World's laptops sport local talent

As consumers tap at their US and Japanese brand laptop computers, little do they know their sleek and expensive machines were made in Taiwan.

Long the silent partner for global brands, Taiwan technology firms have been happy making the world's computers and other appliances, leaving customers Toshiba Corp, Compaq Computer Corp and others the task of distribution and selling.

Not any more.

Now makers of microchips and mobile phones want to market their own products with China -- just next door -- the key target.

One example is VIA Technologies Inc (威盛電子), which makes personal computer microprocessors, as well as the chipsets that connect the processor to the rest of the system.

An ordinary PC user would scarcely have heard of VIA, unless they took a screwdriver to their computer and took a good look at the microchips on the motherboard.

But VIA's bosses are determined to change its quiet image and capitalize on Taiwan's close cultural ties to China, even as officials squabble over political links between China and the wealthy island nation that China regards as part of its territory.

Take, for example, a large billboard near Beijing's Capital Airport, which reads "VIA microprocessors -- Chinese Hearts."

VIA began the campaign appealing to Chinese consumers in the second half of last year.

It is a play on nationalism that Intel or Toshiba can't make in China.

"Since we are the largest IC [integrated circuit, or microchip] design house run by Chinese, we have to secure the local market's identification first," said Frank Jeng, VIA's marketing director.

Adopting China as a home market also makes good business sense.

With such a large and rapidly growing consumer base, this gives economies of scale to Taiwan companies, which are masters of manufacturing, making over half the world's notebook computers, monitors and motherboards.

Need to network

But there is also a problem and one that some Taiwan companies are apparently slow in addressing -- a weak distribution network.

"The distribution network is the key to the success of selling brands there," said T.B. Song, Greater China chairman at Ogilvy & Mather Co, a US advertising company.

"Nearly all world-class players in each industry are there. Foreign and China brands have been managing well in costs and distribution channels for years. For those newcomers, these advantages can't be matched in a short period of time," said Song, who is in charge of promoting brands for foreign companies on the mainland.

With good product quality and expanding distribution, China's mobile phone market is dominated by foreign companies such as Motorola Inc and Nokia, which together had more than 63 percent of the market in 2000.

This makes them a formidable rival to Taiwan mobile phone manufacturer Dialer & Business Inc (大霸電子), which started selling "DBTel" branded handsets in Shanghai and Guangzhou in the middle of last year.

Dialer & Business, which also makes handsets for Motorola on a contract manufacturing basis, expected its brand-name business to account for 50 percent of its total sales this year, compared with last year's 30 percent.

"Foreign firms can cooperate with local distributors to expand their sale networks, but we see few Taiwan companies going that way," said Bill Lan, fund manager at Jih Sun Securities Investment Trust (日盛投信).