Posted on 08/17/2004 8:07:59 AM PDT by TigerLikesRooster
Energy crisis drives high-tech firms back to Taiwan
TAIPEI - The deteriorating power supply situation in mainland China has pushed some Taiwan investors to relocate back home, with the Southern Taiwan Science Park having received NT$1.515 billion (US$44.5 million) in investments this year as of last week, according to a park administration official.
Tai Chien, director of the Southern Taiwan Science Park Administration, said that the investment capital came from six high-tech companies, including three precision machinery, two electronics goods makers and one chemical material producer. One of them began construction August 13, he added.
Worsening power shortages in mainland China have kept strong pressure on companies, in particular high-tech plants which rely heavily on sufficient water and power supplies, to maintain normal operations, Tai said, adding that inadequate energy supplies mean huge losses to high-tech companies.
The lack of rule of law is another major factor that has prompted Taiwan investors to return home, as they have fully realized that businesses may be affected so long as officials in charge are replaced, he claimed.
According to a manager whose company has relocated to the southern science park after having set up plants in Kunshan near Shanghai, companies operating in the mainland now are dogged by severe power shortages - at least two days a week - and due to a backward infrastructure it is hard to meet robust demand.
Companies have to bear losses caused by surprise blackouts on their own, he noted.
Meanwhile, the park's imports and exports in the first half of this year jumped noticeably, statistics compiled by the administration show.
Exports and imports during the first six months totaled NT$212.697 billion, with NT$120.505 in inbound shipments outperforming NT$92.192 billion in outbound shipments, according to the tallies. The first six months export level marks a 78.64% growth over the previous year's level, while the import level represents an astounding rise of 219.9%.
Administration officials attributed the growth to continued business expansion by semiconductor and opto-electronics companies based in the park, which usually purchase production facilities from abroad.
The Middle East topped other parts of the world in terms of the park's export and import growth rates, with Israel leading other countries in the region.
(Asia Pulse/Asia in Focus)
Ping!
China is a victim.
A power shortage shut down the GM plant in China for several days last month. While companies left California after the summer a few years ago of rolling blackouts, in China, they just call it the price of doing business, and they salve their concerns with the fact that they are helping Chinas to "capacity build" in the words of the WTO and the United Nations.
Have you tried to buy steel in the US lately?
The Taiwanese are learning the difference between Taiwan's free market and Red China's Communist market. In a free market, there is less control and more ways to make it. In a controlled market, the government has full rights to sack you on anything.
Not to worry, "free" traders. The U.S. taxpayers stand behind such government entities as OPIC, Ex-Im Bank, World Bank and its MIGA. We will cover your losses if they run out of money. It's the capitalist way! Sure, it's the hated government interference but in this case it's necessary government interference. What are governments for?
To put things in perspective, China consumed around 2,000 billion kwh of electricity last year, while the US consumed around 3,700 billion kwh. China's current oil consumption is around 6.5 million barrels a day while US oil consumption is 20+ million barrels a day. And China's population is four times that of the US. So China's energy consumption on a per capita basis is still very low.
I was wondering when the shortages would start to affect businesses. It seems that the shortages are making some businesses inefficient enough in the PRC to outweigh the cheap labor for the time being.
This story appeared in yesterdays, Tues 16 Aug 04's, China Post but I could not find it in their on-line version to post. Wasteful energy policies are appearing to be doing a lot of damage to mainland China factory/manufacturing expansions.
When Chinese per capita energy consumption is anywhere near American's, the world is in deep trouble.
Just for the record, my company has a WFOE factory in mainland China.
Every Tuesday is "no power tuesday" the occasional Wednesday is also powerless.
What is the result? A diesel generator that does about 400KVA runs on those days is now in place. We're not alone. Every factory around us does the same thing. China has serious power issues, they don't affect procuction, just pollution and oil consumption. Until China deals with the overly hot economy, it's thirst for oil will never be sated.
If it does happen, it will be decades away and will be a global issue not just a Chinese issue.
For electricity, nuclear is the only real alternative (however unpopular that may sound). China is planning to build 30 or more nuclear reactors from now until 2020 to meet some of the demand. Also, cooperation is currently underway between MIT and a Chinese university to develop a pebble bed reactor, one in which the loss of coolant will not result in a meltdown.
Fuel cells, which run on hydrogen, is currently under heavy developement by many of the major auto manufacturers. It is touted as the wave of the future to lower the dependence on oil.
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