China-Japan row could aid local manufacturers

The escalating row between China and Japan may benefit Taiwan's vendors of branded notebooks if Chinese consumers were to boycott Japanese laptops out of a sense of nationalism, analysts said.

On the other hand, the rising tension between China and Japan may have a negative impact on Taiwanese contract manufacturers if demand for Japanese products drops.

"The conflict between the two countries will have a mixed influence on Taiwanese notebook vendors and contract makers," said Helen Chiang (江芳韻), research manager for the personal computer industry at the Taipei-based Market Intelligence Center (市場情報中心).

The anti-Japanese protests could provide a chance for Taiwanese vendors of branded laptops, like Acer Inc and Asustek Computer Inc (華碩), which have been eager to expand their market share in China's vast portable-computer market, Chiang said.

Since Chinese branded laptops have a stronger footing in the low-end segment, Taiwanese vendors producing high-quality products would be able to take over part of the medium and high-end segment from Japanese players, she said.

With the conflict between China and Japan heating up, many information-technology retailers in the first-tier cities in China have removed Japanese products from their shelves, a move that may spark hopes for some Taiwanese companies that Chinese consumers will turn to Taiwanese brands.

Japanese laptop vendors, such as Toshiba Corp and Sony Corp, made up about 14 percent of China's laptop market with shipments of nearly 700,000 units in the fourth quarter of last year, according to figures compiled by International Data Corp (IDC).

However, local vendors of branded computers do not seem to be overly enthusiastic about the potential business opportunities.

"We think the potential impact is transient," Asustek spokesman Sunny Hang (韓德行) said.

"Quality and public praise are the fundamental on which our long-term market strategy focuses," Hang said.

Asustek, China's sixth largest laptop vendor, saw a bright performance in China with its market share jumping to 6.2 percent in the September-December quarter last year, up from 3.8 percent a year ago, according to the company.

Meanwhile, the nation's contract laptop makers may feel the pinch if the sales of their Japanese clients declines as a result of a consumer boycott in China, Chiang said.

"Fortunately, the impact may be limited because of Japanese vendors' relatively small base in China, compared with their shipments to the rest of the world," she said.

Toshiba, which currently outsources around half of its production to three Taiwanese laptop assemblers -- Computer Inc (廣達電腦), Compal Electronics Inc (仁寶電腦) and Inventec Corp (英業達) -- saw its sales volume in China accounting for about 3 percent of its shipments worldwide in the fourth quarter of last year, according to IDC's data.

Downplaying the possible negative influence of the protests in China, Quanta said that it has not noticed any changes in orders thus far.

Acer shares rose NT$1.50, or 3 percent, to NT$51.00 on the local bourse yesterday, while Asustek rose NT$0.70, or 0.9 percent, to NT$82.30.