Taiwan needs to exploit China
Build our stuff cheap then buy it off us
Computex The Computex tradeshow in Taiwan kicked off with industry and trade officials saying how much they need to exploit China's cheap labour, land, and huge market for computers - but not give it enough resources to compete against Taiwan.
China nipped past Taiwan in 2000 to become number three in the world's IT hardware producers league table according to research from Taiwan's Market Intelligence Center (MIC). Though this is due to Taiwan outsourcing a lot of its production to mainland China, it's obviously very concerned that it keeps control of the situation.
Speaking at the Computex opening press conference, Victor Tsan, MD of MIC, said: "We need [China's] labour and land to compete internationally. We also need the market. But we should not put in too much money and resources so they can compete with Taiwan."
"For the high end products, we should keep production in Taiwan. But for products like monitors and keyboards, we need to make these in mainland China."
Chih-Peng Huang, president of Taiwan's China external trade development council, was keen to warn businesses off the tax breaks China is offering manufacturers. "The cheap labour and taxation programmes are favourable, but these programmes are going to be difficult to be realised. Too much investment is not good."
"If we invest money correctly in mainland China - theoretically the capital will return to Taiwan."
Away from the press conference Alex Wen, president of Twinhead, said he thought China would become a serious competitor in the next two to five years. Notebook manufacturer Twinhead has got a joint venture with a Chinese company and is just about to set up its own subsidiary in Shanghai. Wen said that at present the Chinese weren't that interested in product design, just in manufacturing.
According to MIC, the top five IT hardware production countries in 2000 were:
- US, whose production was valued at $88.5 billion
- Japan, $45.4 billion
- China, $25.5 billion
- Taiwan, $23 billion
- UK, $16 billion
China's year on year growth rate was 38 per cent. Taiwan's was 10 per cent, the US' four per cent, Japan's was three per cent, and the UK's was one per cent. The statistics obviously involve a lot of crossover with components and systems being manufactured in assembled in several different countries.
At the opening press conference Tsan gave an overview of Taiwan's IT industry. In 2000, the value of its production was $56.6 billion, with $47 billion coming from hardware.
In 2000, sales of notebooks hit $13.5 billion and this is forecast to rise by 21 per cent in 2001. Monitor revenues were $10.4 billion, due to rise by 19 per cent; desktop sales were $7.8 billion, due to rise by just seven per cent; and mobo sales reaped $5.7 billion, forecast to rise by eight per cent.
According to MIC, here's how Taiwan's offshore hardware production shaped up in 2000. Ninety five per cent of mice were made in China; 95 per cent of keyboards were made outside Taiwan, with more than 85 per cent made in China; 86 per cent of scanners were made in China, 84 per cent of desktops were made outside Taiwan, with more than 40 per cent assembled in China; 47 per cent of mobos were made offshore, with nearly all of them coming from China. Only seven per cent of Taiwan's notebooks were made outside of Taiwan. ®