Table of contents for China's electronics industry : the definitive guide for companies and policy makers with interests in China / Michael Pecht.

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Contents
Foreword ..................................................................................................................v
Preface ....................................................................................................................vii
Editor .......................................................................................................................xi
Acknowledgments .................................................................................................xiii
Chapter 1 General Information .............................................................................1
1.1 Geography ................................................................................................ 1
1.2 Population and Ethnic Groups.................................................................. 2
1.3 Language .................................................................................................. 4
1.4 Religion .................................................................................................... 5
1.4.1 Indigenous Religions ...................................................................................... 5
1.4.2 Imported Religions ......................................................................................... 6
1.4.3 Official Policies towards Religion in China ................................................... 6
1.5 Education.................................................................................................. 6
1.5.1 Literacy........................................................................................................... 7
1.5.2 The Formal Education System ....................................................................... 7
1.5.3 Education Expenditures.................................................................................. 7
1.5.4 Prognosis ........................................................................................................ 8
1.6 Political Structure..................................................................................... 8
1.6.1 The Communist Party of China ...................................................................... 8
1.6.2 Administration................................................................................................ 9
1.6.3 Military Organization ................................................................................... 10
1.6.4 Judicial Organization.................................................................................... 10
1.7 Brief Overview of Modern Chinese History .......................................... 10
1.7.1 China under Mao Zedong............................................................................. 10
1.7.2 Economic Reform after Mao ........................................................................ 11
1.7.3 The Future .................................................................................................... 12
Chapter 2 Economic Conditions and Policy........................................................13
2.1 General Economic Conditions................................................................ 14
2.2 International Economic Angst................................................................ 16
2.2.1 China?s Entry into the WTO......................................................................... 18
2.2.2 Where Does China Stand on Its Commitments to the WTO?....................... 20
2.3 Foreign Economic Relations and Trade ................................................. 21
2.3.1 Current Trading Status ................................................................................. 21
2.3.2 Trade Policy and Administration .................................................................. 21
2.3.3 Major Trade Regulations.............................................................................. 22
2.3.4 Policy Instruments to Promote International Trade...................................... 23
2.3.5 China?s Barriers to U.S. Exports .................................................................. 24
2.4 Special Economic Zones ........................................................................ 24
2.4.1 Special Economic Zones .............................................................................. 25
2.4.2 Open Coastal Cities / ETDZs ....................................................................... 25
2.4.3 High-Technology Development Zones......................................................... 26
2.4.4 Foreign Investment Policy in the Electronics Industry................................. 26
2.5 China?s High Technology ...................................................................... 27
2.6 Foreign Investment in China .................................................................. 28
2.6.1 Liberalization Influencing FDI Flows .......................................................... 29
2.6.2 China/Hong Kong Closer Economic Partnership Arrangement and FDI Flows ................. 29
2.6.3 General Investment Climate ......................................................................... 30
2.6.4 Permitted Forms of Foreign Direct Investment ............................................ 32
2.6.5 U.S. Export Controls .................................................................................... 35
2.7 Financial System .................................................................................... 35
2.8 Fiscal Structure....................................................................................... 38
2.8.1 Turnover Taxes............................................................................................. 38
2.8.2 Enterprise Income Taxes .............................................................................. 38
2.8.3 Personal Income Taxes................................................................................. 38
2.8.4 Import Tariffs ............................................................................................... 39
2.8.5 Most Favored Nation Trade Status ............................................................... 40
2.9 Chinese Government Policy towards Cross-Border Mergers and Acquisitions........... 40
2.10 Evolution of Foreign Investment Project Catalogs ................................ 42
Chapter 3 China?s Science and Technology........................................................43
3.1 History of China?s S&T Development................................................... 43
3.2 Overview of China?s S&T Policies ........................................................ 46
3.3 China?s R&D Expenditures.................................................................... 47
3.4 China?s S&T Organizational Structure .................................................. 49
3.4.1 Ministry of Science and Technology............................................................ 50
3.4.2 Ministry of Education................................................................................... 51
3.4.3 Commission of Science, Technology and Industry for National Defense .... 51
3.4.4 Chinese Academy of Sciences...................................................................... 51
