On May 7, a PCB circuit board manufacturer in Foshan, Guangdong Province was on the verge of bankruptcy due to high debts. In March this year, an old PCB manufacturer in Panyu, Guangzhou, also declared bankruptcy due to the rupture of the capital chain.
The person in charge of the PCB company revealed that the low-end PCB mainly relies on lowering the unit price to obtain customers, and the gross profit margin is mostly below 10%. Due to the weak position in the industrial chain, on the one hand, it has to give downstream customers a generous account period, and at the same time, it cannot obtain "convenience" from relatively strong suppliers. Once the funds cannot be withdrawn in time, the liquidity of the manufacturer will inevitably be under great pressure.
The sudden new crown pneumonia epidemic has put many small and medium-sized PCB manufacturers in such a predicament. But at the same time, the leading PCB companies have attracted the attention of the market because of their outstanding performance. With the continuous upgrading of technology and technology, the survival of the fittest was expected, but the epidemic has evolved into a catalyst, and the reshuffle and differentiation of the PCB industry is also reasonable.
Small and medium-sized circuit board manufacturers suffer from liquidity problems
Mr. Pang currently runs a PCB factory with more than 100 people in Guangzhou. He told reporters that he has been engaged in this industry for more than 20 years and has been running a factory for 13 years. Although the competition in the industry has always been fierce, the impact of the epidemic has made him feel that "life is not easy".
"Especially for overseas PCB orders, because of the epidemic, many of them were stopped by customers halfway through. We bought raw materials and labor, but we couldn't get paid. Mr. Pang revealed that in the PCB industry, especially small and medium-sized manufacturers, the account period for downstream customers is relatively long. After the order was stopped, not only could the payment not be recovered, but also had to bear more than 1 million labor and plant rental costs every month, and the liquidity pressure was very high.
"PCB is an asset-heavy industry, and upstream raw material suppliers are very strong, especially small and medium-sized board factories, which are rarely "taken care of" by suppliers. When it comes to settlement, you will be given a grace period of up to 10 days. However, the account period we give to our customers is very long, 6 or 7 months is common, and it is not uncommon to delay it for more than 1 year. Once the payment is not paid back in the middle of the month, it will not be able to pay the supplier, and there will be problems in the capital chain," Mr. Zhang, the person in charge of a PCB manufacturer in Shenzhen, also revealed.
Mr. Zhang's PCB boards are mainly supplied to customers in the electronics and electrical industries. He pointed out that the technical threshold of low-end PCB boards is low, the competition is fierce, and manufacturers can only obtain customers by fighting the unit price, "which causes the gross profit margin of small and medium-sized board factories to be very low, usually below 10%," Mr. Zhang said, low profits, weak market discourse, resulting in a very difficult survival situation for small and medium-sized PCB manufacturers.