Computing
PC Production Bases in China: A Crowded Melange of Chinese Vendors and Foreign Players
October 01, 2002 / Sean Kao / Shao Xiang
16 Page, Topical Report
US$720 (Single User License)

Abstract

Both major international PC vendors and Taiwanese PC manufacturers have established numerous production facilities in China, enticed by low production costs and the huge domestic market. At the same time, Chinese governmental protection has also aided Chinese PC manufacturers in gradually winning market share, spawning a significant domestic desktop PC industry. These combined factors helped China to overtake Taiwan in 2000 as the world's third-largest producer of IT hardware; IT vendors worldwide are now closely monitoring developments in China. This report examines the Chinese PC industry's current state of development and production centers, and highlights possible future developments.
  •  List of Topics
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There are several reasons for the limited future growth expected from the Chinese desktop PC industry. Most major international PC vendors are shifting their focus away from desktops to notebook PCs. Domestic PC market demand and PC industry growth is slowing as well. Finally, Taiwanese desktop PC manufacturers?industrial expansion for the desktop is at a slower rate. On the other hand, transportation infrastructure improvement projects undertaken by local government authorities should encourage Taiwanese notebook PC makers to increase their percentage of production in Eastern China. Japanese and Korean manufacturers are also expected to increase their presence in Eastern China. The notebook PC assembly and related industries in Eastern China will probably comprise the main source of future growth for the Chinese PC industry.

Both leading international vendors and Taiwanese PC manufacturers are starting to strengthen R&D capabilities in China. This will enhance domestic IT hardware R&D capability; however, recruitment of key personnel by foreign R&D centers may funnel talent away from Chinese manufacturers. The battle of hunting for engineering talent has increase the average wage level in costal area which weaken the absolute labor cost advantage that China enjoyed comparing to other countries in Asia before.

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