3.4.5 Chinese Academy of Engineering ................................................................ 52
3.4.6 National Natural Science Foundation of China ............................................ 53
3.5 China?s S&T Infrastructure .................................................................... 53
3.5.1 CAS-operated Institutes and Laboratories.................................................... 53
3.5.2 Universities and Colleges ............................................................................. 54
3.5.3 National Engineering Research Centers ....................................................... 56
3.5.4 Science Parks................................................................................................ 56
3.6 China?s Major S&T Development Programs ......................................... 57
3.6.1 National High-Technology Research and Development (863) Program ...... 57
3.6.2 National Basic Research Priorities Program................................................. 57
3.6.3 Torch Program.............................................................................................. 58
3.7 China?s Major S&T Development Efforts and Achievements............... 58
3.7.1 China?s Indigenous IC Development............................................................ 59
3.7.2 China?s Avionics and Space......................................................................... 60
3.7.3 China?s Development of the Global Positioning System ............................. 61
3.7.4 China?s Supercomputers............................................................................... 61
3.7.5 China?s Telecommunications Effort............................................................. 62
3.7.6 China?s Development on Wi-Fi.................................................................... 63
3.7.7 China?s Effort in Audio-Visual and DVD Development.............................. 63
3.7.8 China?s Efforts in Nanotechnologies............................................................ 64
3.8 Promoting Innovation and Creativity ..................................................... 64
3.9 Summary ................................................................................................ 65
Chapter 4 The Development of China?s Electronics Industry...........................67
4.1 China?s National Five-Year Development Plans ................................... 67
4.1.1 The First Five-Year Plan, 1953-1957 ........................................................... 67
4.1.2 The Second Five-Year Plan, 1958-1965....................................................... 68
4.1.3 The Third and Fourth Five-Year Plans, 1966-1975...................................... 68
4.1.4 The Fifth and Sixth Five-Year Plans, 1976-1985 ......................................... 68
4.1.5 The Seventh Five-Year Plan, 1986-1990...................................................... 69
4.1.6 The Eighth Five-Year Plan, 1991-1995........................................................ 69
4.1.7 The Ninth Five-Year Plan, 1996-2000 ......................................................... 70
4.1.8 The Tenth Five-Year Plan, 2001-2005 ......................................................... 70
4.1.9 The Eleventh Five-Year Plan, 2006-2010 .................................................... 71
4.2 Government Organizations ? The Ministry of Information Industries... 73
4.3 Foreign Trade and Investment in China?s Electronics Industry............. 74
4.4 Imports and Exports of Electronics Products ......................................... 76
4.5 Major National Electronics Projects....................................................... 77
4.5.1 Golden Bridge Project .................................................................................. 77
4.5.2 Golden Card Project ..................................................................................... 78
4.5.3 Golden Customs Project ............................................................................... 79
4.5.4 Golden Taxation Project............................................................................... 80
4.5.5 909 Project.................................................................................................... 80
4.5.6 Electronic Air Traffic Control Project.......................................................... 81
4.5.7 Three Gorges Electronic System Project...................................................... 82
4.6 Major Electronics Companies ................................................................ 83
Chapter 5 China?s Semiconductor Industry .......................................................89
5.1 A Brief History of China?s Semiconductor Industry.............................. 89
5.2 Semiconductor Production and Market Size .......................................... 92
5.3 China?s Current Semiconductor Industry............................................... 93
5.3.1 Discrete Semiconductor Sector..................................................................... 97
5.3.2 Integrated Circuit Sector............................................................................... 98
5.3.3 IC Design.................................................................................................... 101
5.4 Major Domestic Semiconductor Manufacturers .................................. 105
5.4.1 Semiconductor Manufacturing International Corporation.......................... 106
5.4.2 Shanghai Hua Hong (Group) Co., Ltd........................................................ 107
5.4.3 Hejian Technology (Suzhou)...................................................................... 109
5.4.4 Advanced Semiconductor Manufacturing Corp. ........................................ 109
5.4.5 Grace Semiconductor Manufacturing Corporation, Ltd. ............................ 110
5.4.6 Shougang NEC Electronics Corporation .................................................... 111
5.4.7 Wuxi China Resource Microelectronics Co., Ltd. (formerly Hua Jing Electronics Group Corp.) 111
5.4.8 Shanghai Belling Stock Holding Co. Ltd. .................................................. 113
5.4.9 Hua Yue Microelectronics Corporation...................................................... 114
5.4.10 Others ......................................................................................................... 115
5.5 Involvement of Foreign Capital and Technology................................. 116
5.6 Intellectual Property Protection Issues ................................................. 118
5.7 Challenges and Strategies..................................................................... 119
Chapter 6 Electronic Manufacturing Service Industries .................................121
6.1 China?s Device-Level Electronic Packaging Industry ......................... 121
6.1.1 Overview .................................................................................................... 121
6.1.2 Foreign Manufacturers ............................................................................... 122
6.1.3 Domestic Manufacturers............................................................................. 124
6.1.4 Adopted Technologies and Levels.............................................................. 125
6.2 China?s PCB Fabrication Industry ....................................................... 126
