Thu, Jun 07, 2001 page24

• China delegation star attraction at Computex show

  FINDING A BALANCE Orders from Chinese firms are welcome given the current economic slump, but some fear help given to China now could help Taiwan's giant neighbor overtake it in the future

  • AP
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  Taiwanese may resent China for regarding Taiwan as a renegade province and often rebuking it, but you wouldn't know that at the world's third largest computer trade show in Taipei.

  This week's Computex Taipei 2001 show, where local computer makers exhibited their cutting-edge products, attracted hundreds of shoppers from the US, Europe and Japan.

  But the trade delegation whose buying power attracted the most attention was the one from China, which until recently had long been considered a technology backwater.

  

  A visitor passes by a plasma display screen at Computex Taipei 2001, which opened at the Taipei World Trade Center on Monday. The show, which is Asia's largest computer exhibition, fields 281 booths for foreign exhibitors and more than 1,700 for Taiwanese firms.

  PHOTO: CHANG CHIA-MING, TAIPEI TIMES

  Over the past decade, Taiwanese firms have set up assembly lines in China to turn out personal computers and spare parts from power supplies to motherboards, taking advantage of China's cheap manpower.

  The investments helped turn China into the world's third largest computer hardware maker last year with total output valued at US$25.5 billion. About 70 percent of the products were produced by Taiwanese-invested firms in China.

  China's computer output, behind the US and Japan, marked an impressive 38 percent growth. Taiwan ranked close behind at US$23 billion with a 10 percent growth.

  The Chinese delegates to the weeklong trade show, including executives from its two largest computer firms, were shopping for laptops, hand-held computers and the more cutting edge motherboards not yet produced in China.

  Legend Holdings Ltd (聯想集團), China's largest computer maker, will spend much of its annual purchase budget of 20 billion yuan, about US$2.5 billion, to buy Taiwanese products, said Yang Yuanqing (楊元慶), president of the company.

  "Taiwanese makers have a leading edge in research and development and chipset design. More important, they have a better understanding of the Chinese mainland market than American firms," Yang told reporters.

  The Chinese orders are highly valued as Taiwanese firms struggled with sagging demand from the West amid the global economic slowdown.

  But there is a catch behind the luring business. Taiwanese officials fear their companies may be helping their historic rival so much that China could build a computer industry to replace Taiwan's in a few years.

  "China brings both threats and opportunities to us," said Victor Tsan (詹文男), an official of Taiwan's semiofficial Institute for Information Industry (資策會). "Our biggest challenge is how to strike a balance in our strategies."

  Several company officials at the trade show dismissed the concerns as unwarranted.

  Asustek Computer Inc (華碩電腦), a leading Taiwanese motherboard and laptop maker, displayed at its booth computers using Intel's latest Pentium 4 microprocessor, products to be formally marketed by August.

  Joe Hsieh, Asustek's marketing manager, said the company has several factories in China to make computers that have been on the market for years, but that state-of-the-art models are produced here where engineers work closely with chipmakers and other component suppliers for product innovation. "China is gaining in technology, but Taiwan has access to the latest tech information," he said. But China's potential to be a high-tech power cannot be neglected.

  Raff Liu (劉瑞復), chairman of Syscom Computer Engineering Co (凌群電腦), said his company operates a design center in the central Chinese city of Xian, employing 100 young engineers to design software for Internet appliances at less than one-third the cost of similar operations in Taiwan.

  "We must utilize China's advantages, much the same way American firms built assembly lines in Taiwan 20 years ago," Liu said.
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