Taiwan's hardware industry shifting to Indian market
Taipei (AsiaNews/agencies) Taiwan's hardware industry is increasingly interested in shifting production to India. Business delegations from the Taiwanese electronics-manufacturing companies have visited the subcontinent in growing numbers to determine whether to make the jump or not.
"We went there to get acquainted with the Indian regulations and infrastructure," said Wu Tao-yuan, president of the Taiwan Semiconductor Industry Association (TSIA), who was in India during the summer. "Since Taiwan is an established manufacturing hub in the semiconductor industry, we see a great potential to outsource a host of requirements from India."
Over the years, Taiwan's hardware makers have invested US$ 200 billion in China. Now they want to reduce their dependence on the mainland. More than 6 per cent of Chinese hardware exports are in fact either owned or controlled by Taiwanese hardware entrepreneurs, whilst more than 70 per cent of the hardware and components manufactured in the mainland are based on Taiwanese investments. But growing tensions between Beijing and Taipei worry island's companies and investors.
Mainland China accounts for more than 30 per cent of Taiwan's external trade, whilst India represents only 0.67 per cent. Taiwan accounts for 0.87 per cent of India's external trade. Compared with Taiwan's US$ 200 billion investment in mainland China, the island's investment in India is a puny US$ 116 million (as of 2004).
Cultural and language differences and memories of the 1997 financial crisis in South-East Asia have kept Taiwanese firms away. But for some analysts a new phase is starting.
In February for instance, Foxconn, the biggest original electronics manufacturer, announced that it would invest US$ 110 million to set up a manufacturing base in Tamil Nadu's capital of Chennai, India's fourth largest city and an important hub for the informatics and electronics industry. Soon afterward, Taiwan's Institute for Information Industry (III) established an offshore development centre in Chennai.
According to the Taipei World Trade Center, at least 60 Taiwanese companies have already set up shop in large Indian cities; as many as 30 are electronics-manufacturing companies.
According to Stanley Wang of III, the biggest driver behind Taiwanese IT companies setting up operations in India is to improve the cost structure through the much lower costs of labour and land than in China, as well as to scale up production through the huge manufacturing facilities the country can provide.
Some Taiwanese companies have already moved from South-East Asian countries such as Malaysia, Thailand, and Philippines.
Wang said the Taiwanese hardware industry's biggest market is mainland China, and "Chinese customers [tend to] request hardware [. . .] manufactured in China."
But now, according to the Indian hardware industry, even if India's markets are not as big as China's, it is catching up.
"India is waking up to a very real hardware boom and can now boast of a large and rapidly growing domestic market," said Vinnie Meht, executive director of the Manufacturers' Association for Information Technology (MAIT).
The country's consumption of semi-conductors, currently at .3 billion, is expected to reach billion by 2015, when consumption of finished electronic products is expected to reach 5 billion (currently billion).
A comparative study by Taiwan's personal-computer brand Acer reveals that the total addressable market in India has overtaken those of Australia and South Korea. And barring Japan and China, India has emerged as the fastest-growing market in the Asia-Pacific region.
"The country's proximity to the European, [Southeast Asian], African, Central Asian and Persian countries makes it a natural site for exports to these countries," said Mehta. "India's close geographical proximity to these countries could also reduce shipping costs significantly." (PB)
.png)
