S'pore electronic firms seek opportunities abroad
S'pore electronic firms seek opportunities abroad
SINGAPORE (DPA): Electronics manufacturers hit hard by competition are planning to invest overseas, outsource or acquire companies, a Singapore survey showed on Saturday, but electronic commerce is not popularly viewed as a viable strategy.
Nanyang Polytechnic's International Business Resource Centre queried 450 semiconductor, disk drive, personal computer, supporting industry and contract manufacturers during its research.
About seven in 10 of the respondents, mainly PC, disk drive and contract manufacturers, said they intend to invest overseas in the next 12 months mainly to lower their wages and gain access to larger markets like China, India, Europe and the United States.
The survey results, published in The Business Times, found lower production costs and proximity to key customers were also key reasons for going overseas.
Contract manufacturers are also heading to Hungary and Mexico, the survey found.
About 60 percent of the electronics producers said their profit margins were under pressure from severe price and industry competition and rising wages and overheads.
Least interested in e-commerce are PC suppliers and sub- contractors, who cited high costs and lack of skilled IT personnel.
"Moreover, they have been using the fax and the telephone to conduct their business and this has so far proved to be both efficient and sufficient," researcher Sylvia Teh was quoted as saying.
Outsourcing and automation were each cited by about 40 per cent of the respondents as a strategic response, with manufacturers looking to outsource lower-value activities mainly to suppliers in Asia.
Major manufacturers such as NatSteel Electronics (NEL) have gone into distribution in China by acquiring substantial shares in partner-firms there.
NEL clinched a deal earlier this year to purchase a U.S. manufacturing plant from Japanese giant NEC Corp. for 200 million U.S. dollars to give it a firmer foothold in Japan as well as a base for expansion in the United States.
In addition to the Oregon plant, NEL also has a facility in California and a large plant in Mexico.
"By acquiring companies, you get the entire chain of activities, and gain direct access to the business," Teh said.