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Cao Unites Chinese Components Vendors

Light Reading
OFC/NFOEC News Analysis
Light Reading
2/20/2004

Simon Cao, founder and former CTO of Avanex Corp. (Nasdaq: AVNX) and also CEO of his current venture Arasor Corp., has been busy in China pulling together a consortium of components vendors to attract manufacturing business from the West. The new consortium, called Greater China Photonic Solutions (GCPS) will introduce itself to the world at next week's OFC show.

"Exhibiting as a group will give a powerful message," Cao told Light Reading. "We will be perceived as a much bigger player."

Over the past couple years, the majority of components vendors, including the likes of JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU), have been attracted to China as a manufacturing base, because of low labor costs. But Cao wants to take this idea one step further.

"They [components vendors] are only attacking the labor cost in the overhead," says Cao. "We can really provide an extra advantage to the customer, by addressing the materials supply."

The cost of materials makes up the largest part of the overall components cost -- up to 65 percent, he says. Many folk are buying their materials from suppliers all over Asia, and may not be getting the best prices. The GCPS consortium has already negotiated prices with established suppliers, he claims, which means it can help its customers lower costs and make the entire manufacturing process a lot smoother.

So far the consortium has six members:

Two more companies are likely to join the consortium in the near future, and three others are waiting in the wings, according to Cao.

The Chinese government clearly takes Cao and his company seriously. The investment arm of the Guangzhou government, Nansha High Technology Investment Ltd., has just agreed to finance a 200,000 sq. ft. factory for Arasor in the municipality's new Nansha IT Park. The facility, which will become operational in the fourth quarter of this year, will be the largest production facility built in Guangzhou since 2000.

Separately, Arasor plans to announce on Monday that it has acquired Lightbit Corp., a startup developing all-optical wavelength conversion technology (see Interest Grows in Wavelength Conversion).

— Pauline Rigby, Senior Editor, Light Reading

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truelight
truelight
12/5/2012 | 2:24:03 AM
re: Cao Unites Chinese Components Vendors
The only message that Cao is going to send to folks visiting at OFC is "the chinese are coming"
OptixCal
OptixCal
12/5/2012 | 2:24:01 AM
re: Cao Unites Chinese Components Vendors
Chinese, Japanese, Taiwanese, Indian, Pakastani...we all know what the message is and the messengers are not the issue. Costs and pricing drive business, and at this rate, business isn't being driven to San Jose, it's being loaded onto boats and hauled, en masse, to lands where costs are 10% - 20% of anything the US is doing. We (the US) and Mr. Bush, better figure out how we're going to keep jobs in the US. Fighting an Iraqi war only keeps manufacturers of military products happy. Next stop, Korea!
allidia
allidia
12/5/2012 | 2:23:41 AM
re: Cao Unites Chinese Components Vendors
is we should stop giving out H1B Visas so people like Simon can come to the US and take advantage of our Education system and jobs that should go to the American taxpayer who is funding the programs allowing Simon et al in to the country. The argument that we need to be competitive to keep the jobs here holds no water when you look at the "Buy Chinese" clauses that companies like Shanghai Bell have. If 90% of any product sold to the Chinese Govt. must be made in China including materials then labor is irrelevant. It's time for Verizon and other US focused companies to step to the plate and require the same. I don't know to many Verizon users overseas. Verizon's profits will drop alot faster when the unemployed start balking at $150 for Local/LD/Cell/DSL. Sorry Verizon but the Chinese don't need your services. Even the US Govt. only sets a 40% threshold and that is dubiously enforced.

gzkom
gzkom
12/5/2012 | 2:23:30 AM
re: Cao Unites Chinese Components Vendors
America always stands up after painful processes:

Automobiles, semiconductors, HDTV, ...
busted
busted
12/5/2012 | 2:23:17 AM
re: Cao Unites Chinese Components Vendors
Chinese Gov't can require Chinese content. Us Gov't also can. Verizon is not the US Gov't, they need to make profit and compete with CLEC's that will do anything to survive. Do you think Verizon feels pressure from the consumer to buy US content, nope just low prices.

Manage job loss overseas maybe (a little), but isolate us from the world market, no way. We are all suffering from this market and the answers are not easy, but isolation is not the answer. We may all need to start over in another market, the world has shifted, adapt. I think we also might have to give up the 2 giant SUV's in the garage and the 7000 sq ft home, it stinks bu what can you do. Also, looks like any kind of class climbing will stop. Those in the upper income groups will benefit from the global economy, for the rest of us were hosed.
whyiswhy
whyiswhy
12/5/2012 | 2:21:07 AM
re: Cao Unites Chinese Components Vendors
Cao will find it relatively easy to do small business in China, but hard to do even small business outside. Chinese hardware is still knock-off, for the most part, and going offshore for them is a big risk of lawsuit. It is simply too risky for big companies to do big business with small Chinese companies.
qlwang
qlwang
12/5/2012 | 2:11:02 AM
re: Cao Unites Chinese Components Vendors
The really website of Sinoceramins, Inc. is :'http://www.sinocera.net' or 'http://www.sinocera.com'.
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