Tue, Nov 27, 2001 - Page 17 News List

Mobile phone companies plan China investments

BLOOMBERG , TAIPEI

Acer Communications & Multi-media Inc (明電) and other Taiwan-ese makers of mobile phones plan to boost investment in China to cut costs and tap the mainland's growing economy.

Acer Communications may expand production in China rather than in Taiwan, if orders at Taiwan's biggest mobile-phone maker rise next year, Alex Liu, a financial controller at Acer, said in an interview. The company plans to make about 6.5 million handsets in Taiwan this year.

Taiwan last week eased investment rules, allowing companies in 122 industries, including notebook computer and mobile phone makers, to start manufacturing in China from next year.

The companies, some of which have built plants in China in anticipation of a relaxation, will be able to pare labor costs by about a 10th and tap into a market of 1.3 billion customers as demand from the US, Europe and Japan wanes.

"Many companies have already started production in China," said Katherine Chen, who manages NT$800 million (US$23 million) in stocks at International Investment Trust Co (國際投信). "Any relaxation of restrictions is positive, with the effect being rising investment and expansion in China.''

China overtook the US in July to become the biggest cellular phone market, while sales in the rest of the world dropped. China's economy expanded 7 percent in the third quarter from a year earlier, while Taiwan's shrank 4.21 percent.

The new investment rules will allow Taiwan's handset makers to benefit in the same way as rivals such as Matsushita Communication Industrial Co, Japan's biggest mobile-phone maker, which set up a plant in Beijing 10 years ago.

Acer Communications, which makes handsets for Motorola Inc, currently manufactures monitors, keyboards and other computer accessories in China. It also has the space and labor to make handsets at its China plants, Liu said.

"China is the biggest mobile-phone market," Liu said. "If we move, we can start making handsets there very quickly."

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