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January 13, 2015

Looking to Alibaba for Electronics Contract Manufacturing? Think Twice

Alibaba, the Chinese internet behemoth, has been killing it since its recent US IPO where it raised $25 Billion, with a “B”, in September 2014.  According to ForbesAlibaba posted 54% sales growth and now has a market capitalization of $250 Billion.  Slightly ahead of a little company called Wal-Mart and making them one of the top 10 most valuable companies in the world.

A quick search of electronic contract manufacturing on Alibaba yields 5,349 results.  Think about that, over 5,000 items that advertise EMS, PCB, PCBA, multi-layer boards, Assembly, Box Build, Lead Free, Manufacturing and Assembly services for electronics.


How in the world do you know which one is the best fit for you?  How do you know you are buying from the company that is actually making the product?  Do you know if your contract manufacturing is sub-contracting its work? How do you ensure 3rd party validation (UL for example) is certified?  Buying from a contract manufacturer is fraught with risk if you have zero visibility into their business!

A Parable

Imagine you are in a street market in China looking to buy a blue shirt for work.  One small shopkeeper you meet says he has shirts, but they are red and green.  You politely decline and attempt to leave.  The shopkeeper will insist he does have blue – and run down the street to the small shop that does have the blue shirt.  He’ll buy that shirt for $2, sprint back to his shop, and kindly sell the blue shirt to you for $5.  You are happy you bought a shirt for $5.  But do you know ‘where’ your shirt was made, what raw material it was, does the finished good match the tag?

You see we have had engineers who have been in ‘those’ electronics manufacturing factories.  There were only two employees and the only Wave Solder Machine was covered in dust from years of no service.   That manufacturer was simply outsourcing his manufacturing.  It’s not an uncommon practice today.   At one point in time, after visiting 25 EMS factories, we partnered with only two.  And that is why we ultimately built our own EMS division – to have complete transparency of the supply chain.

I think Alibaba is great tool for many.  Judging from their growth and financials my comment is a no brainer.  However, I wonder if it makes the most sense as a solution for you to find an electronics contract manufacturing partner.  I doubt  you want to buy ‘advertised’ UL and Lead-Free PCB/PCBA’s from the same website you can buy Kayaks and Cowboy Boots!

If you're looking for the right contract manufacturer for your product, read another helpful post here: "Looking for the RIght Contract Manufacturer?"

FREE White Paper: 5 Important Questions to Ask a Prospective EMS Partner

Filed Under: Offshore Expertise, Contract Manufacturing