Electronics Production | April 25, 2007
Why Eastern Europe has emerged<br>as an electronics hotbed
When it comes to emerging markets, India and China usually are at the top of the list. However, Eastern Europe, once concealed behind the so-called Iron Curtain, has become the new contender in the global competition for electronics manufacturing dollars, according to iSuppli Corp.
Speaking today at iSuppli's 2007 European Briefing Series in Budapest, Hungary, Greg Sheppard, chief development officer at iSuppli, discussed the outlook for electronics manufacturing in Eastern Europe. With a population of more than 400 million people, regional Gross Domestic Product(GDP) growth of around 5 percent and an annual increase in electronic consumption by consumers and enterprises slightly less than 10 percent, it isn't a surprise that Eastern Europe has become a hotbed of activity for manufacturing and designing everything from Liquid Crystal Display Televisions (LCD-TVs), to desktop and notebook PCs, to mobile handsets, to consumer electronics, Sheppard noted. iSuppli considers the following countries as comprising Eastern Europe: Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Malta, Moldova, Poland, Romania, Russia, Serbia, Slovak Republic, Slovenia, Turkey and Ukraine. Eastern Europe's electronic system production revenue is expected to rise at a Compound Annual Growth Rate(CAGR) of 10.2 percent for the period of 2005 through 2010. This compares to a negative 2.4 percent CAGR for the rest of Europe during the same period. “Eastern Europe benefits from having a labour force that is typically of a higher level of education compared to other developing nations," Sheppard said. “Add to this demand from consumers and production costs that are far lower than those of Western Europe and the East has become extremely popular in a short time." The region also is benefiting from the rise in tax grants and benefits from governments. These governments are striving to increase the Gross Domestic Products (GDPs) of their countries, Sheppard said. For companies, maintaining an R&D centre or manufacturing plant in the Eastern European region means they will generate good will among the local population and possibly even that they can avoid tariffs set in place to discourage products from other countries such as China from being dumped on the market. One of the areas that has really exploded during the past 18 months has been the LCD-TV market, where numerous companies already are engaged in a fight to win over the hearts and minds of the Eastern European public. The number of companies throwing their hats into the LCD-TV ring in Eastern Europe is substantial. One of the reasons for this is that the barrier to entry in the LCD-TV business is much lower than it used to be in the vertically integrated environment of the CRT television market, so companies are able to buy parts from a variety of sources and resurrect themselves as television manufacturers in other nations. According to iSuppli's Television Systems service, the LCD-TV market is set to grow to 4.1 billion euros by 2011, managing a CAGR of 19.5 percent from 1.7 billion euros in 2006. While revenue will be expanding steadily, it is the unit volume that will experience the highest growth, reaching 7.3 million units by 2011, rising at a CAGR of 31.6 percent from 1.8 million in 2006.
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