6.2.1 Foreign Manufacturers ............................................................................... 127
6.2.2 Domestic Manufacturers............................................................................. 127
6.2.3 Adopted Technologies and Levels.............................................................. 130
6.3 China?s Printed Circuit Board Assembly Industry............................... 132
6.3.1 Major Board Assembly Companies............................................................ 133
6.3.2 Adopted Technologies and Research Abilities........................................... 134
6.4 Summary .............................................................................................. 135
Chapter 7 China Connectors, Cable Assemblies, and Backplanes .................137
7.1 Connectors and Cable Assemblies by Design Type and Sector........... 139
7.1.1 Computer Sector......................................................................................... 139
7.1.2 Telecom Sector........................................................................................... 141
7.1.3 Connectors, Cable Assemblies and Backplanes in Communications/Wireless
Sector.......................................................................................................... 142
7.1.4 Connectors, Cable Assemblies and Backplanes in Datacom / Network Sector........... 142
7.1.5 Connectors, Cable Assemblies and Backplanes in Military / Aerospace Sector......... 143
7.1.6 Connectors, Cable Assemblies and Backplanes in Automotive Sector ...... 144
7.1.7 Connectors and Cable Assemblies in Consumer Electronics Sector .......... 144
7.2 Analysis of Connector Production in China......................................... 146
7.3 Analysis of Suppliers in China............................................................. 146
7.4 Doing Business in China ...................................................................... 148
7.4.1 Housing ...................................................................................................... 149
7.4.2 Meals .......................................................................................................... 149
7.4.3 Four Types of Business Operations in China ............................................. 150
7.4.4 Export License............................................................................................ 150
7.4.5 Business Strategies Differ by Region of China .......................................... 150
7.4.6 Import to and Export from China ............................................................... 150
7.5 Major Customers in China ................................................................... 151
7.6 Leading EMS / ODM Companies ........................................................ 152
7.6.1 Flextronics International............................................................................. 152
7.6.2 Jabil Circuit ................................................................................................ 152
7.6.3 Hon Hai Precision Industry ........................................................................ 152
7.6.4 Sanmina-SCI .............................................................................................. 152
7.6.5 Solectron..................................................................................................... 153
7.6.6 Quanta Computer........................................................................................ 153
7.6.7 Compal Electronics .................................................................................... 153
7.6.8 Asian EMS / ODM Companies .................................................................. 153
7.7 Manufacturing Processes in China ....................................................... 154
7.7.1 Connectors.................................................................................................. 154
7.7.2 Cable Assemblies ....................................................................................... 154
Chapter 8 Computers ..........................................................................................157
8.1 China?s Computer Market.................................................................... 158
8.1.1 Market for Business Computers ................................................................. 159
8.1.2 Market for Home Computers...................................................................... 160
8.1.3 Market for Notebook Computers................................................................ 160
8.2 Major Domestic Computer Manufacturers........................................... 161
8.2.1 Legend Group/Lenovo................................................................................ 161
8.2.2 Founder Group ........................................................................................... 162
8.2.3 Great Wall Group ....................................................................................... 163
8.2.4 Others ......................................................................................................... 163
8.3 Major Foreign Competitors.................................................................. 163
8.4 China?s Super Computers..................................................................... 165
Chapter 9 The Telecommunications Industry ..................................................167
9.1 Overview of China?s Telecom Industry ............................................... 167
9.2 Related Government Organizations and Regulations........................... 168
9.2.1 Telecom Equipment Market Policy: Buy Local ......................................... 168
9.2.2 Telecom and Internet Regulations.............................................................. 169
9.3 Fixed-line Business .............................................................................. 170
9.4 Mobile Communications Business....................................................... 170
9.5 Development of the Backbone Transfer Network................................ 172
9.6 China?s Telecommunications Operators .............................................. 173
9.6.1 China Telecommunication Corporation ..................................................... 174
9.6.2 China Mobile Communication Corporation ............................................... 175
9.6.3 China United Communication Co., Ltd...................................................... 175
9.6.4 China Network Communications Co., Ltd. ................................................ 176
9.6.5 China Railway Communication Co., Ltd. .................................................. 177
9.6.6 China Satellite Communication Corporation.............................................. 177
9.7 China?s Telecom Equipment Manufacturers........................................ 178
9.7.1 PuTian Information Group (POTEVIO)..................................................... 178
9.7.2 Huawei Technologies Co., Ltd. .................................................................. 179
9.7.3 Zhongxing Telecommunications ................................................................ 181
9.7.4 Alcatel Shanghai Bell Company................................................................. 183
9.7.5 Datang Telecom Technology Co. Ltd. ....................................................... 183
9.7.6 Fiberhome Telecommunication Technologies Co., Ltd. ............................ 184
