INTERNATIONAL MANAGEMENT Offshore development of electronic products The existence of a local electronics industry is widely considered in both the developed and developing nations to be an essential contributor to pros erity and growth. This is not electronics products, but also because of the radical effect that the application of electronics goods and services has on the competitiveness of other sectors of the economy. only on account of the sc af e of the world market for by Kevin J. Tiiey, David J. Williams and Paul I? Conway he UKs electronics sector, the fourth largest in the world, accounted for T 12.7% of value added by UK manufacturing industry in 1991. Given the strategic importance of electronics to national prosperity, it is not surprising that governments find themselves becoming involved, either directly or indirectly, in trying to protect or enhance the competitiveness of the electronics industries in their own countries. Government support can take many forms, the most obvious of which are import tariffs and quotas, often accompanied by voluntary export agreements. More subtle forms of support are to be found in strategic research initiatives, such as the ESPRIT program of the European Com- munity, and the public financing of defence industries. - This article considers how electronics product development activities are being established in the offshore sites of major multi- nationals. It begins with a synopsis of how countries attract foreign direct investment (FDI) and the associated benefits such investments can bring to the indigenous electronics industry of the host country, and then considers how some of the successful electronics-based economies in the Far East have used strategic initiatives to further develop their industry into higher value-added activities. Two strategies In developing countries, two forms of government strategy have generally been observed with regards to support for the electronics industry. One strategy is to place severe restrictions on imports in order to protect or develop parts of the local industry. An example is the restrictions placed on microcomputer imports to Brazil during the 1980s. One danger of this approach is that it can lead to these countries falling behind the rest of the world in terms of electronics technology, if the local companies are not forced to compete with foreign technology leaders. For a country with a large population, however, import restrictions can also be used selectively to induce large companies to locate production facilities in the country; this approach is generally used where there is no existing indigenous capability. The other main strategy has been to use the low-cost production factors (illustrated in Table 1) available in the develop- ing country to attract foreign companies, which then manufacture products primarily for ENGINEERING MANAGEMENT JOURNAL AUGUST 1994 185
Transcript
INTERNATIONAL MANAGEMENT
Offshore development of electronic products
The existence of a local electronics industry is widely considered in both the developed and developing nations to be an essential contributor to pros erity and growth. This is not
electronics products, but also because of the radical effect that the application of electronics goods and services has on the
competitiveness of other sectors of the economy.
only on account of the sc a f e of the world market for
by Kevin J. Tiiey, David J. Williams and Paul I? Conway
he UKs electronics sector, the fourth largest in the world, accounted for T 12.7% of value added by UK
manufacturing industry in 1991. Given the strategic importance of electronics to national prosperity, it is not surprising that governments find themselves becoming involved, either directly or indirectly, in trying to protect or enhance the competitiveness of the electronics industries in their own countries. Government support can take many forms, the most obvious of which are import tariffs and quotas, often accompanied by voluntary export agreements. More subtle forms of support are to be found in strategic research initiatives, such as the ESPRIT program of the European Com- munity, and the public financing of defence industries.
- This article considers how electronics product development activities are being established in the offshore sites of major multi- nationals. It begins with a synopsis of how countries attract foreign direct investment (FDI) and the associated benefits such investments can bring to the indigenous electronics industry of the host country, and then considers how some of the successful electronics-based economies in the Far East
have used strategic initiatives to further develop their industry into higher value-added activities.
Two strategies In developing countries, two forms of
government strategy have generally been observed with regards to support for the electronics industry. One strategy is to place severe restrictions on imports in order to protect or develop parts of the local industry. An example is the restrictions placed on microcomputer imports to Brazil during the 1980s. One danger of this approach is that it can lead to these countries falling behind the rest of the world in terms of electronics technology, if the local companies are not forced to compete with foreign technology leaders. For a country with a large population, however, import restrictions can also be used selectively to induce large companies to locate production facilities in the country; this approach is generally used where there is no existing indigenous capability. The other main strategy has been to use the low-cost production factors (illustrated in Table 1) available in the develop- ing country to attract foreign companies, which then manufacture products primarily for
ENGINEERING MANAGEMENT JOURNAL AUGUST 1994 185
INTERNATIONAL MANAGEMENT
newly newly less industrialised industrialised
developed country: country: technology country manual automated
through hole 10065 90.37 80.57
developed country:
automated
1 1 5.79
I surfacemount I - I - I 115.22 I 153.58 I
Taiwan 20.5 NA NA 1.4% 91.2 7 990
S. Korea 43 16.9 23.7 2.4% 92.7 5 569
Malaysia 18 6 4 20.7 NA 72.6 2 305
Thailand 4.2 26 18 NA 79.7 1418
Philippines 61.9 22.88 19.4 NA 88.7 727
Indonesia 184.3 67 20.2 NA 74.1 520 rlA = not available at time of writing
Taken from: 'International compelition in printed circuit board assembly: keeping pace with technological change', A. Mody, R. Suri. J. Sanders, M. Tatikonda, World Bank, Industry and Energy Dept. Wohing Paper, Industry Series Paper No. 53, December 1991
country
HongKong
Singapore
export, often in designated export processing zones.
