Asia's Computer Challenge: Threat or Opportunity for the United States & the World?

By Jason Dedrick; Kenneth L. Kraemer | Go to book overview

4
Asia's New Competitors

Korea and Taiwan

The personal computer revolution created opportunities for new countries to become integrated into the production network of the PC industry. The most notable entrants were the newly industrializing economies (NIEs) of Asia: Korea, Taiwan, Singapore, and Hong Kong. The NIEs' economies had grown at exceptional rates on the strength of labor-intensive manufacturing and rising exports, but by the late 1970s, labor costs were going up and new competition was developing from lower wage countries in the region. The governments of Korea, Taiwan, and Singapore were convinced that their economies needed to "graduate" to more capital- and technology-intensive industries. In the electronics industry, the governments promoted production of more advanced consumer products, such as VCRs and microwave ovens, and sophisticated components such as semiconductors. They also laid the groundwork for computer production by encouraging foreign investment and technology transfer, and by developing domestic technical and manufacturing capabilities.

As U.S. PC companies looked for low-cost suppliers and subcontractors, they created opportunities for Asian companies to enter the PC industry without having to master a wide range of technologies or develop their own marketing and distribution channels. A company could produce a cable, power supply, keyboard, or monitor based on IBM's architectural standards and sell the components to any PC maker. Or it could assemble PCs or circuit boards for U.S. companies that preferred to outsource some parts of the production process. The barriers to entry were low, and East Asian producers flooded into the market.

The direct investment and outsourcing by multinational computer makers and efforts by local companies to become part of the supply chain combined to create a boom in computer production in East Asia. The mix was different in each case. Singapore depended heavily on production by foreign multinationals, Taiwan and Hong Kong had a mix of foreign and domestic producers, and Korea's industry was led by domestic firms. During the 1980s, each of

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Asia's Computer Challenge: Threat or Opportunity for the United States & the World?
Table of contents

Table of contents

  • Title Page iii
  • Preface and Acknowledgments v
  • Contents xi
  • List of Figures xv
  • List of Tables xvii
  • 1 - Competing in Computers 3
  • 2 - Globalization of the Computer Industry 28
  • Conclusions 71
  • 3 - Japan and the PC Revolution 76
  • Summary 90
  • Summary 104
  • Conclusions 113
  • 4 - Asia's New Competitors 116
  • Conclusions 143
  • Conclusions 172
  • 5 - Asia's New Competitors 174
  • Conclusions 209
  • 6 - Findings from the East Asian Experience 211
  • 7 - Lessons for Companies and Countries 254
  • Summary 263
  • Conclusions 278
  • 8 - Competing in Computers in the Network Era 280
  • Conclusion - Asia's Computer Challenge 319
  • Appendix 321
  • Notes 325
  • References 343
  • Index 353
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