Tuesday, April 13, 2010

Sinotruk to build bus assembly plant in Taiwan

From the China Times via Taiwan Today, news about a Chinese state-owned vehicle maker that wants to build a bus assembly plant in Taiwan:
According to the officials, state-owned China National Heavy Duty Truck Group Co. Ltd. has fixed its sights on establishing a bus assembly plant in the Changhua Coastal Industrial Park in west central Taiwan.

The state-owned enterprise, also known as Sinotruk Group, plans to invest NT$5 billion (US$158.7 million) in establishing the factory. The project, if approved, would represent the largest investment in Taiwan by a mainland Chinese company since the government opened the island up to mainland investment in July of last year.

MOEA officials stated that top executives of Sinotruk visited Taiwan late last year to study the planned investment project and that the company is currently carrying out a more detailed assessment of the plan.
The kicker is at the end of the article:

The officials pointed out that Taiwan’s bus market is nearly saturated, so most of the buses produced at the planned factory in Changhua would be exported to the U.S. and Southeast Asia.

The higher value of “made in Taiwan” products compared to “made in China” goods was an important factor in Sinotruk’s decision to move to set up a production plant on the island, the officials said.

The investment is nice, but does not do much for the island's technology base, since it is merely an assembly plant with the high value technical work done elsewhere. Sinotruk was actually founded in 1935 under the KMT government based on an earlier automobile firm in Jinan, Shandong.
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les said...

Brilliant move. They are going to let the Chinese drag the name of Taiwan manufacturing down to their level.
I buy 1,000's of products out of Taiwan for specialist retail in the EU... items which can be made in China... simply because so far the customer has a much higher acceptance for 'Made in Taiwan' and almost zero for 'Made in China'.
A move like this will cripple Taiwan manufacturers when there is no longer any quality difference between the two manufacturing locations, leading the choose between either going to another higher quality manufacturing location or the lowest price... in China. There will be nothing left for Taiwan.

les said...

I also wonder how many jobs will be actually be created for Taiwanese. Parts and assemblies are going to be coming in from China so there isn't going to be a boon for local sub-suppliers. Perhaps a special deal-sweetener will be to let Sinotruk bring their own labor over here, that wouldn't surprise me in the least.

Beijing2008 said...

This blog is outstanding. I actually come here more often for up-to-date news sources and information, than the actual media outlets themselves.

Islander said...

I agree that this will drag Taiwan's brand name down to China's level.

Also, Taiwan brought to China high tech semiconductor and electronics jobs and for this China is giving Taiwan a bus assembly plant?!

The KMT is either dumb at foreign policy or they are selling out Taiwan and I don't think they are stupid.

Anonymous said...

Right, what Taiwan really needs are more third-rate liberal arts graduate students. That'll help its economy really thrive.

Thoth Harris said...

Anon 5:32 A.M.: WTF do university students, liberal arts or not have to do with anything in MT's post? The discussion is about a Chinese company being allowed to build, manufacture, and distribute from Taiwan using "'Made in Taiwan" on their labels.
Anon, you are a troll and possibly from China. No more needs be said. Tell your boss cracking his whip over your head that we are smarter than him. Freedom of speech is better than your idiocy over there.

Arty said...

Hint: Chinese heavy industries (i.e. car, truck, tanks, aerospace, etc.) are better and more technological advance than Taiwan's. China also have economic of scale that only a few countries can match. Also, last time I checked, my iphone is made in China and it is very fine quality.

Thoth Harris said...

Arty: Do you have links to any viable studies to prove that you are not talking out of your Chinatroll behind?

Diego said...

Sometimes I don't get the point of what is written here. Bad investment which will spoil Taiwan's face abroad?
I'm sorry if this sounds trolling too, but please China bring the factory to my 20% unemployment country !

Arty said...

Arty: Do you have links to any viable studies to prove that you are not talking out of your Chinatroll behind?

I am glad you are not teaching in the US. There are many reports talk about China heavy or even high-tech industries. I will give you some areas to look into:

Low tech heavy industry: China's iron, steel, and coal productions dominate the world. Actually some closures of coal processing plants caused a shortage of a solvent (acetylnitrile jump from $50 for 4L to close to $450) used in high-tech industry.

Shipbuilding: China currently holds the 3rd place in ship production behind Korea and Japan, and catching up fast.

Mid to High tech: China can build every single parts for cars and airplanes (Taiwan still can't make its own engine for cars). China has its own commercial airplane companies and some Embraers are made in China (I was on one just few months ago).

The big one: Commercial satellite launcher. China is one of the cheaper one to launch satellites. Can Taiwan do it?

