If you’ve ever used a smartphone, phone, tablet, laptop, or camera, chances are you’ve used a Knowles Electronics product—and it may have come from Knowles’s factory in Suzhou, China. Based in Itasca, Ill., Knowles makes the tiny receivers and microphones that go into many products of Apple (AAPL), Samsung (005930:KS), BlackBerry (BBRY), and Huawei (002502:CH), among others.
Knowles, a subsidiary of manufacturing conglomerate Dover (DOV), is trying to figure out how to stay in China, which has changed beyond recognition since the company arrived in Suzhou in 1995. “When we came it was obvious that very low-cost labor was an important driver,” says Steven Lu, China managing director of Knowles, which also makes components for hearing aids. “Now wages for some positions have gone up five times and even more.” Rising land and raw materials prices and an appreciating yuan have further upended the business model.
Low-end producers of textiles, sneakers, and toys have been shutting their China operations and relocating to Vietnam, Cambodia, and India. That’s not an option for businesses that pack a lot of engineering knowhow into their products. “In the past 10 to 20 years, China has developed a very complete supply chain for us. The whole ecosystem is right here,” says Lu. “And all the major cell phones are now produced in China. Staying close to them is a major driving force” to stay put.
via U.S. Electronics Maker Knowles Adapts to a Changed China – Businessweek.
CHINDIA ALERT: You'll be living in their world, very soon 