Companies Move Production from Malaysia, Singapore, Taiwan and Japan to China

Multinational companies are shifting their production from Southeast Asia to mainland China. Minolta is planning to shift part of their Japan-based production to China. NEC, a technology giant, is transferring its personal computer line from Malaysia to China, while Seiko Epson laid off 700 staff in Singapore as a result of newly built production facilities in China. US companies are shifting production from Taiwan and Malaysia to China, mostly in electronics and components. This year new investments by US companies in Malaysia are expected to drop by 25% to US$450m. China is said to be at the beginning of a big expansion of its electronics industry and according to market analysis is expected to become the second largest producer of PCs in the world. The reasons for this development are threefold: Firstly, the business environment in China has improved, China gained technology know-how and moved up the value chain and companies increasingly make use of the low cost of labour. This trend is also partly driven by a growing domestic market. China's role as a major exporter is increasing: GE's chief executive J. Immelt forecasts that US$5bn of goods will be sourced from the mainland by 2005. A new era has started, bringing with it a profound impact for the market players, in particular the supply industry.

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