As if the perennial exodus of Taiwan manufacturing activities to China was not enough indication of the precarious cost situation on the island, many major information technology hardware manufacturers in Taiwan are now following German examples to escape to Eastern Europe and have set up production facilities in the Czech Republic to stay competitive and also closer to their European markets. Local media speak already of a "Taiwan overseas IT industry cluster and supply center in that Eastern European nation.

Among those that have set up factories in Czechoslovakia or are planning to do so, are reportedly Hon Hai Precision Ind. Co. Ltd, First International Computer Inc., Asustek Computer Inc., Lite-On Technology. Corp., Inventec Corp. and Quanta computer Inc.

The awareness for the Czech Republic rose a few years ago after First International Computer set up a gigantic manufacturing plant there. As the infracstructurial environment matures, more Taiwan companies are reported to follow suit.

Industry sources say that labor costs in the Czech Republic are only about on-third to one-fourth than in Western Europe. Also, companies can draw from a large pool of skilled labor and R&D professionals due to the country`s former role as a military weapon and radar/telecom center during the cold war times.

In order to attract IT investment, the government there provides several incentives, including a 10-year tax holiday, free land use and unemployment subsidies.

Taiwan`s Asustek said it plansto soon open a production facility on rented space to shorten time for the start of production, and later will study the feasibility to built an own plant.

Quanta recently also announced that it wild set up a server plant in the third quarter of this year to benefit from a proximity to the European market and at the same time reduce dependence on Mainland China.

Inventec reportedly plans to set up a US$ 2 m plant for servers and related products.

Insider sources in Taipei pointed out that the present diversion trend to the Czech Republic ( and to Mexico as the next drift to follow suit ) is newly spurred by the SARS risk factor, leading to second thoughts about "unhealthy" concentration of manufacturing in China.