3Com pins hopes on China's low labor costs
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Networking equipment vendor 3Com Corp. is counting on low labor costs in China to help the company earn better margins on its products and compete against rivals like Cisco Systems Inc., the company's chief executive officer said Wednesday.
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China&#39;s car production and sales this year will be lower than expected and also the lowest increasesince China&#39;s entry to the World Trade Organization three years ago, according to industry experts.
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Acer, the world&#39;s third largest PC vendor, said Friday that it is keeping an eye on a labor shortage in China that could affect PC production.&quot;There is a labor shortage in China, which is new to me,&quot; said J.T. Wang, chairman of Acer, during the company&#39;s third quarter investors&#39; conference in Taipei. &quot;China has 1.4 billion people, how can they have a labor shortage?&quot; he asked rhetorically.Acer&#39;s China-based component suppliers and PC assemblers have said that in some cases they have lost 1,000 workers overnight, and have had to seek new employees. The Taiwanese company will work with suppliers on new strategies to make sure the issue does not affect production, Wang said.He characterized the concern as small, and unlikely to become a major issue in the near term.There has been a growing shortage of skilled labor in the East coast cities of China, in part due to government efforts to develop the nation&#39;s inland areas, said one analyst. Many factory jobs used to be filled by migrant workers, but now that many companies are building factories in China&#39;s interior, people feel they can stay at home and work instead of traveling to the coast.Acer president Gianfranco Lanci said factories tend to move to new places when production in a certain region becomes difficult, and he expects that will happen if companies continue to see labor shortages in China.A number of electronics firms have started investing in Vietnam. Taiwan&#39;s Hon Hai Precision Industry, the world&#39;s largest contract electronics manufacturer and maker of gadgets including iPods, PlayStation 3 consoles, and Nokia mobile phones, in August announced a&#160;plan to spend $5 billion&#160;over the next five years to build a base of electronic components factories near Vietnam&#39;s capital, Hanoi. Until now, the company&#39;s major investments have all been in China.Taiwan&#39;s Compal Electronics, the world&#39;s second-largest laptop PC maker and another major investor in China, has also announced plans to build a notebook computer factory in Vietnam.Companies have started to look outside of China for new factory investments, the analyst said, and while Vietnam, India, and other countries boast low-cost labor, they will only win investments if their workers are educated and investment incentives and regulations attractive.&#160;
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The expanded program offers free services to Chinese consumers and small businesses.
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By Virgil Larson, Omaha World-Herald, Neb.  May 25--DENVER -- Level 3 Communications Inc. is eyeing China as a market for the network and services it now sells across the United States and much of Europe.
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The productivity of U.S. workers rose by a weaker-than-expected 0.2 percent in the third quarter, while unit labor costs grew by less than initially thought in encouraging news for the Federal Reserve on wage pressures, government data showed on Tuesday.
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Communications network equipment   maker 3Com Corp. COMS.O said on Thursday its quarterly loss   narrowed as revenues increased mainly due its joint venture   with China's Huawei Technologies Co. Ltd.
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China may dish out its first 3G  license as early as this month, a senior industry executive  said on Tuesday, as China Telecom and Netcom soared on hopes  that Beijing would finally take the leap after three years of  false starts.
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China&#39;s sweeping new labor law will  improve workplace conditions without deterring foreign  investment, the European Union Chamber of Commerce said on  Sunday.
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British Telecom is hoping to see annual revenues of $250m from its operations in China over the next three years.
