China emerges as technology giant

Industry experts throughout the machine-vision/image-processing industry exclaim that China is the high-technology market of this decade...

Apr 1st, 2003

Industry experts throughout the machine-vision/image-processing industry exclaim that China is the high-technology market of this decade (see p. xx). They all agree that the country possesses mammoth potential in the product, engineering, and equipment markets. Moreover, they add, China is already transacting into a colossus of spending, buying, and manufacturing ventures. To save costs, numerous US companies have already transferred their semiconductor, electronics, or pharmaceutical-manufacturing, research, and development facilities from North America and Europe to China and Asia-Pacific.

In addition to Vision Systems Design, other PennWell magazines have noted this sea of change in worldwide market activity. In a supplement to SolidState Technology, February 2003, "ASIA PACIFIC, China: Poised for Rapid Growth," senior technical editor Debra Vogler discusses current foreign investments in China. She points out that China is now the sixth largest economy in the world and the only trillion-dollar economy expected to double in the next decade. The country's foreign trade has already passed that of Japan to capture third place behind the European Union and North America. Focusing on the IC market, Vogler provides recent statistics from the China Center of Information Industry Development. Its data indicate a 2001 China IC market demand versus IC domestic supply of $15.2 billion vs. $2.3 billion. The corresponding forecasts for 2005 are $36.1 billion and $8.5 billion, respectively. To meet 2001 worldwide needs, semiconductor production in China totaled $2.9 billion and in the United States $71.2 billion; research-and-development spending reached $11 billion in China and $233 billion in the United States. China expects to gain rapidly in these fields over the next ten years.

Another PennWell publication, WDM Solutions, proclaims in a February 2003 article that "the China market offers strong prospects for growth." Authors Robert V. Steele, director of optoelectronics at Strategies Unlimited (Mountain View, CA), and Eric A. Bergles, vice president of sales and marketing at BaySpec (Fremont, CA), report that despite the severe 2001 market decline of 34% in worldwide optical equipment and component revenues, China's market soared by 70% to $1.9 billion.

Bill Gates, chairman of Microsoft Corp., has also made alliances in China. Last year, Microsoft pledged to invest $750 million in China over three years. The company also has committed $2.2 million to build a software research laboratory in Beijing over the next five years and to provide the Chinese government with controlled access to its source code.

Despite these positive business activities, the Chinese high-technology market landscape is still littered with pitfalls. US companies must go through a complicated process to obtain export licenses with the Departments of State and Commerce and contracts with the Chinese government and companies. China is a vast country, its infrastructure is slow to modernize, and business procedures and languages differ markedly with localities. To achieve market success in China, outside companies must foster alliance relationships over the long term.

George Kotelly,
Editor in Chief
georgek@pennwell.com

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