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A New Perspective on the Custom LCD Supply Chain
This year marked my first participation in CDTech’s annual gathering, and it offered more than just a new stage. It offered a fresh perspective on our custom LCD supply chain. In my previous roles, annual meetings usually involved board members, employees, and their families, creating a familiar and predictable setting. But the CDTech 2024 Annual Meeting was completely different. The front row, where I stood as the new host, was reserved for 14 of our key LCD components and parts suppliers. This arrangement reflected the importance of supplier collaboration within our custom LCD supply chain and gave me a clear view of the event’s unique energy and dynamics from the stage.
The suppliers were a diverse group, each with their own distinct presence. Some were dressed in sharp suits, exuding professionalism and focus, while others displayed a more serene composure, their hair styled in graceful coils and a quiet smile on their lips as they listened with deep attentiveness. Some had already begun exchanging toasts and cigarettes in hushed tones, their camaraderie unmistakable. It was during the intermission that I realized these suppliers were not just business partners—they shared a connection that went beyond the professional realm. They seemed to know each other on a personal level, toasting with genuine warmth, as though they had been close friends for years.
Beyond Business: Human Connections in the Custom LCD Supply Chain
As I took a brief pause from my duties on stage, my thoughts drifted to the supply chain model that defines our company.
Unlike the typical model where suppliers bid for contracts, our network operates more like a close-knit community. Built on regional cluster advantages, our suppliers collaborate with a level of intimacy that fosters a deep understanding of LCD pricing, raw material costs, and the complexities of the LCD supply chain.
This knowledge is shared freely among them, creating a seamless flow of information and support. Shenzhen, being a hub for foreign trade and cross-border e-commerce, provides a significant advantage. According to Amazon data, Shenzhen boasts over 100,000 sellers on Amazon, dwarfing Guangzhou’s 28,000 and Brooklyn’s 11,000.
In Shenzhen, you can find manufacturers for virtually every type of electronic component, optical device, semiconductor part, and custom LCDs. Many of these factories have broader foreign trade reach than retail, meaning businesses engaged in foreign trade here often have a more extensive range of products than cross-border e-commerce companies.
For procurement professionals, having suppliers concentrated in one location simplifies coordination, enabling efficient communication and the organization of offline meetings to address challenges and foster cooperation. This model of collaboration works particularly well in Shenzhen, where supply chain partners are tightly woven into the fabric of the local economy.
Policy-Driven Growth in China’s Custom LCD Supply Chain
You may not read local government reports in China (in fact, not many Chinese people do either). However, if you’ve studied Chinese policies, you’ll find that many phenomena are supported by official policy documents.
For example, in 2022, the Shenzhen Municipal Government issued the “Opinions on Developing Strategic Emerging Industry Clusters and Future Industries”. It aimed to cultivate leading enterprises, boost key technology breakthroughs, and build advanced manufacturing parks, including display screens and custom LCD solutions.
It also emphasized promoting the development of major industry clusters like network and communication, new energy, etc., making up for industry shortcomings such as in semiconductors, and enhancing the development of emerging and future-oriented industries. Additionally, there was a detailed classification of industry clusters following this.
If you want to understand China, you can definitely read the government work reports of the Chinese national government and city governments.
I used to work as a Business Associate and was involved in many government-supported projects. For instance, if a company moves to an industrial park designated by the government, it will receive a sum of incentive funds. Also, if a company meets the scientific research standards of the “specialized, refined, characteristic, and innovative small and medium-sized enterprises” to be announced by the government and gets this recognition, it will also obtain government-supported funds, ranging from about 100,000 to 500,000 RMB.
This has led countless entrepreneurs to move to the industrial cluster areas designated by the government for better profits and to save cash flow. Coupled with transportation cost advantages and self-adjustment of market prices, leading, mid-range, and low-end price-war-fighting enterprises have emerged in this industry cluster.
Why Stability Matters in a Custom LCD Supply Chain
At the event, the suppliers seated at the front tables were visibly enjoying themselves, exchanging toasts and laughter. Suddenly, the boss of Supplier A, clearly tipsy, pulled our boss to the central control to request a song and perform karaoke. The mood shifted dramatically, the room bursting into laughter and applause as the bosses took to the stage. The energy was contagious, lifting the entire atmosphere of the event to new heights. At this moment, the word “stability” came to my mind.
Although everyone might have their own thoughts, it was evident that on this night, they were all trying their best to maintain this cooperative relationship.
A stable supply chain relationship is the bedrock of any thriving industry. It ensures the efficient allocation of resources, enabling businesses to establish a strong position within the supply chain and leverage their unique strengths in the LCD industry. This synergy drives the improvement of industry standards and fosters the creation of innovative ecosystems for custom LCD displays and touch screen solutions.
From an employment perspective, the stable development of the supply chain also stimulates the prosperity of upstream and downstream industries, indirectly creating countless job opportunities and supporting the livelihoods of many families. This, in turn, contributes to social harmony and stability, laying a solid foundation for long-term growth.
Adapting the Custom LCD Supply Chain for Global Uncertainty
That said, we must acknowledge the challenges the industry faces. The global economic landscape remains uncertain, and volatile market demand has made it increasingly difficult for businesses to predict trends accurately. Additionally, shifting trade policies have presented numerous obstacles for import and export companies. During these uncertain times, it is our close-knit LCD supply chain relationships that prove invaluable.
When market demand fluctuates, we share real-time information with our suppliers, enabling us to adjust production plans quickly and avoid inventory imbalances. In response to trade policy changes, our supply chain partners collaborate to explore new market channels, optimize resource allocation, and adjust logistics routes to reduce trade costs. This collective flexibility allows us to navigate the complexities of the global market and continue to thrive, even in challenging circumstances.
At a global level, many countries boast their own strong industrial clusters, and the United States is no exception. For instance, Silicon Valley, San Jose, Seattle, Portland, and Detroit are all prominent examples of advanced manufacturing industrial clusters. These clusters thrive purely because of market demand. Companies gather, share resources, information, and talent, constantly driving innovation and industry growth.
In contrast, China’s industrial clusters are largely driven by government policy. The Chinese government actively guides market aggregation through strategic policies, funding support, and the creation of industrial parks for industries such as custom LCDs and touch screen technologies. Shenzhen’s success, for example, is a result of both government policy and market demand, where the policies create a siphoning effect that attracts numerous companies and suppliers to the region, forming a tightly-knit ecosystem for LCD suppliers.
This contrast between government-led and market-driven models reflects two distinct paths to economic development. China’s approach is more reliant on policy-driven clustering, while the U.S. model thrives on market forces and competition. Both methods are effective in their own right, driving industrial growth in their respective regions.
As the evening continued, the two bosses, slightly tipsy but in high spirits, took the stage to perform karaoke. The annual meeting was drawing to a close, but my reflections on the power of LCD supply chain cooperation were only just beginning. The connection we share with our suppliers is more than just business; it’s the foundation that supports everything we do.
Finally, here is an image of me hosting the rehearsal.
Have you ever had supply chain cooperation that goes beyond a transactional relationship?
What factors contributed to the establishment of such an intimate relationship?
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