Relocation of Singapore's Maxtor
China's shadow looms large over Singapore. Maxtor, a hard-disk drive maker announced on Friday that they move parts of their manufacturing production from Singapore to China - accompanied by a loss of 5,500 jobs in Singapore.
Hard-disk makers, such as Seagate, Western Digital or now Maxtor work on razor-thin margins. They cannot afford to live with even the smallest price increase.
This is as painful for Singapore as it is for other countries that suffered earlier. It will get even harder, when countries like India become stronger as well.
The challenge for countries is twofold. First, even raising up the value-added ladder isn't a recipe for success anymore. China is lurking at the lower end of the manufacturing chain that have been the pain for many countries already. A country that is raising upwards the value added chain will now also find that China is taking position at the higher end of the chain - as an example, see Germany's engineers that already feel the pain. Their huge markets just make any investment easier.
India is taking a similar path. Here, the software and the outsourcing industry is blasting ahead of the market - expect more with the deregulation of the telecommunications industry that will be followed by financial sector and more to come.
What to do for those smaller markets in Southeast Asia, or, for that matter, other nations across the world?
Tough choices are to be made, but closing the borders is no solution. For one, they could raise the educational level or ">knowledge power of their population, increase overall R&D in their country, but than, also add value to resources that are unique to their own country and which cannot be duplicated by either China or India. Similar actions can be taken by companies - here, they can use their own internal culture to become an unbeaten team that allows them to follow unique strategies that cannot be duplicated by Chinese or Indian countries. It is easy to write this here, of course, but there is no general recipe that guarantees success. Individual customisation is the recipe that one needs to follow.
(By Asia Business Consulting)
Hard-disk makers, such as Seagate, Western Digital or now Maxtor work on razor-thin margins. They cannot afford to live with even the smallest price increase.
This is as painful for Singapore as it is for other countries that suffered earlier. It will get even harder, when countries like India become stronger as well.
The challenge for countries is twofold. First, even raising up the value-added ladder isn't a recipe for success anymore. China is lurking at the lower end of the manufacturing chain that have been the pain for many countries already. A country that is raising upwards the value added chain will now also find that China is taking position at the higher end of the chain - as an example, see Germany's engineers that already feel the pain. Their huge markets just make any investment easier.
India is taking a similar path. Here, the software and the outsourcing industry is blasting ahead of the market - expect more with the deregulation of the telecommunications industry that will be followed by financial sector and more to come.
What to do for those smaller markets in Southeast Asia, or, for that matter, other nations across the world?
Tough choices are to be made, but closing the borders is no solution. For one, they could raise the educational level or ">knowledge power of their population, increase overall R&D in their country, but than, also add value to resources that are unique to their own country and which cannot be duplicated by either China or India. Similar actions can be taken by companies - here, they can use their own internal culture to become an unbeaten team that allows them to follow unique strategies that cannot be duplicated by Chinese or Indian countries. It is easy to write this here, of course, but there is no general recipe that guarantees success. Individual customisation is the recipe that one needs to follow.
(By Asia Business Consulting)
posted by Andreas @ 12:30 pm
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