Re: Future of the elctronic industry in the devlopment country? | 26 October, 2000
That is a tough question. I think that an important point must be made, and that is that the electronics assembly business is just that, a business. And, electronics asssembly companies are in business to make a profit. The profit, or "bottom line" is maximized by maximizing market share (high volume, low price or low volume, high price) and minimizing costs. A prediction of having an advantage in one, or both of these stipulations will form the basis for a decision by an electronics assembly company to locate in a particular area. Now, there are indirect factors related to these two points such as local infrastructure (water, electricity, chemical availability, etc.) and people (education level and/or educational institutions for teaching people, etc.). That is the basic economics.
Now, let's move closer to home - electronics assembly. An important cost reducing aspect of business is labor costs. Twenty or so years ago, electronics assembly was very labor intensive - the hand assembly of through-hole product. At that time, the discrepency in labor costs between the developed and developing world was enormous. As a result, there was a very real cost benefit to setting up factories in the developing world. Today, there is still a very large gap in labor costs between the developed and developing world. Unfortunately, electronics assembly is not as labor-intensive today as it was then, thanks to automation; therefore, the profit margin to be gained by moving a factory to an area simply for the reason of lower labor costs is not as intense. For example, as a result of this state-of-affairs, the progress being exhibited by US OEMs to move their manufacturing to Mexico has been somewhat slowed. Nonetheless, there is still that advantage and many companies are taking advantage of it.
Finally, I think that it is important for a country's government and its industry to work together to convey information abroad as to the benefits of locating a company in their region - this is just good marketing.