14th July 2006

China Syndrome Cooling ?

posted in Business |

China Syndrome cooling, an article by Ed Sperling in Reed Electronics points out the possible waning of the “Invest in the Booming China Market” wave by electronics companies. Possible reasons cited by them for hedging their bets in other regions and in other countries include:

- China’s emphasis on allowing other cities besides Shanghai and Beijing to partake in the economic revolution is making it far more difficult for companies to manage logistics between their manufacturing sites inside of China;

- Rapidly rising labor costs are forcing some companies to consider comparable wage scales in places such as Vietnam, Malaysia and Eastern Europe;

- China’s ineffective policing of intellectual property theft has made many companies reluctant to move design operations there;

- Continued U.S. government regulations about what technology can be shipped into China or developed there has kept the lid on many companies’ plans;

- Manufacturers are looking to hedge their bets with backup strategies in case of a natural disaster or political issues that can affect regions.

Well, it makes economic and political sense for China’s emphasis to let its cities other than Shanghai and Beijing to invite investments so that they can have an inclusive growth – something vital for both the economic and political stability of a country else the economic disparity thus created would mitigate the growth achieved otherwise. To help the electronics companies, infrastructure improvement in these other cities could help.

Ineffective policing of IPs is indeed an important deterrent. However a few recent events are providing some progress. Hong Kong Science and Technology Parks Corporation (HKSTP) recently inaugurated the Intellectual Property Servicing Centre (IPSC) at the Hong Kong Science Park. Based within the Hong Kong Integrated Circuits Design Centre at the Park, it offers IP licensing, IP hardening, IP integration and IP verification services. Most notably, IPSC is run by HKSTP and will make use of Hong Kong law for any legal dispute over intellectual property. A key vehicle for this will be the Hong Kong International Arbitration Centre which is based in the SAR.

Under the “7+1” IC Design Centre framework signed with the High-Technology Research & Development Centre of the PRC’s Ministry of Science & Technology, HKSTP jointly collaborated with Harbin Institute of Technology, Hefei University of Science and Technology, Zhejiang University and the Hong Kong University of Science and Technology in July 2005 to extend the SIP trading platform throughout Greater China. The collaboration is to develop a due diligence platform in legal and technical terms for SIP certification and authentication purposes.

In October 2005, HKSTP also formed alliance with the China’s Ministry of Information Industry Software and Integrated Circuit Promotion Centre (CSIP) for the Mainland China IC design industry. The alliance is to promote the cooperation and development of Mainland China’s IC enterprises under the guidance and supervision of the administrative bodies, to jointly facilitate the outreach and popularization of SIP in SoC design services, as well as to standardize the SIP design, SIP standard promotion and SIP protection mechanism.

This entry was posted on Friday, July 14th, 2006 at 4:06 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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