)

    By the 90s.. most people just accepted the issue as “complicated”.. and ignored the “issue” of buying decisions being swayed by it.

    Trying to explain trade policies .. when it is hard to tell if a company is publicly traded or Gov owned?… the world has just “upped” the level of confusion.

    Back in the USA…
    With local , state, fed subsides and incentives of public/private companies building/expansion locations.. I guess we should expect everyone (other countries) to make these “lines in the sand” a bit hard to define.
    Witness Boeing’s expansion… and how incentives were given.
    or
    The local Walmart’s location (which town in this area gives the best deal?)
    The list of examples is very, very long.

    Strange times we live in…

    In simpler times.. it was observed in the movie “The President’s Analysis”…
    (by the Russian spy in the story)
    My paraphrasing.. (sorry, my memory is not that good).
    ” Communism , Capitalism, Socialism… who cares?
    Each are being more like the other every day… All are merging to a common place”

    Indeed .. things are getting much harder to define.

    And why should care if Kaifa (or any other company) is on a top 50 list?
    I would be a simpleton if this was a factor in deciding which EMS to use.
    We have more confusing (and important) questions to answer.

    Questions, like…..where is this going?

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