Up to 80 percent of Taiwanese companies may not have changed their manufacturing procedures to comply with new European regulations coming into force as early as next year which will be mandatory by 2006, experts said yesterday.
"There have been no official studies yet, but I would give a wild guess that between 10 and 20 percent of Taiwan companies are ready for the new regulations, especially in the 3C [computer, communication and consumer electronics] sector," said Wang Ren (
"Companies have begun to react, but are not necessarily ready," Wang said.
Wang was speaking at a seminar yesterday in Hsinchu to inform companies about the new regulations.
The three directives -- Waste Electrical and Electronic Equipment, Restriction on the Use of Hazardous Substances and Energy Using Products -- require electrical and electronic-equipment producers to prevent waste, increase reuse and recycling as well as improve the environmental performance of any products they wish to sell within the EU.
While most contract manufacturers in Taiwan will not face prosecution under the new rules -- which only apply to the company whose logo appears on the product sold in Europe -- their brand-name customer may force them to change their manufacturing procedures.
Japanese giants Sony Corp and Matsushita Electric Industrial Co, which makes the Panasonic brand, already require strict environmental policies from Taiwanese suppliers in line with Japanese regulations.
"Companies in Taiwan which are part of the supply chain have started to take action," said Joy Boyce, head of corporate environmental affairs at Fujitsu Services Ltd.
"However, companies do not have a clear idea of the implications [of the new regulations]," she said.
Not only do companies have to phase out the use of poisonous substances such as lead, mercury and cadmium, they also have to design products that are more easily re-used or broken up for recycling. This can result in a hefty makeover bill, Boyce said.
"The costs are significant, but against that you have to bear in mind the costs of not making the changes -- your product will be illegal in Europe," she said.
Sony felt the pain of non-compliance with EU rules two years ago when 1.3 million PlayStations were blocked from the Netherlands because their cabling contained too much cadmium. The game consoles were shipped back to Japan, costing Sony an estimated ?200 million (US$1.84 million) in lost Christmas sales.
With increased competition from polluting companies in China, Taiwan could gain a green upper hand by adhering to the rules early.
"In the past we tended to treat those regulations as non-tariff trade barriers," said Yu Shu-wei (余樹偉), director of ITRI's environmental safety center.
"Now it is true that we view the regulations as incentives to enhance design for competitive advantage," Yu said.
Yu announced at the seminar that his center has allocated up to US$100,000 to set up a joint project with British experts to help Taiwanese companies understand the potential impact of the new policies on their businesses.
Companies need to get moving now, according to Dave Burrell, senior technology consultant at UK-based Plextek Technology Consultants.