Moving into the market A discussion with Simon Lui of Wuhan Telecommunication Devices

Simon Lui is first deputy general manager of Wuhan Telecommunication Devices in Wuhan, China. He received his undergraduate degree in marketing and a master's degree in management from MacQuarie University in Sydney, Australia. He previously worked at Philips Electronics Group and Philips Automotive Lighting Hubei Co., and has been with WTD for nearly two years.

WDM: Wuhan Telecommunications Devices (WTD) is a joint venture between Wuhan Research Institutae of Posts and Telecommunications (WRI) and Corning Lasertron. Why was it established and what do you personally hope to accomplish?

In the 20 years since it was established, with technical support from both WRI and Corning Lasertron, WTD has been through a baptism into the market economy and an ideological transition from a strictly manufacturing-oriented enterprise to a market-oriented one. Currently, WTD has an annual manufacturing capacity of 5.5 million optoelectronic devices and 1.5 million optical modules per year. My personal objective is that, in the near future, WTD will become an international manufacturer and supplier of optoelectronic devices.

WDM: Why does the city of Wuhan have such a large number of companies making products for optical networking?

Liu: East Lake, where WRI is located, is the cradle of China's optical communications technology research. WRI is mainly engaged in manufacturing of optical communications equipment, optical fiber and cable, and the development and manufacturing of active and passive devices. In addition, East Lake is surrounded by more than 20 universities, including Wuhan University, Huazhong University of Science and Technology, as well as some important enterprises engaged in manufacturing optical fiber and communications equipment, such as Yangzte Optical Fiber and Cable and Wuhan NEC Fiber Optic Communications Industry. So, the East Lake High-Tech Zone offers many qualified employees and abundant technical resources for developing optical networking products.

WDM: Do you think that your best market growth will come from domestic sales or export?

Liu: The development of WTD is a process. About five or six years ago-because the company was originally a research institute with a related management/manufacturing philosophy- market growth came mainly from the domestic market. In terms of management experience and ideology, manufacturing capacity, staff training, even the quality of some of our products, WTD could not meet the standards for exporting. In the past two or three years, our company has endeavored to become an international enterprise.

Now, WTD has taken the preliminary shape of an international company. We have obtained ISO 9001, ISO 9002, ISO 14000, and TL9000 certification, and will be qualified in ISO 18000 by the end of 2002. In 1999, WTD's export market amounted to $300,000 or so, accounting for 3.8% of the total sales. In 2000, it was about $2.45 million , accounting for 8.1% of our sales. Last year, it amounted to $9.3 million, accounting for 15.3%. So, with these developments and China's entry into the World Trade Organization, WTD will eventually make the international market its main source for market growth.

WDM: Has the telecom downturn in North America and Europe had a major impact on optical component and system manufacturers in China?

Liu: In my view, the telecommunications downturn has indeed had an impact on Chinese suppliers of optoelectronic devices and systems. It is one of the reasons why recently the development of China's telecommunications industry has not met our expectations for growth. However, the rapid growth of China Telecom will surpass that of other carriers in the world because China's GDP continues to grow by more than 7% annually. The telecommunications industry will meet its goals as part of the plan for national economic growth-and show an increase of about 20%, which is the goal set by our government.

In May 2002, the Chinese telecommunications industry was reorganized. Now, competition between carriers will be beneficial to the development of equipment suppliers. Although some analysts think the industry will now grow in a calm and orderly manner, I think some unexpected and perhaps overheated development could occur.

WDM: Would you discuss your manufacturing processes? Which areas of your manufacturing and testing are manual and which automated?

Liu: Automation is partly used in chip scribing, in quality testing during production, and in testing the final products. In the production process, some accessory instruments are used to improve efficiency, such as clamps. But the important point is that, to reduce the cost of manufacturing, the reduction of labor expenses has been put on the table.

Because of the development of technology and the demand for large-scale manufacturing, automation is our only path forward. Manual operation and workshops are not the foundations of large-scale manufacturing. Problems associated with manual work such as inconsistent quality, divergence from specifications, and limitations on the quantity of production caused by manual work are widely recognized in China.

As we incorporate automation into our production processes, we must focus on understanding the life cycle of products, the demands of the market, the best means of synchronizing automation and manual production, and the ability of an enterprise such as ours to afford automation. We believe, above all, that by using automation, production efficiency can be greatly improved, and the economy can be developed as well.