Of course, there are bad stuffs made in China, but there are also very good one, too. And if you are a buyer and don't know how to do quality control, I don't think you can blame the suppliers ALONE.

dixteel said...

Arty, actually iPhone is more like "assembled" in China. The components inside come from all over the places, including Taiwan. That is why China actually can run surplus with Japan, South Korea and Taiwan because it has to imports components from them.

Also, a lot of work done for iPhone is from Foxxcon, a "Taiwanese" company. Although I would say the owner of Foxxcon licks Chinese asses so hard I don't know if he is actually Taiwanese anymore. All I can say is "gOOgle" has 2 balls while "Foxx" get f**ked up the ass.

By the way, Apple notebook, also assembled in China, actually sucks from what I heard. (keys fall off etc)

Arty said...

"Assembled" or "made," if you have to play word game, that's fine with me. American cars are assembled in the US, so what's your point? Mac note books are actually very good, I have both PC and Mac due to work. Although, I hate the Mac format.

P.S. Foxconn sings RPC national anthem every year in its year end banquet. hint hint...

P.P.S. Also, I find people on this blog proclaiming how they love democracy while behave like racist bigots ignoring facts and figures. Michael, can you tell me why you seem to not liking Obama now the health care is passed.

dixteel said...

There is a huge difference between made and assembled.

Please take a look at this link:


Check out the partial contractor list.

IPhone is an international effort, to contribute it as "made in China" is just wrong. I made a mistake in saying a lot of work is done by Foxxcon. Actually it's a lot of "assembly work" is done by Foxxcon. While it has its importance, it is but a small part of the whole.

Now here is the brand issue. A iPhone "made in China" has good quality. A SinoBus "made in Taiwan" has poor quality. Who is the loser here in trems of brand name?

And don't tell me Chinese trucks design / quality etc are good because they most likely aren't. A Iranian friend of my told me some interesting stories about his friends' Chinese truck. I don't remember all the details, but they include stuffs falling off just after a few weeks of purchase etc.

Arty said...

IPhone is an international effort, to contribute it as "made in China" is just wrong. I made a mistake in saying a lot of work is done by Foxxcon. Actually it's a lot of "assembly work" is done by Foxxcon. While it has its importance, it is but a small part of the whole.

Do you actually have an iphone? Do you know how many time I have it tossed accidentally from my hand. It is still in one piece unlike my old sprint smartphone. The assembly is "SOLID." It could be the design but clearly it is assemble correctly and "made" well! What your link suppose to mean? So a chair made in Taiwan using wood from Indonesia is not made in Taiwan? Just like a fancy furniture store tried to tell my how their furniture are all made in the USA (wait, devil is in the details, some parts are imported like frame and fiber). So an Acer PC assembled in Taiwan, does not consider to be "made" in Taiwan (everyone know the intel chip is from the US). How about cars assembled "made" in Taiwan, a lot parts are from Japan and China these days. China truck might not be good quality but it is cheap and your friend clearly is impressive enough and decide to buy one, and btw, Taiwan can't even make one without importing the engine.

Dixteel said...

If a phone/PC/notebook is "made" in Taiwan, there will be a lot more parts in it that is actually made/designed in Taiwan. The CPU will be designed by Intel/AMD for sure, but there are a lot of other parts including ICs, capacitors, motherboards, various cards, memory chips, even fans, of which Taiwan has ample supplies. The same goes with a cell phone. Furthermore, if the laptop is from Acer, or if the cell is from HTC, then you will know that a lot of design/engineering is done in Taiwan.

However, that is also why Intel, AMD and Nvidia are smart because they know it's good to put stickers indicating their brand, such as "Intel Inside."

A car that is "made" in Taiwan clearly is not really made in Taiwan because most of the stuffs insdie Taiwan cannot actually make. Same with Aircrafts.

The wood from Indonesia is more raw than chips and other electronic components. The amount of work in creating a chair from wood in proportion is not the same as assemble an IPhone. Eg. Craftsmen can contribue 80% of value to a chair, while IPhone assembler contribue 10% value to an IPhone.

Iphone's toughness can also be contributed to:
1. the design
2. the casing / material engineering.
3. robustness of the components.
4. assembly

Once again it's not just iPhone is assembled well. Other areas also contribute.

However, in terms of brand, this is how people think:

IPhone -> good quality. IPhone "Made in China".
"Made in China" -> good quality.

SinoTruck -> bad quality.
SinoTruck "Made in Taiwan".
"Made in Taiwan" -> bad quality.

That is why Taiwan would be a real loser in terms of brand.

Also, my friend's friend did not buy the truck because he is impressed but because he does not have a lot of money. He did not expect it to have good quality but the quality is worse than anticipated, that is why it is kind of funny.