Feeds

Chinese jitters as tech firms look to SE Asia expansion

Could the global tech power balance be shifting?

Bridging the IT gap between rising business demands and ageing tools

China could be at risk of losing its position at the centre of the technology manufacturing world as increasing numbers of producers move their operations to other nations in order to combat rising wages and ongoing trade concerns.

Taiwan’s WantChinaTimes, citing a report in China’s influential Economic Information Daily, said that foreign direct investment into south east Asian countries totalled $US117 billion in 2011, up a quarter from the previous year. The growth rate for China during the same period was just eight per cent.

While not all of this investment is tech-related, the technology industry is one of China’s biggest, with the south-east province of Guangdong along the Pearl River Delta apparently accounting for around 60 per cent of the world’s IT production.

Chen Zhihua, president of the Guangdong Computer Chamber of Commerce, told the paper that spiralling wages were forcing manufacturers to locate elsewhere in Asia.

A Frost and Sullivan report from August noted that China became the largest selling and production market in the world for mobile phones, PCs and TVs in 2011.

However, it warned that the growing popularity of other “cost competitive countries” such as Vietnam, Malaysia, India, Indonesia, Singapore, and Mexico have “decreased the attractiveness for contract manufacturing in China”.

“These countries also benefited from a skilled labour pool and the labour wages in these regions are rising slower compared to China,” it added.

Foxconn is one big name ODM/OEM that has already begun to build bases beyond China, recently announcing plans for a huge plant in Indonesia that could see investment of up to $10bn over the next 5-10 years.

Others could follow if rumoured minimum 13 per cent wage hikes in Shenzhen come to pass. Rumours to that effect have already caused some concern in the tech supply chain. HP and Dell have already voiced concerns in the past over rising wages.

However, the wage bill remains a small part of the overall manufacturing cost, and analysts said China would remain the manufacturing destination of choice for most big name producers.

Foxconn, for example, has also committed to build the world’s largest smartphone factory in Henan province, despite its investments outside the PRC.

“When it comes to components, manufacturers want everything centralised in one place,” IDC analyst Melissa Chau told The Reg. “China has everything from A-Z.” ®

The Power of One Brief: Top reasons to choose HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.