Content area
Full Text
When Flextronics first decided to manufacture in the Pacific Rim in the early '80s, it chose to locate in Singapore and Hong Kong, two low-cost production centers.
"Their business practices were similar to those in the U.S., their currencies were closely tied to the dollar and they mostly spoke--or understood--English," says Dennis P. Stradford, vice president of marketing and sales for the Fremont, Calif., electronics manufacturer, adding, "Both also had good technical infastuctures."
All of those attractions are still there in the 1990s. But labor costs have gone up so much that in 1987 the company had to move its labor-intensive manufacturing out of Hong Kong to a satellite plant in southern China, and last year it shifted its Singapore production to a plant in nearby Malaysia.
Flextronics is only one of the hundreds of U.S. and other companies that are searching for lower-wage factory sites along the booming Pacific Rim. Gone are the days when the only real option for making textile, electronic and other products cheaply was to set up operations in South Korea, Taiwan, Hong Kong or Singapore--the spunky rivals to Japan that got to be known as the Four Dragons. Now, stung by soaring labor costs, companies in those countries aren't even doing their own manufacturing anymore.
"The center of gravity for manufacturing in Asia has shined demonstrably from the northeast to the southeast," says Steven Schlossstein, a Princeton, NJ., international business consultant. His book, Asia's New Little Dragons, charts the emergence of Indonesia, Malaysia and Thailand--all Southeast Asian nations--as alluring factory sites, as well as not-so little consumer markets in their own light. While U.S. investments in the region already are sizable, the biggest investor by far is Japan, ever on the prowl for cheap, reliable labor.
But that doesn't mean there aren't good reasons to consider locating your plant in, say, Korea or Taiwan, as foreign companies have traditionally done. It's just that those countries, like Japan in the past, are now trying to shrug off their low-tech, copycat image and focus on the kind of high-tech, high-value-added products that are more in tune with their increasingly skilled and very much more costly labor forces. In fact, 1990 was the first time in three years that U.S. companies...