Buoyant tech trade show belies tough times ahead

By MICHAEL FOREMAN

TAIPEI - The atmosphere was surprisingly upbeat at Taiwan's Computex computer trade show, in Taipei this week.

This year may go down as one of the worst for the PC industry in its 20-year history. But for the 1000-odd exhibitors at Asia's largest computer fair, business appeared normal.

"This industry may be going through a tough time, but seeing some of the exhibits here, I can't believe it will last too long," Intel vice-president William Siu told the audience during a keynote speech.

Computex occupies a special place in the information technology industry, because Taiwanese companies make a surprisingly large proportion of the world's computers.

Manufacturers based in this small island state build a quarter of the world's desktop PCs and more than half its notebooks.

Although the big US companies do not usually exhibit at the show, Computex has become something of an annual pilgrimage for their purchasing executives - as it has for New Zealand PC assemblers Arche Technology and The PC Company, which buy components from here.

The general gaudiness of the labyrinthine bazaar was accentuated by the troupes of young women wearing uniforms that invariably included hot pants or micro-mini skirts.

"Sex still sells in the Republic of China," was the wry observation of one Australian visitor.

But behind this glitzy facade, the Taiwanese computer industry is facing a couple of serious problems. The first is that demand for PCs, after two decades of growth, has levelled off this year, except in a few markets.

As if that was not bad enough for Taiwan's economy, which depends on information technology for 30 per cent of its exports, this same industry has begun to desert it for the Chinese mainland.

"It's a trend that started only a couple of years ago," said Ritsuya Kaminaga, a Taipei-based executive of Nikkei Business Publications, a Japanese IT publishing company.

"At the moment they have just moved the manufacturing mainly to Shanghai. They are still doing the design work here in Taiwan, but in five or 10 years they will probably move that there too."

The trend is clearly worrying the Taiwanese Government. At a press conference at the opening of Computex, Victor Tsan, managing director of Taiwan's Market Intelligence Centre for Information Industries, said Taiwan needed mainland China's cheap labour pool to compete internationally, and it needed access to its developing computer market.

But he warned:

"We should not put in so much money and resources so they can compete with Taiwan."

The warning may be too late.



Computex online

* Michael Foreman attended the trade show as a gust of Intex.