Why did these PCB companies fail?

In recent years, PCB industry has not been very peaceful, the emission limit, environmental pressure, epidemic, Sino-US trade friction, Russia-Ukraine conflict... One thing led to another. In such an environment, the competition in the PCB industry has intensified rapidly, and many small and medium-sized PCB manufacturers have also fallen into business crisis, or even collapsed and quit the stage of history.

However, just like the collapse of ancient dynasties, mostly due to peasant uprising, foreign invasion, but the incapacity of the authorities, bureaucratic corruption, heavy tax, people living in poverty, is the deep reason for the collapse of the dynasty. Similarly, the reasons for the closure of PCB companies are complex and far from a single epidemic or environmental pressure can be summed up.

So, what are the main reasons for PCB enterprises to close down?

First, cash flow dries up, capital chain breaks. This is also the most common cause of death in the past two years circuit board business closure.

At the end of 2021, the Intermediate People's Court of Guangzhou, Guangdong Province issued an announcement on the bankruptcy and liquidation of a circuit board factory in Guangzhou, which means that the era of this circuit board factory is completely over.

The circuit board factory was established in Hong Kong in 1995, and moved to Panyu, Guangzhou in 1999. It has been operating in China for more than 20 years. The company is committed to providing high quality 2-16-layer precision rigid circuit boards, which are widely used in automobile, communication equipment, multimedia digital electronics, home appliances and other fields. It is the production base of many famous international brands and has had a good time.

But with increasingly stringent environmental requirements on the mainland, the circuit board factory has gone from bad to worse, and its cash flow has been strained. At the beginning of 2020, the novel coronavirus epidemic suddenly hit and continued to wreake havoc around the world. The circuit board factory originally planned to raise funds to save itself, but under the attack of the epidemic, all walks of life across the country suffered varying degrees of impact, and investment institutions were more prudent. The circuit board factory finally "no way to help", but collapsed.

This is not the only PCB company that has closed down in recent years due to cash flow problems.

Second: lack of core competitiveness, gradually eliminated by the market.

As early as the beginning of 2008, there was a wave of PCB companies in South China, and most of the PCB companies that collapsed did not have core technology or superior products.

Nowadays, with the further high-end of electronic products, PCB market competition intensifies and product iteration accelerates, and the market plays a more obvious role in eliminating PCB enterprises with weak innovation. Some circuit board enterprises still do not pay attention to research and development innovation, or do not concentrate on their core products, eventually also encountered "death is coming".

A circuit board factory was established in Dongguan in 2009, mainly manufacturing all kinds of single, double-sided and multi-layer circuit boards. In the early stage of the business, the orders were OK, but as the industry overcapacity became more and more serious, the factory was lost in the common single and double-sided circuit board market by those competitive big manufacturers. In the high-end circuit board sector, the factory failed because it had been stingy with research and development, and finally failed to innovate.

Another circuit board enterprise located in Dongguan is mainly engaged in R & D and production of mirror aluminum, flip aluminum substrate, copper substrate and ceramic plate. Due to too many product categories, the company has not formed its unique core advantages, but each product consumes too much energy and capital, resulting in serious losses of the company. In addition, since 2017, the circuit board enterprise has been subjected to environmental inspection "encirkement and blocking", in multiple pressure, the company finally had to announce the closure of operations.

Third: the enterprise intemperate, regardless of their own conditions to expand production, investment, intended to devour a larger market. Will not evaluate the situation, step too big, the capital chain at any time to break, ultimately lead to the demise of the enterprise on the road.

In 2011, a circuit board factory in Zhejiang province collapsed. The peak of the circuit board factory has more than 500 employees, the output value of 50 million yuan, strength is a bar. However, his boss was not satisfied with this, and wanted to expand the business of circuit board, but also wanted to get involved in other industries to make a lot of money. In the second half of 2007, the boss contracted Yueqing Theater, invited many musicians to do activities, failed, lost millions of yuan; In 2008, it spent tens of millions of yuan in Jiangxi to build a circuit board factory to expand production, just started soon, not really output, the bank's time to repay the loan... In the end, the circuit board company collapsed, with 79 workers still owed 378,000 yuan in unpaid wages.

Only to conquer the distant stars of the sea, forget the steady path. But God is always fair, the consequence of taking too many shortcuts, is that one day you will find that there is no way out.

Fourth: the enterprise is some high-level wealth accumulation tools, when the wealth accumulated to a certain extent, the collapse of the enterprise is the result of these high-level deliberate.

Such man-made "unnatural deaths" are not uncommon in the circuit board industry.

In 2015, a large circuit board factory closed down. It is reported that when the circuit board announced its closure, it owed employees nearly ten million in wages and hundreds of millions in debt. However, the circuit board factory was not losing money but making a profit every month before closing its business. According to the insider Revelations, in the enterprise before the completion of the circuit board factory has been secretly responsible for the company's property transfer.

Guangzhou has also had a circuit board factory in arrears with the supplier payment of more than 20 million, the company's fixed line stopped, the relevant person in charge to change the mobile phone contact, so that these suppliers have no door to chase money. The suppliers eventually sued the company and won the lawsuit, but they still could not recover the money because there was no enforcement action to be taken. According to one of the suppliers, they have long since transferred their property and are left with a shell.

Fifth: do not pay close attention to the changes of customers, resulting in enterprises can not keep up with the changes in customer demand, order decline again and again, and finally unsustainable.

In 2014, a circuit board company in Suzhou announced its closure. The company used to be a supplier of a well-known mobile phone company, but as mobile phone manufacturers upgraded their products, their requirements for circuit boards became more "harsh". The circuit board factory has been stable orders in the past, thus neglecting innovation, when the customer put forward higher requirements, the factory is difficult to meet, and finally because of its backward technology, low yield, high cost was the mobile phone enterprise out of the list of suppliers.

Innovation is the current survival rule of circuit board enterprises, not in the innovation of nirvana rebirth, disappear under the inaction. This cannot be taken lightly.

Six: the enterprise management is not good, trouble rises against the wall.

In the circuit board industry, many enterprises are developed by small workshops, with the founders and a few entrepreneurial elders of a cavity enthusiasm and invincible will to grow the enterprise. But when these enterprises have made great achievements, their management has not done the corresponding adjustment, still stay in the workshop scale management level, everything at will. The company has been under disorganized management for a long time, and over time, it has been shaken.

In December 2015, a closed PCB circuit board factory in Shenzhen showed the reasons for its closure in its notice of suspension of production: due to poor management, resulting in successive years of losses, due to serious insolvency, capital chain break, and ultimately unsustainable. According to the insider, the company due to the imperfect management system, so the lack of checks and balances in the decision-making process, made several major decision-making errors, more accelerated the speed of its death.