Although an increasing number of international manufacturers are gradually being drawn to China, the head of Cisco Systems Ltd's Asia Pacific business said yesterday its outsourcing strategy in Taiwan won't change anytime soon.
"Taiwan's competitive edge is not only low labor costs but entrepreneurial ability and creativity. Therefore our commitment toward Taiwan won't change in the short term," said Louis Mc Elwain, field sales operations vice president at Cisco Asia.
Cisco Systems, the world's leading networking equipment provider, reported US$18.7 billion in revenue last year. Entering the Asia Pacific market in 1994, the venture currently has 32 offices in 13 countries within this region.
Cisco set up its Taiwan branch office in 1997, and has since then provided Internet networking services to the nation, and capitalized on Taiwan's OEM capabilities as well.
An industry watcher at a government think tank said Taiwan may be able to hold off competition from China's networking manufacturers for about two years.
"In terms of high-tech component production, Taiwan is more experienced and qualified than China," said Liang Sheng-kai (
Taiwan's open business environment and strong relationships with international companies, keep the country competitive, he said.
But, in terms of market size, the lure of China is very attractive.
"China is still a very immature market, but with the government there highly committed to boost networking services, it is expected to be the fastest growing region over the next few years," McElwain said.
In addition, China can skip the slow, tedious technological jump from twisted copper wire and migrate right into high-speed connections, he said.
"They can shorten the 30-year long process into a couple of years," McElwain said.
McElwain said Cisco plans to centralize operations by "taking orders, producing components and delivering products within the same region."
"This year we ordered about 2 billion components from our manufacturing partners in Asia Pacific and we hope the number will be much more next year."
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