Recently, a business registration notice regarding Sumitomo Electric (Suzhou) Optoelectronic Devices Co., Ltd. resolving to dissolve and enter the liquidation process has stirred considerable waves within the connector and wiring harness industry.
Due to Sumitomo Electric’s pivotal role in the global automotive wiring harness and specialty connector markets, many industry observers have mistakenly interpreted its actions as a precursor to a complete withdrawal from Suzhou.
However, after investigation by International Cable & Connectivity, it was found that this liquidation is more of a case-by-case “exit” for specific severely loss-making and inefficient businesses, rather than a comprehensive divestment across the entire group.
However, looking at past cases reveals an undeniable trend: foreign connector companies are undergoing a “loss-cutting exit wave” in China, spanning from consumer electronics to automotive wiring harnesses.
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This “Business Cleanup” had Long Been Foreshadowed.
To clarify the essence of this liquidation event, it is first necessary to define its commercial entities and specific business boundaries.
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The true subject of retreat
The entity being dissolved in this resolution is Sumitomo Electric (Suzhou) Optoelectronic Devices Co., Ltd. The facility previously focused on the research and development of optical communication devices and optoelectronic module components. On July 22, Sumitomo Electric announced that it “does not have any products related to medical devices.”
If one examines the factory’s publicly available social insurance data in recent years, it becomes clear that this withdrawal was not an abrupt decision, but rather a prolonged, gradual decline over several years:
- 2016 (peak period): The number of factory employees enrolled in social insurance reached over 500;
- 2024 (accelerated liquidation): Enrollment had sharply declined to 265;
- 2025 (liquidation phase): The number of registered insured individuals dropped drastically to just 7.
Data indicates that production functions have long been halted, and this decision to dissolve the company is merely Sumitomo Electric Group’s legal move to clear out this loss-making division.
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Strategic divestiture under “multi-entity operations”
It should be emphasized that Sumitomo Electric in Suzhou operates under an independent “multi-entity, multi-division” model: Sumitomo Electric Wire & Cable (Suzhou) Co., Ltd., which manufactures electronic cables and industrial connectors;
Sumitomo Electric Precision Polymers (Suzhou) Co., Ltd., a manufacturer of fluoropolymers and polymer materials;
The aforementioned entities continue to operate normally and maintain production lines. Therefore, equating the dissolution of this optoelectronics subsidiary with “Sumitomo Electric’s complete withdrawal from Suzhou” is a misunderstanding. However, this move does represent Sumitomo Electric’s decisive decision to cut losses by exiting certain product lines facing declining gross margins and lost competitive advantages.
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From the Massive Relocation of “China+1” Production Lines
to Direct Liquidation and Deregistration
If foreign connector giants in the past were more inclined to “relocate production lines to Vietnam, India, or Mexico (China+1),” in recent years, under intensified competition, “completely dissolving legal entities and directly liquidating operations” has become their hardline approach to disposing of non-core, inefficient assets in China.
“International Cable & Connectivity” has compiled the following foreign-invested and Taiwan/Korean-invested connector/harness-related entities that have been established or dissolved and liquidated in China over the past three years, based on publicly available information:
In terms of timing, the foreign investor connector settlement went through a very clear “two waves”:
First wave (2021–2023): The liquidation phase for consumer electronics connectors. As South Korean smartphone and TV assembly manufacturers such as Samsung fully relocated out of China, their suppliers of internal connectors, FPC harnesses, and terminals lost substantial orders, triggering the liquidation and deregistration of the first wave of small- and medium-sized connector companies.
Second Wave (2023–2025): Wind-down period for automotive wiring harnesses and industrial connectors. Driven by the surge in China’s new energy vehicles and the sharp decline in Japanese automakers’ share of the internal combustion engine market, major Japanese wiring harness giants—such as Yazaki and Nippon Seiko—that heavily rely on traditional automotive supply chains are forced to make strategic decisions regarding their factories in South and East China.
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Why Are Foreign Connector Manufacturers Cutting Losses in China?
Connectors and wire harnesses, as electronic components highly dependent on end-user demand, rely on “cost, response speed, and customer retention” for the survival of their manufacturing plants. The potential liquidation of foreign giants in China may be related to these three key factors:
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Loss of terminal strongholds: The backward pressure from Japanese cars and consumer electronics
Automotive wiring harnesses and connectors have long been the core profit centers for Japan’s “Big Four” (Yazaki, Sumitomo, Fujikura, and Furukawa). In the past, Japanese wiring harness manufacturers formed extremely close and closed “private supply chains” with automakers such as Toyota, Honda, and Nissan.
However, as China’s new energy vehicle penetration rate rapidly surged, the market share of traditional joint-venture fuel-powered vehicles suffered severe erosion. Orders at wiring harness factories closely tied to Japanese automakers plummeted sharply. Since automotive wiring harness plants are capital-intensive facilities characterized by high labor density and heavy fixed assets, once capacity utilization falls below a critical threshold, resuming operations inevitably leads to massive losses, leaving parent companies with no choice but liquidation.
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Service Model Suppression: “On-site, Round-the-clock response” defeats “slow and steady work”
Foreign connector giants have traditionally been known for their “long R&D cycles, strict quality control, and high sample modification fees.” However, in today’s Chinese market, the iteration cycles for new energy vehicles and AI servers have been compressed to a matter of months.
Domestic connector manufacturers (such as Luxshare Precision, TELINK Technology, and Shenglan Co., Ltd.) can even provide “engineers on-site at automakers or server manufacturers 24/7 to assist with design modifications.” Foreign companies, burdened by cumbersome overseas headquarters approval processes and high labor costs, are comprehensively outperformed by domestic firms in terms of service efficiency.
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Production line automation reconstruction: A dimensional strike on cost control
In the past, wire harness assembly, terminal crimping, and pin insertion heavily relied on manual labor, which created room for foreign-invested factories that thrived on meticulous management.
In recent years, domestic connector manufacturers have fully adopted fully automatic terminal-molding injection machines, AI-based visual inspection systems, and highly automated wiring harness assembly lines. Automation has not only offset the disadvantage of rising labor costs in China but also driven down the per-unit cost of standard connectors and wiring harnesses to an extreme level. Facing such a significant cost gap, foreign-owned older factories lacking budgets for automation upgrades have seen their gross margins turn negative.
Conclusion
The dissolution of Sumitomo Electric (Suzhou) Optoelectronic Devices Co., Ltd. is a snapshot of foreign investment strategic restructuring and the upgrading of domestic supply chains amid the global reshaping of the electronics supply chain.
Overall, foreign connector giants are clearly showing a trend of “scaling back in the mid-to-low end and consolidating in high-barrier segments.”
Most of the companies exiting or winding down operations are low-value-added, labor-intensive consumer-grade wiring harnesses, low-end optoelectronic component processing, or traditional internal combustion engine vehicle wiring harnesses.
What is being retained and continuously expanded upon includes high-end advanced materials, automotive high-voltage and high-frequency connectors, high-speed copper cables required for AI server computing clusters (such as NVLink-related products), and optical interconnect technologies.
For domestic Chinese connector manufacturers, the market gap left by foreign withdrawals undoubtedly brings significant opportunities for “domestic substitution.”
However, as they take over market share, domestic connector manufacturers must remain vigilant: they must avoid falling into vicious price wars in the oversaturated low-end market. Only by extending their technological reach into uncharted territories such as high-frequency and high-speed connections, premium medical, and advanced industrial connectors can they secure an invincible position in the next round of global connector market reshuffling.