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Electronics Production | January 05, 2007

Asian EMS-firms discover Eastern Europe

A growing number of Chinese and Taiwanese companies starting to manufacture in Eastern Europe as an alternative to production in China.
According to a report published by Red Orbit, Chinese and Taiwanese companies have invested a total of at least $300 million into the region to get closer to consumers in Europe.

Governments in the new EU-member countries are frequently offering rich incentives to manufacturers that will create jobs.

As evertiq reported yesterday, Foxconn have been granted a 10-year tax holiday in the Czech Republic. The same applies for many other electronics producers in the Czech Republic like Changhong for instance. Producing in the EU also lets companies like Foxconn and Changhong to avoid the 14 percent tariff Brussels put on TV-sets that are made in China.

According to the Red Orbit report, labour rates in the Czech Republic are about $500 per month for a normal 40-hour week. In China it is about $100 to $150 monthly for much longer hours. And while productivity in Czech plants is roughly equal to that in Chinese factories, absenteeism is up to 15% some days. Also surging currencies and growing labour costs, have forced some companies to look at Ukraine and Russia. A company representative in the Czech Republic told Red Orbit that their presence in the Czech Republic won't shrink, but if they need to expand more, they will go further into Eastern Europe, to countries like Ukraine or Russia.

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