Taiwan firms increase investments in Vietnam:Last year, U.S.-based Intel Corp. said it would build a US$1 billion semiconductor testing and assembly plant near Ho Chi Minh City in the south. Call centers and other outsourcing operations also have established themselves in Vietnam.
Lai said the provincial authorities have agreed to provide 360 hectares of land to set up factories, where Compal and about 24 other Taiwan companies have pledged to invest a total of US$1.1 billion by 2012.
Compal said these companies will serve its demand for electronic parts, and will also produce parts and accessories for cell phones and personal computers, according to Lai.
Compal said it is investing in Vietnam because of customer requests.
"We are currently investing in Vietnam, because of our customers' demand," Compal spokesman Chang Chih Ming said. "They want to diversify their investment (from China) to minimize risks."
At the moment wind power is slightly more expensive than thermal, held back by the massive subsidies given to coal and oil production by governments all over the world (renewable energy subsidies are miniscule by comparison). But thanks to demand from China, coal prices are rocketing up. Taiwan has responded by attempting to lock in supplies:
Two Taiwanese utilities sought this week to secure coal supplies for the next five to 10 years, longer-term deals than the norm, amid growing concerns that China's demand may sap Asian supplies for years to come.
Taiwan Power Co (Taipower) and Ho-Ping Power Company issued the tenders this week to buy thermal coal from Australian, Indonesian and Chinese suppliers, producers said on Friday.
The delivery over as much as 10 years -- longer than deals typically for just four or five years -- is a stark sign of the anxiety among many Asian utilities after a year in which prices soared to record highs above $70 amid a scramble for supplies.
"The supply outlook has changed quite substantially over the past few months so we're moving to secure more coal in advance," a source at Taipower who declined to be named told Reuters.
In the long run, nothing will make us move away from fossil fuels faster than rising prices.
Bad news for consumers and for the DPP: prices of consumer goods are rising in Taiwan, as probably every reader on the island has noticed.
The nation's consumer price index (CPI) rose 3.08 percent year-on-year last month on rising food, clothing and fuel prices, the government's statistics bureau said yesterday.
The inflation benchmark accelerated to a two-year high last month, adding pressure for another interest-rate increase.
Rising raw materials prices have driven up prices for virtually all consumer items. The Central Bank will likely raise interest rates, pushing down economic growth ahead of the elections, and in the face of rising prices.
[Taiwan] [China] [Vietnam]
"Chang Chih Ming said. 'They want to diversify their investment (from China) to minimize risks.'"
ReplyDeleteAnd I am sure that the rising costs of labor in China are playing a big role too. Based on what I have been reading recently about the troubles Chinese factory owners are having finding skilled labor at a low cost, I would be almost willing to bet that setting up shop in Vietnam costs less.
Yeah. China's moving up the value chain pretty quickly. Top-tier cities aren't really that much of a bargain anymore, and moving inland to the 2nd-tier cities has costs of its own. I wouldn't be surprised if we saw a lot more manufacturing moving to less developed Asian countries over the next few years.
ReplyDeleteMark, they are much more expensive, but do you have good evidence of them moving up the value chain?
ReplyDeleteI've read anecdotes of Chinese supplier testing waters and finding buyers accepting higher prices, but this is not moving up the value chain so much as they were probably pricing incorrectly previously.
I've read anecdotes of Chinese supplier testing waters and finding buyers accepting higher prices, but this is not moving up the value chain so much as they were probably pricing incorrectly previously.
ReplyDeleteCPI is a lag indicator...btw, look like Taiwan CPI is not cheating. America takes out food and energy that's why you get around 2%. If you include food adn energy...it is above 12%. FED you should increase increase rate now!!! Not lowering it. I see stagflation coming.
Sure, anonymous. 10 years ago, most motherboards were manufactured in Taiwan, and mainland China's top manufacturing industries were low-technology goods. Now, the majority of the world's motherboards are manufactured in mainland China, and even laptop production is moving that way. The next major steps will probably be software and bio-tech. China is also rapidly becoming a world leader in solar cell technologies.
ReplyDeleteRight now, the labor cost of a Chinese manufacturing laborer is already quadruple that of that of an Indian laborer. Costs are rapidly becoming too high for simple textiles.
Google news is a great place to keep up on this kind of thing.
In 1993, hiring a factory worker in Guangdong cost 500 RMB a month.
ReplyDeleteIn 2003, the cost is now four digits and the hiring and work standards are that much more stringent. Land and housing construction costs have risen accordingly--so has product quality and facility technology.
That kind of resembles moving up the value chain.