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HP calls for collaboration

US computer giant Hewlett-Packard Co urged local manufacturers to collaborate more closely with the company as a strategy for maintaining development in the highly competitive market, an executive of the company said yesterday.

Addressing over 60 business representatives at a gathering organized by the Chinese-language Global Views Monthly (遠見雜誌), Rosemary Ho (何薇玲), vice president and country manager for HP Taiwan, said most Taiwanese information technology (IT) companies lack the experience and adequate investment to build global brands.

But Taiwan's IT manufacturers have strong potential to upgrade their global presence via further cooperation with international players, Ho said.

"Local manufacturers can have broad vision if they stand on the shoulders of a giant," she said.

"With their manufacturing prowess, Taiwanese companies should become further involved in product development to secure market position," Ho said. "In the long run, I think, goods made here cannot simply be recognized as `made-in-Taiwan' but rather `created-in-Taiwan' or `powered-by-Taiwan.'"

In her speech, which focused on methods of global marketing, Ho said that creating a brand is not the only approach Taiwanese IT companies should take. But one peer disagreed, saying that to be profitable, companies need to have their own brands.

"Taiwanese companies will always be bothered by tight margins if we only pursue foreign companies' orders," said Nelson Yang (楊良學), general manager of Moriah Tek Co (摩利亞科技), a local software developer, who offers software solutions to HP.

Yang said he understood that brand-building is both expensive and time-consuming. But "only high risks can generate high returns," he stressed.

The Moriah Tek executive cited Acer Group chairman Stan Shih (施振榮), as a role model that he very much admires.

"I was touched every time when I spotted Acer advertisements in foreign countries," Yang said. "If no one wants to run the risk of brand-building, Taiwanese companies will end up making limited profits [compared with global brands]."

Local manufacturers are suffering from thin margins as foreign companies, such as HP and Dell Inc, cut retail prices to stimulate sales.

For instance, Taiwan's largest notebook computer maker, Quanta Computer Inc (廣達電腦), has reported its profit margin dropped to 8 percent in the first quarter of this year from about 15 percent in the last quarter of 2000, according to statistics compiled by Global Views.

A researcher expressed sympathy for local manufacturers' increasingly narrow profit margins, and urged them to upgrade their product-development ability.

"Once local companies are more involved in the research and development process, they can expect to have stronger bargaining power to protect their margins," said Kung Ming-hsin (龔明鑫), division director of the Taiwan Institute of Economic Research (台經院).

Building brand names is another solution, although it's much more difficult and risky, because it's pretty tough for Taiwanese companies to create an IT product brand that can compete with international players, since most IT products are standardized items, Kung said.

"But that doesn't mean there is no chance of doing so ? Acer is one successful example," he added.
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