Chinese mainland to be world's largest laptop production base

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Last updated at: (Beijing Time) Thursday, January 08, 2004

Chinese mainland to be world's largest laptop production base

With its improved science parks, cheaper labor and massive market, the Chinese mainland is challenging Taiwan as the world's largest production base for notebook computers. Data from IMSReserach, a famous market research company offering the up-to-date information on the global electronic market, indicates that the Chinese mainland will take the place of Taiwan as the world's largest notebook computers production hub.

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With its improved science parks, cheaper labor and massive market, the Chinese mainland is challenging Taiwan as the world's largest production base for notebook computers.

On Jan.2, Quanta Computer Inc. in Taiwan, the leading notebook-computer manufacturer in the world, declared that three quarters of its laptop output were planned to be off its production lines in the Chinese mainland. The world will have more and more laptops from the Chinese mainland as the world's top producer moves its manufacturing facilities to the mainland of China. As a result, the Chinese mainland will replace Taiwan as the world's largest production base for notebook computers.

Relocation of production lines

Taiwan has been an important base for the global production base of notebook computers, which houses an array of businesses specialized in contracted laptops manufacturing and producers with their own brands such as Benq. It turns out notebook computers for IBM, Toshiba, Dell and HP. A report by iSuppli, a market survey agency, says that 64 percent of the global notebook computers were made by Taiwan producers in 2002.

But Taiwan's position as the largest production base for notebook computers is challenged by the Chinese mainland where science parks have been put up and improved with favorable policies carried out and cheap labor available. As an enormous sales market takes shape in the Chinese mainland, laptop giants such as IBM and Toshiba think it would be more convenient for them if their producers could stock them with products in the Chinese mainland. This will not only cut down costs for customs, but also make their products closer to their customers. As a response to such demand, Taiwan producers flocked into the Chinese mainland with their manufacturing lines. Their spare-parts suppliers joined them in the exodus out from the Island. When the whole production chain settled down in the Chinese mainland, the output of notebook computers would soar up there.

Now Taiwan notebook-computer manufacturers have settled down in the Chinese mainland and begun to turn out goods. All of them have been in the Chinese mainland now. Eight out of the ten top producers have set up their facilities in the Yangtze River Delta. Suzhou, a coastal city in Jiangsu province in the Yangtze River Delta, has grown to be the biggest production base for notebook computers in the world with its output approximating 10m units for a year, accounting for 25 percent of the global total.

Besides the manufacturers at the latter part of the production chain, mainboard suppliers have followed suit by moving to the Chinese mainland. It is estimated that all Taiwan mainboard suppliers would relocate their production lines to the Chinese mainland.

Chinese mainland to be the world's largest laptop production base

As laptop manufacturers have their plants built or relocated in the Chinese mainland, the output of notebook computers are increasing day by day. Data from IMSReserach, a famous market research company offering the up-to-date information on the global electronic market, indicates that the Chinese mainland will take the place of Taiwan as the world's largest notebook computers production hub.

Besides growing to be the global top production base for laptops, the great market potential will make the Chinese mainland a bone of contention. IDG predicts that the notebook computer market will keep on increasing by 30 percent in the three years to come. 20 percent to 30 percent market shares of the total PC sales go to notebook computers in the overseas market, making a sharp contrast with less than 10 percent in the home market of the Chinese mainland. Given this, in the eye of notebook computer players both home and abroad, the market in the Chinese mainland has just begun to be tapped and touched and a large cake is still there waiting for them to share out.

Research & Development stay at home

Competition is getting heated to the players in the Chinese mainland as notebook computer producers swarm into the playground. However, despite of production lines and plants in place here in the Chinese mainland, there is hardly any inflow of technology, which means this transfer only makes sense in quantity. The mainland enterprises should strengthen their shield by sharpening their own core technology against the surge of overseas competitors. In this way, it is to raise the competitiveness and not to be contained or checked due to technological problems.

It is true that the transfer of production centers has remarkably increased the output in the Chinese mainland. But it did not bring the R&D core technology into the Chinese mainland. Insiders think that basic designs for notebook computers will be shifted to the Chinese mainland in a short time while their hi-end know-how and overall control will still remain in their headquarters in Taiwan. Under this backdrop, it is the best choice for the enterprises in the Chinese mainland to swiftly throw off its traditional OEM way to develop an all-round style in R&D, production, marketing and services so as to bring out notebook computers of their own.

Prices used to be one of the most important advantages for the notebook-computer players in the Chinese mainland. But this has also been changed. Production and delivery have cost overseas businesses much less than they used to be, thanks to the plants and computer component parts and assembly they have set up in the Chinese mainland. In addition, more and more enterprises have developed and developed laptop brands of their own. In this case, pricing really counts in gaining more market share. So the mainland players should focus on upgrading technology and novel designs when they lose their advantage on pricing.

When leading notebook computers suppliers in the Chinese mainland like Lenovo place their production order into the hands of manufacturers like Quanta, some newly emerged competitors in the field of notebook computers begin to embark on developing their own products. In this way they put their fortune and future in hand.

By People's Daily Online

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