Tuesday, November 22, 2005

Outsourcing World: Taiwan attracts R& centers

You haven't heard it in the local news, and it's just the kind of thing the DPP should trumpet, but Taiwan is competitive in getting R&D centers from the outside world:

In just two years, Taiwan has convinced multinational corporations, mainly in IT, to build 28 research and development centers on the island, according to the latest government count. Attracting more R&D is part of an effort to offset the loss of manufacturing jobs to lower-cost China and to keep Taiwan moving forward to becoming a fully developed economy.

Hewlett-Packard Co., Microsoft Corp. and Sony Corp. top a list of industry giants operating on the island--and for some of them it's their only R&D center in Asia.

The R&D centers have been a boost for Taiwan. Like many countries around the world, including the U.S., Taiwan has lost thousands of IT manufacturing jobs to China in recent years, and it's looking to replace them with higher value-added work.

"We lost the low cost edge," said Ho Mei-Yueh, Taiwan's Minister of Economic Affairs at a news conference. And since low cost is no longer an advantage, Taiwan needs to press forward with adding value to goods and services, she said.

Many of Taiwan's biggest IT manufacturers, like Quanta Computer Inc., the world's largest contract notebook computer maker, and Asustek Computer Inc., the biggest motherboard producer, have moved most of their production lines to China. They've left their marketing and design operations on the island, and many have built new R&D centers as well.


David said...

Hmm ... I'm a bit dubious about this. I used to work in a big multinational R&D lab in Taiwan - which closed down as soon as a Chinese R&D centre was up and running.

The movement of all manufacturing to China is also mirrored by R&D - with all the big companies opening up labs (mainly in Shanghai). While there's still plenty of investment in Taiwan by international companies, I'd say the net movement has been a decrease of external R&D in Taiwan over the last few years.

The thing that Taiwan needs to encourage now is more R&D by companies which are either part-owned or fully owned by local Taiwanese companies (think TSMC). That's a lot more sustainable than trying to entice American/European countries who are usually starstruck by the opportunities (and cheaper cost of top-quality graduates) by China.

Michael Turton said...

I hadn't heard of this story, either. I'm glad you made that criticism.