For European manufacturers, Chinese New Year is the key to success

It will be under the sign of the tiger and, according to the stars, it should be one of spontaneity, novelty and the granting of secret wishes. For people working in manufacturing, however, the arrival of the Chinese New Year, which in the calendar fluctuates between 21 January and 20 February, marks an absolutely crucial milestone in the season. It is often here that it is decided whether and how successful the following year will be. In fact, the Chinese New Year is also associated with the term 'Chunyun', when people travel en masse to see their families and fifteen days of celebrations break out across the country. For two weeks, most Chinese factories are unable to produce anything, and all orders go back to Europe, at least for a while.

"Chinese New Year is always the start of the main season for us," confirms Zdeněk Cápal, Chairman of the Board of Gatema PCB, which is now the largest manufacturer of printed circuit boards in the Czechia according to current data.

We have the raw materials, now we'll see

However, the traditional New Year's positive swing that most large European producers rely on has another unusual story this year. Namely, the raw materials crisis. Last year showed just how dependent the world's material supplies are on a few regions. And how little it takes to put the entire global supply chain in a bind. As soon as traditional supply and demand faltered, a whole host of problems immediately sprang up. Shortages of materials, competition in other industries, a logistics crisis.

Gatema PCB has tried to prepare carefully for this year as well. "The strength of our company is shown, among other things, in the fact that even in the event of a crisis it is able to procure materials. I am very curious to see what this February will bring. If the new Chinese year will use up our stock and we will have to argue for more material. Or will we live for a year on the materials we have in stock here. We'll see how the suppliers react if they go down in price because there won't be demand. However, the current signals do not suggest this," adds Radim Vítek, who is in charge of PCB production management.

To make matters worse, the whole situation is further complicated by the political situation. "The market is interested in everything we produce. Copper, laminate, fibreglass, resin, copper foil. Unfortunately for us, big players often enter the picture and are able to 'skew' the whole market. We have been greatly influenced by the wind power lobby, which consumes huge amounts of copper. Most recently, it is again the interest in car batteries. These are things that you cannot influence and that interfere with the standard market. We are already talking in Europe about the fact that we need to reduce our dependence on Asian suppliers, but that is a horizon of a few years, certainly not the song of the next few months," explains Zdeněk Cápal.

Priority is given to existing customers

The prices of basic raw materials have risen by tens of percent in the last year alone, which is reflected in the final prices of products. Instead of looking for room in the increase with customers, we are trying to further optimise our own processes.

"We need to stay competitive, which we can only do by maintaining our key benefit - and that is the extraordinary speed at which we produce prototype boards. Today, however, we are in a situation where we have virtually no room to cut back. Last year we purchased a double-sided spray for the soldering mask, but this saves one drying, which in the end takes several minutes. Therefore, we've been hitting production bottlenecks and trying to increase our production capacity. If we shorten each process by a small amount, we'll have more capacity for expressions. This enables us to offer our customers assistance in emergency situations," says Zdeněk Cápal.

Existing customers play a primary role in Gatema PCB's thinking. "Last year brought a lot of non-standard moments. The combination of the coronavirus, the raw material crisis and price increases caused some European manufacturers to go under. As a result, dozens of new enquiries started flocking to us in some months. But at the same time, we found ourselves in a situation where our existing clients were also picking up orders. We also had cases where some companies completed more than 100 percent more orders with us than in previous years. At such times, we have to assess with a clear head that we prefer to turn down new enquiries - even if it is a chance for us to show off to a new client - and give priority to long-standing relationships and the satisfaction of our existing portfolio of customers. We have grown with them and we owe it to them that we are where we are today. Commitment in the form of long-term cooperation is also about making sure that they can rely on us at every moment and that we can move forward in technology together," concludes the Chairman of Gatema PCB.


Care to know more on the subject?
Connect with our specialists
Zdeněk Cápal