9.7.7 Great Dragon Telecom Group .................................................................... 185
9.8 Challenges and Prospects ..................................................................... 186
Chapter 10 Other Electronics Industries...........................................................189
10.1 China?s TV Industry............................................................................. 189
10.1.1 High Definition TV (HDTV)...................................................................... 191
10.1.2 Digital TV................................................................................................... 191
10.2 China?s DVD Industry ......................................................................... 192
10.3 China?s Cellular Phone Industry .......................................................... 193
10.4 China?s Automotive Electronics Industry ............................................ 195
10.4.1 Recent Developments in China?s Automobile Industry ............................. 197
10.4.2 U.S. Auto Parts Trade with China .............................................................. 198
10.5 China?s Avionics Electronics Industry................................................. 199
10.5.1 Regulatory Agencies .................................................................................. 200
10.5.2 Aviation Industries Corporation of China I and II...................................... 200
10.5.3 The China Aerospace Science and Technology Corporation ..................... 201
10.5.4 China Aerospace Science and Industry Corporation .................................. 202
10.5.5 The Civil Aviation Administration of China .............................................. 202
10.6 The Medical Electronics Industry in China.......................................... 202
10.7 China?s Military Electronics Industry .................................................. 204
10.7.1 Overview of Government Policy on Defense and Military Market............ 204
10.7.2 Domestic Military Industry ........................................................................ 205
10.7.3 Export of Military Products........................................................................ 206
10.7.4 Import of Military Products........................................................................ 206
10.7.5 Air Force Technology................................................................................. 207
10.8 China?s Space Electronics Industry...................................................... 208
Chapter 11 The Software Industry in China.....................................................211
11.1 Overview of Software Industry Development in China ....................... 211
11.2 Policy of China?s Software Industry .................................................... 212
11.3 Central Government Preferential Policies for the Software Industry in the Areas of Finance and Tax........ 213
11.3.1 Investment and Financing........................................................................... 213
11.3.2 Taxation...................................................................................................... 213
11.3.3 Exports........................................................................................................ 213
11.3.4 Revenue Allocation .................................................................................... 214
11.4 Software Education and Training......................................................... 214
11.4.1 Basic Education .......................................................................................... 214
11.4.2 Tertiary Education ...................................................................................... 215
11.4.3 Software Blue Collar .................................................................................. 215
11.5 Software Technology Research............................................................ 215
11.5.1 Institute of Software ................................................................................... 215
11.5.2 The National Research Center for Intelligent Computing .......................... 216
11.5.3 China National Software and Service Company Limited........................... 216
11.5.4 Macao Special Administrative Region ....................................................... 216
11.5.5 Hong Kong Special Administrative Region ............................................... 217
11.6 Investment ............................................................................................ 217
11.6.1 Software Parks and Science Parks.............................................................. 217
11.6.2 Zhongguancun Science Park in Beijing...................................................... 218
11.6.3 Special Economic Zones and Costal Cities ................................................ 218
11.6.4 Shanghai Pudong Software Park ................................................................ 218
11.6.5 Southern Software Industrial Park.............................................................. 219
11.6.6 Hong Kong Special Administrative Region ............................................... 219
11.6.7 Tianjin ........................................................................................................ 219
11.6.8 Dalian ......................................................................................................... 219
11.7 Legal Protection ................................................................................... 220
11.8 Outsourcing of Software and IT Service to China ............................... 221
11.9 Accomplishments of the Chinese Software Industry ........................... 221
11.10 Potential of the Chinese Software Industry.......................................... 221
Chapter 12 Conducting Business in China........................................................223
12.1 The Advantages.................................................................................... 225
12.1.1 A Low-Cost, High-Quality Labor Force .................................................... 225
12.1.2 A Complete Supply Chain with World-Class Infrastructure ...................... 227
12.1.3 Favorable Tax Structure and Low Capital Costs ........................................ 230
12.1.4 Large Internal Market................................................................................. 231
12.1.5 Entrance into the World Trade Organization.............................................. 232
12.2 The Cons .............................................................................................. 232
12.2.1 Shortage of Energy and Resources............................................................. 233
12.2.2 Inadequate Land Transportation System .................................................... 234
12.2.3 Currency Revaluation and Financial System.............................................. 235
12.2.4 Deficiency of Enforcement in Intellectual Property Protection.................. 236
12.3 Summary .............................................................................................. 237
Index .....................................................................................................................239

Library of Congress Subject Headings for this publication:

Electronic industries -- China.
China -- Commerce.