Mitsubishi Electronics, Hitachi, and NEC are all expanding IC production and packaging capabilities in China. Intel is establishing a flash memory factory in China. Not to be outdone, companies like AST and IBM have installed their most advanced production facilities in China. The expected growth in Chinese PC production to 8 million units annually by 2000 provides a major incentive. The extensive supply base available in China is reducing the need for imports as exports gain market share in overseas markets like the United States and Japan.
Hong Kong continues to provide an important support base for Chinese electronics industry developments. The rapid development of capabilities in China has already matched most manufacturing capabilities in Hong Kong. The attempt to upgrade technologies in Hong Kong appears to be limited, since most companies from the United States and Japan are placing operations and transferring the latest technologies directly to China. Companies like WKK and Wong's Electronics have specialized in helping companies cut their product costs through sourcing and production in China. Hong Kong's long-term advantage continues to be its living environment and support activities such as engineering, finance, purchasing, distribution, and communications. High cost of labor and limited availability of land provide little incentive to expand HK manufacturing operations.
At the same time, companies like VTech continue to expand operations in China, utilizing advanced ASIC technology to transfer computer and communications technologies into their advanced learning aids. Ability to embed their latest technologies into a chip, and then use the lowest cost labor to assemble their products, gives the company a strong leadership role in the world market for learning aids. Nam Tai produces the most advanced consumer products requiring miniaturization technologies, using Hong Kong as its sales, purchasing and distribution center. Legend's QDI considers itself a competitor with companies like Acer in Taiwan, offering the highest quality and most advanced desktop computers in China. Such development will put further pressure on Korea, Taiwan, and Singapore to push their technologies to more advanced levels.