Catcher Technology Switches Focus Back to Taiwan

The deteriorating investment climate in China has persuaded Catcher Technology, a leading producer of aluminum and magnesium cases, to shift its manufacturing and R&D focus back to Taiwan.

This change was disclosed by Hung Shui-shui, chairman of Catcher Technology, in a recent exclusive interview with the Chinese-language Economic Daily News, a sister publication of the Taiwan Economic News. He said that a major shakeout is playing out quietly in China's high-tech sector in response to a number of serious problems, including soaring labor costs, worker shortages, and high turnover. The worker problems are aggravated by China's high rate of inflation, which erodes the effect of pay hikes.

Hung believes that China's overall investment climate has changed and that the time of unlimited expansion there is over, especially in view of rising land costs.

The chairman expects the shakeout to become even more acute this year, with many companies closing down or undergoing mergers.

Catcher Technology will try to cope with the changes in China by improving the production efficiency of its factories there, while at the same time investing in capacity expansion in Taiwan. Besides enlarging its plants in the Southern Taiwan Science Park, the company has purchased land in Tainan's Yongkang Industrial Park for the construction of new plants.

Hung notes that overall labor costs are not higher in Taiwan than they are in China, when Taiwan's lower turnover and higher labor quality are taken into account. Over the next several years, therefore, Catcher Technology's development and manufacturing of new products will take place in Taiwan.

This year the company will target customers who want higher-priced products with higher added value and more complex design, Hung reported, while turning down orders for low-margin products so as to achieve optimal utilization of the company's limited resources. As part of this switch Catcher Technology has expanded from its original notebook PCs into smart phones.

The iPhone and iPad, Hung noted, have altered the landscape of the high-tech industry and will become mainstream handheld devices during the next several years. The iPad will create new consumer demand for entertainment devices, inevitably eroding the demand for notebook PCs—which, however, will continue to grow at a double-digit rate. The chairman predicts that the demand for smart phones will soar by over 50% this year, and that growth momentum will remain strong for the next two years.