Front End I Taitronics 2011
Breaking China S
Despite a growing manufacturing base in mainland China, the electronics industry in Taiwan is showing a new confidence, as Steve Rogerson found when he visited October’s Taitronics electronics exhibition in Taipei
igns that the bubble may have burst for cheap Chinese manufacturing were evident at October’s Taitronics
electronics exhibition in Taipei, Taiwan, as industry bodies and exhibitors alike talked about rising labour costs and increased fears over security.
Over the past decade, there has been
an increasing trend for Taiwanese manufacturers to build additional plants across the water in mainland China or transfer production from existing plants to new factories in China. Often, only research and development and, maybe, some pilot production remained in Taiwan. The reason was very cheap labour costs, far lower than in Taiwan where the cost of living is now relatively high for the region.
Evidence for this can be seen in figures
from the Taiwan Electrical & Electronic Manufacturers’ Association (Teema), which has seen the number of employees among its members fall from 880,000 in 2008 to a little over 750,000 today. “But now we are seeing some of the manufacturers moving back from mainland China,” said Isabel Shih, director of Teema’s exhibition department. “They are coming back because Chinese labour costs are going up and they also want the skilled labour that we have here.” More interesting, according to Shih,
were enquiries from some native Chinese companies looking to set up offices and even production lines in Taiwan. “R&D is cheaper here than in China,” said Shih. However, the problems for Taiwan are not necessarily over as its own companies are still seeking out cheap labour elsewhere. Once a likely successor to China, Vietnam is now seen as a bad risk by many Taiwanese firms because of its poor labour relations record. “Strikes in the area have put people
off,” said Shih. “The favourite place to move to now for cheap labour costs is Indonesia. We are seeing Taiwanese
companies putting production facilities there now. Indonesia is more stable, but the workforce is not as well educated as in Vietnam.” Taiwan though still wins out on quality of labour in the region, bettered only by Japan and on a par with South Korea. Plus there is a loyalty to the country from its own grown engineers. “Many Taiwanese engineers prefer to
stay here rather than move to other countries,” said Shih. In 2010, the output of Taiwan’s electrical, electronics and relevant industries was US$24.71bn, or 53.1% of Taiwan’s total industrial production. The export value of Taiwan’s electrical and electronics industries in the same period also reached US$13.69bn, 49.8% of Taiwan’s total export value.
“Thanks to the solid foundation developed over time, Taiwan’s electrical and electronics industries have not only survived but also performed well under the international economic turbulence,” said
Teema chairman Yu-Cheng Chiao in his keynote address at Taitronics. He said that increased economic and trade cooperation between China and Taiwan would become a stabilising factor in the region. Typical of the Taiwanese companies
wrestling with the varying labour costs is Diptronics, a maker of small switches and buttons, the likes of which can be found on items such as mobile phones. The company has its headquarters, R&D and pilot run facilities in Taiwan but its four main factories are in China. “China was cheaper,” said Steve Lin, the company’s founder, “but in three to five years time it may not be. The costs in labour are increasing all the time. Also, today our major customers all have factories in China, so we have to be there too.”
About 40 per cent of the company’s
sales are to the Chinese market. But for Anita Yang, from the sales department of camera specialist Mintron
Enterprise, it was the quality of the Taiwanese labour force that mattered most. “We manufacture in Taiwan,” she said.
“We are in a high quality market, which is why we stick in Taiwan. If you move to China you lose control of the manufacturing.” Everlight Electronics, however, like
Diptronics, sees the benefits of being near its customers. “We have two plants in China,” said Ken Liu, a specialist in the company’s marcom department. “We do manufacture near Taichung in Taiwan as well but the Chinese plants have more capacity. The Europe and European markets are slowing down but the Chinese market is picking up fast.”
Owen Hsu, a specialist in the marketing support department at Shihlin Electric, added: “We have to lower costs if we want to sell in China, which is why we have a factory there as well as Taiwan. We also have a factory in Vietnam.” For plastic electronics component maker Pingood Enterprise, it is a matter of horses for courses as to which products are made in which of its two factories in Taiwan and two in China.
“Our R&D team live in Taiwan,” said overseas director Anita Liu. “We produce 250 new items each year. If our customer is in Taiwan or overseas, then we manufacture in Taiwan. If they want the product in China, we make there. Some products are made in both, but the Chinese factories are kept for the Chinese market.” She said, though, that new products
were always made first in Taiwan so the quality could be controlled. “When we develop a new product, we find they are very quickly copied by competitors,” she said. “This copying could happen anywhere, but we find it happens in China.” The ongoing strength of Taiwan is shown by it being ranked the sixth most competitive country in the world, and the third in Asia. In 2010, the country’s worldwide market share for notebook PCs, motherboards, cable customer premises equipment and wireless network interface controllers were all over 90 per cent with netbook PCs and servers just below 90 per cent. In fact, according to Taiwan’s Institute for Information Industry, the country produces a notebook computer every 0.35 seconds and a motherboard every 0.21 seconds. Figures such as these show why Taiwan not only weathered the recent worldwide recession but actually thrived and why, as the rest of the world again prepares to tighten its belt, there is a strong optimism among Taiwanese electronics companies. ■
6 November 2011
Components in Electronics
www.cieonline.co.uk
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