Asian tech companies look to neighbours for supply

15 November 2011

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15 November 2011 | Adam Leach

As China and Japan’s dominance in the high-tech component supply market recedes, companies in the region will source more from emerging countries such as the Philippines and Vietnam.

That’s the finding of the Changein the supply chain survey, published last week by global logistics company UPS. It discovered that the number of companies sourcing most of their supplies from China and Japan – including domestic businesses – would reduce over the next three to five years, while it will rise in other countries.

Asked what destinations they sourced most of their supplies from, 66 per cent of respondents identified China and 51 per cent identified Japan. However, when asked to predict the picture in three to five year’s time, China dropped to 64 per cent and Japan to 46 per cent.

In contrast, the grouping of mature Asian-Pacific markets (Thailand, Malaysia, Hong Kong and Singapore) increased from 42 per cent to 50 per cent in the future, Taiwan from 27 per cent to 31 per cent and the emerging markets of the Philippines and Vietnam from 16 per cent to 24 per cent.

Carla Huang, director of marketing for the high tech sector at UPS, said: “Shifts in sourcing strategies will impact high-tech supply chains throughout the Asia-Pacific region as well as those in North America, creating long-term implications for the industry on a global level.”

Yesterday, it was announced that Japanese electronics giant Hitachi will boost the amount of supplies it sources from Taiwan. The company, which manufacturers a variety of products including LCD TVs, refrigerators and hard disk drives, has committed to expanding procurement of flat panel and LED displays and other products in the country to the value of $2 billion (£1.25 billion).

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