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(InfoWorld) - Networking equipment vendor 3Com is counting on low labor costs in China to help the company earn better margins on its products and compete against rivals like Cisco Systems, the company's chief executive officer said Wednesday. "There is one large player who is enjoying 68 percent to 70 percent gross margin on its products, while others are enjoying 40 percent to 45 percent gross margins," Edgar Masri, 3Com's CEO and president, said in an apparent reference to Cisco. However, the disparity in salaries between China and other countries creates an "arbitrage opportunity" for 3Com, he said. Arbitrage is the practice of exploiting price differences between two markets. While Cisco and others rely on expensive engineering talent in the U.S. and elsewhere, Masri is betting that cheaper labor costs in China will give 3Com an advantage, allowing it to price its products 30 percent to 40 percent lower than its competition. 3Com's strategy bears a striking resemblance to that employed by Chinese telecommunications equipment maker Huawei Technologies, which took advantage of lower costs in China to undercut its competitors and build a growing stake in the worldwide telecommunications market. Once a little-known Chinese company, Huawei is now a major player, having won deals across Asia and in Europe. The resemblance is not an accident. In March, 3Com acquired the remaining shares in H3C Technologies, aÂ joint ventureÂ the company set up with Huawei in 2003. As a result of that deal, 3Com acquired the 2,400 R&D engineers employed by H3C in China. The engineers help give 3Com an advantage over its competitors, Masri said, claiming that rivals' labor costs are up to five times higher than 3Com's.
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Siemens will help 3Com provide service support for enterprise customers around the globe.
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(InfoWorld) - A Chinese PC maker today introduced a low-cost PC designed for customers in rural China that can be used with a television as a display. The 998 renminbi ($129) Tian En GX-2 was developed by Sichuan Sinomanic Technology, based in the western Chinese city of Chengdu, and is being pitched as a low-cost system that can help narrow the "digital divide" between China's rural and urban areas. The GX-2 is based on a 400MHz MIPS processor from Raza Microelectronics. It runs either a version of the Linux operating system or FutureAlpha, a Chinese-developed operating system. The GX-2 has128MB of DDR (double data rate) DRAM, one USB 2.0 port, a 10/100MbpsÂ Ethernet adapter, and a 1GB SD (Secure Digital) memory card to store data. The PC, which does not include a monitor, has a VGA (video graphics array) output for computer monitors as well as a TV output. This capability could help some users save money as televisions are found in most homes across China. Software that comes bundled with the GX-2 includes an Internet browser, a Chinese-English dictionary and a calendar application for managing appointments, among others, Sinomanic said. The price of the GX-2 is roughly the same as the laptop developed by the One Laptop Per Child (OLPC) project, which the group recently saidÂ costs about $130. That system is expected to enter volume production during the third quarter of this year. Â
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Three more manufacturers are cutting costs in anticipation of lower production this year.
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(InfoWorld) - China launched the first trials of a home-grown 4G (fourth-generation) mobile communications network in a district of Shanghai on Sunday, despite the fact it hasn't even decided on standards for 3G (third-generation) services, the Web site of the state-run China Daily reported. The field test in Shanghai's Changning District will cost about 150 million Chinese renminbi ($19.3 million) by the time it's completed and marks an important step for China. It will be the final trial of a system made in China and fulfills a goal ofÂ developing technology at homeÂ to meet the needs of Chinese users. The group of 10 Chinese institutions involved in the 4G project have obtained more than 200 patents for the system since starting research in 2001, and some of its fundamental technologies have been adopted by international standards organizations, the China Daily said, without naming the organizations. The goal has been to put the 4G system into trial commercial use between 2006 and 2010. The 4G system was designed to transmit data and images wirelessly at speeds as fast as landline optical fiber, the China Daily said. Research on the 4G system, called the FuTURE Project, short for Future Technology for Universal Radio Environment, was started as part of China's national high-tech initiative. China hasn't yet released aÂ timetable for the rollout of 3GÂ mobile networks, nor said how many licenses it will issue. Chinese officials have said they want 3G services up and running in time for the 2008 Olympic Games, to be held in Beijing. One issue surrounding the opening of 3G services in China has been the selection of the technology or technologies to be used. Many Chinese officials favor a home-grown standard, TD-SCDMA (Time Division-Synchronous Code Division Multiple Access), but a TD-SDCMA rollout could prove slow because of a lack of support from equipment and handset manufacturers. Â
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Japanese mobile provider Willcom Inc. will forge a tie-up with China Network Communications Group to expand its low-cost phone business in Asia, a report said Sunday.
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China Mobile and Focus Media: Domestic titans selling at knock-down prices.