Sony manufacturing moving out of Taiwan

Sept. 25, 2000

Following earlier reports on this Website News about Taiwan becoming less competetive as a manufacturing location, with around 40% of Taiwan enterprises'IT hardware already manufcatured offshore in China our Southeast Asia, Sony hit the headlines in Taiwan Saturday with a pullout announcement. 」

The minister said that Sony had decided to buy more computers and parts from Taiwan, and that these Taiwan purchases could exceed US$300 million this year, three times more than In 1999.

The minister said that Sony had decided to buy more computers and parts from Taiwan, and that these Taiwan purchases could exceed US$300 million this year, three times more than In 1999.

A Sony official said in a statement to the press:" We will cease production ant Sony Video Taiwan Co. Ltd. by the end of this year and establish at the same time a technology center to further enhance product design, engineering and parts procurement capabilities." The need to improve efficiency and cut costs prompted the decision to move the assembly to countries with cheaper labor, the official added. ?Looking at today's business environment, the frequency and speed of changes in the market are increasing in an unprecendented way. Thus, the need for improving efficiency in all parts of our oprations has become extremely high. Flexibility and speed are the key issues to properly respond to today's rapidly changing markets", he added.

Sony started its Taiwan operations in 1984, producing video tape recorders and later DVD players, car audio systems and motherboards.

The Japanese company's pullout decision is not unique. According to TEEMA, approximately 5,000 its members have switches some production lines to China to take advantages of the Mainland's lower labor and raw material costs, while other have set up shou in Southeast Asia. The Taiwan Electrical and Electronic Manufacturers Association, (TEEMA) is Taiwan's largest industrial organization, roughly comparable to the German VDMA/ZVEI . Founded in 1948, it us Taiwan's only association with mandatory membership for everbody in the electric and electronics business, as stipulated by the then Chiang Kai-shek government, in order to especially improve this industry on the island. Present membership stands at over 5,600 companies. About 40,000 Taiwan enterprises invested an estimated US$ 40 billion into China since Taiwan allowed civil exchanges across the Taiwan Strait in 1987, some with the required government approval, others by transactions via third countries.