Dongguan's Connector Industry to Benefit from Growth Recovery

China’s place in the connector industry remains solid, based on internal developments that witnessed a CAGR of 11.22 percent from 2016 to 2021 and a further expansion in 2022. According to Chinese consulting firm AskCI, the country achieved $16.5 billion in this category in 2016, which went up to $26.9 billion in 2021 and $29 billion in 2022. The country is the world’s largest manufacturing base for connectors based on raw numbers, accounting for more than 30 percent of the global market, according to industry estimates.

According to the latest report by Global Industry Analysts, China will grow at 12 percent CAGR in this category from 2022 to 2030, with a forecast $31.3 billion by the end of the period. Canada, Germany and Japan, for comparison, are projected to realize 7, 4.9 and 4.2 percent CAGR, respectively. The global market for connectors, estimated to have reached $75 billion in 2022, will hit $137.7 billion by 2030 at 7.9 percent CAGR.

Of China’s key provinces, Guangdong is the biggest production base, with Dongguan and Shenzhen having the greatest number of suppliers. Dongguan plays host to nearly half of Guangdong’s pool. Like Shenzhen, it offers key advantages, such as a comprehensive industry chain, convenient transport system, sufficient labor resources and preferential policies, to both homegrown and international companies.

Most domestically owned manufacturers of connectors in Dongguan are small and midsize with a registered capital below $290,000, but there are companies of significant standing.

Luxshare, a key company in China’s connectors industry, is also among the largest in the world, with a market share of over 20 percent in the computer connectors segment, according to Qianzhan Industrial Research Institute. Its headquarters are in Dongguan, with offices in Taipei, Seoul, Yokohama, and Silicon Valley and a plastic parts factory in Germany.

Other major suppliers in Dongguan include XKB Connectivity and Shenglan Technology. The latter owns the JCTC Terminals & Connectors trademark.

Three years on

With gradual market recovery in the three years of the pandemic, most Chinese companies involved in connector manufacturing are planning to boost their output.

Dongguan Enkang Electronics Co. Ltd, which enjoyed a 20 percent growth in domestic and international orders in the past 12 months, has been operating at 90 percent capacity. It expects to maintain if not increase this utilization rate with a sustained rise in demand throughout 2023. Dongguan Vast, meanwhile, has invested $44 million in a new high-precision connectors project in Hongmei town. The facility is 20,010sqm in area and is scheduled to commence mass production in one or two years. The expected annual production value from this endeavor is $88 million.

Growth drivers

Dongguan-based suppliers of connectors offer an array of options for the automotive, communications, consumer electronics, medical, industrial, transportation and military fields. The first three are currently the top applications that will drive R&D and production efforts in the years ahead.

Luxshare is targeting a 3 percent share of the world market for automotive connectors and 10 percent of the domestic segment by 2030, and to rank among the top five global players in this sphere. This is based on the company’s projection that the sector will reach $33 billion globally by 2030, from $17.1 billion in 2021. Current industry leaders in the automotive segment include Tyco, Amphenol, Aptiv, Molex and Rosenberger.

Dongguan-made connectors

Products that can be sourced from Dongguan include the A/V, RF, PCB, fiber-optic and power connectors widely used in consumer electronics devices, computers and peripherals, and communications, medical, automotive and industrial applications. They are available in water-resistant variants, usually with an IP65 to an IP68 rating.

USB, HDMI and DisplayPort connectors dominate most Chinese suppliers’ shipments, according to companies interviewed by Global Sources.

All these connectors can be customized to suit specific requirements, with such orders representing between 20 and 60 percent of deliveries. Generally, they are manufactured based on industry safety standards such as CE, RoHS, TÜV and UL.

In the foreseeable future, Chinese suppliers see their products migrating to the midrange and high-end market segments. To realize this objective, they will continue R&D efforts with emphasis on small size, and high density, transmission speed and frequency in their designs.

Manufacturers source materials, including copper, nickel, gold, PE and PBT, from domestic companies, but also accommodate requests for imported versions. The cost of copper rose in the past 12 months, leading to a 5 to 10 percent increase in connector prices. This may stabilize in the next six months.