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How to Compete with the Chinese: Don't

Editor's Note: To listen to Dan's weekly column, as you've always done in the past, click here. For the written transcript, keep reading...While talking to a friend of mine the other day, our talk turned to how American board shops can compete against the Chinese and other Asian board fabricators. After an extended exchange, he said. “It’s very simple, Dan. The best way to compete against them is to not compete against them.” After thinking about this for a few days I now realize that he was 100% right. We let them play their game and we play ours.

Sure, we are no longer as good as they are doing what they do well, but on the same token, they can’t do what we do either.

Look, here is what they are good at: High-volume low cost production. No matter how hard we try, we will never have lower labor rates than they do. Well, maybe never; their economy is rising rather rapidly. But for the most part, they have lower labor, more automation, more government support and more support from our customers. And some of these are our customers, and you and I know who they are: The ones who learned technology from us and then sent it over to Asia to combine our technology with their lower labor and then eat our lunch for the sake of building the so-called best products on earth with the cheapest circuit boards on earth.

That ship has sailed, and we are never going to beat the Asians at this game. We never have and never will. The American companies who have survived and succeeded are the ones who did not bother to complete against the Asians in the first place, but rather looked for things that they could beat them at and then concentrated on those areas.

What are those areas? They are things that we can do better than the Asians. Let’s think about that for a minute. We are closer to our customers here in North America, so shipping our product to them is much cheaper, as much as four times cheaper than shipping product from China to the U.S. I know all about those shipping containers and those slow boats from China and that mode of shipping does help with shipping costs, but it also eliminates the possibility of shipping small quantities fast. They have to have a whole lot of boards to fill those containers so there is no way that they are going to produce and ship five boards and have them to you in 24 hours. Once in a while Asian fabricators can do it, but never as consistently as we can.

That’s right. We can build and ship boards faster than anyone outside our country, a distinct advantage that we have over the Asians.

Technology is another one. As long as we can stay ahead of the technology curve, we win. This is something that we have always done particularly well in this country and if we continue to focus on technology, we will win the battle for that particular market.

So, our ability to build tough stuff fast gives us a strong advantage over our Asian neighbors.

Here are a couple of other things that Asian’s cannot do. They can’t build military boards, mil-spec boards, aerospace boards or anything that involves national security, and no matter how many companies have tried to breach those compliances, the door on doing that slammed shut in the past year when the DoD put our beloved printed circuit boards on the ITAR requirement list. These products are to be built here in the U.S. and anything else is breaking the law. And as I always say, do not hesitate to call the FBI whenever you learn of a competitor or even a customer who is trying to turn a blind eye to that law.

And finally, the granddaddy of all advantages we have over our Asian competitors is service. We can outservice them any day of the week. Have you ever rejected boards you bought in China? That’s a lot of fun isn’t it? Did you ever try to find out what’s going on with those high-tech boards you tried to have built in Taiwan? That’s equally as much fun isn’t it? NOT!

As long as we continue to service the hell out of our customers; as long as we produce what they need when they need it, as long as we keep ahead of the technology curve, and as long as we build and deliver boards faster than anyone else in the world, we will win. We will live another day, we will thrive, and yes, with all of the changes that are going on in the world right now--from innovative new product development to onshoring and enforced ITAR protection--we’ll be doing just fine.

It’s only common sense.