These forced import-substitution and export-led strategies are not mutually exclusive and have been used together in a number of countries to improve the local electronics industries. The foreign companies that invest as a result of these strategies provide jobs for local workers in the short term, and a potential source of technology transfer in the longer term. As the local country becomes more prosperous, the local market may also prove to be attractive in itself; the growing markets in China and Indonesia are particularly attractive to companies at the present time, whilst providing a large pool of cheap labour. Prominent examples of countries that have successfully attracted considerable inward investment are Singapore, Mexico and Malaysia. Relative newcomers to the FDI game include China and Vietnam, while in Thailand electronics is the fastest growing industry as a result of foreign investment. A profile of some of the more active Asia Pacific countries in electronics is presented in Table 2.
Luring foreign direct investment Attracting foreign companies is not an
activity restricted to the developing nations,
labour median GNPI population force age of % population capita
million million workforce unemployment literate US$
5.9 2.64 28.3 2.4% 80.1 12 069
2.7 1.32 27.2 1.7% 82.9 12 718
however, and there is considerable competition to provide the most favourable environment for companies wishing to locate in Western Europe or the USA, even down to the scale of individual regions within countries competing with each other. Companies do not usually locate manufacturing activities in Europe or the USA because of the low input factors, but in order to serve the local market; a secondary consideration may be to locate in the region where the cheapest, well trained workforce can be found or where infrastructural support may be stronger.
In the electronics sector, a local presence enables companies to configure products close to the customers whilst at the same time improving the trade balance of the host country, particularly where the offshore base is used as a regional manufacturing centre. Considerable benefit has been obtained in the United Kingdom from the local presence of North American information technology companies and Japanese consumer electronics companies that are using the UK as a base for manufacturing in the European Community. A trade deficit in colour televisions, for example, has been turned into a healthy trade surplus.
The spin-offs As well as benefiting from the jobs and
expertise provided by the multi-national companies (MNC) themselves, the local economy of the recipient country can benefit from spin-offs associate$ with the consequent improvements in the local supply, automation
186 ENGINEERING MANAGEMENT JOURNAL AUGUST 1994
INTERNATIONAL MANAGEMENT
and service industries supporting the MNC activities. These support industries can consist of local companies, and foreign support companies that have also been located as a result of the opportunities provided by the original MNC investors. In the UK, the presence of so many world-class electronics companies has in turn attracted some of the world leaders in electronics subcontracting. Once such a technological infrastructure has built up, its inertia can make it difficult for foreign MNCs to find comparable alternative manufacturing locations within a particular region.
The present world dominance of Singapore in hard disc drive manufacturing, for example, is based on the firm foundation of its precision machining and mechatronics expertise. Similarly, the strong position of Taiwan in ‘motherboard’ and personal computer manu- facturing is backed by the presence of strong local printed circuit board, components, plastics and sheet metal industries. Taiwan’s printed circuit board industry overtook its United Kingdom counterpart in 1990, and now lies fourth in the world behind Japan, the USA and Germany. These competent support industries have not grown overnight, but are the result of decades of continuous improve- ment, helped, in part, by government initiatives to improve the industries’ capabilities.
Development triangles Within the countries that rely on foreign
direct investment, there is considerable concern, however, that the capacity of the existing manufacturing infrastructure may not be sufficient to combat their growing cost disadvantage in basic input factors when compared to countries such as China, Indonesia and Vietnam. It is already clear that much of the low-end, labour-intensive manufacturing in the newly industrialised countries (NICs) is moving to even cheaper countries, with the NICs providing much of the investment themselves. Taiwan and Hong Kong, for example, are the major foreign investors in Vietnam. Meanwhile Singapore, as part. of its national economic strategy, has developed the ‘growth triangle’ of Singapore, the Riau Islands in Indonesia, and the state of Johor in Malaysia, gaining access to the relatively low labour and land rates in these countries. Both local companies and the foreign MNCs based in Singapore are taking advantage of the growth triangle. AT&T has moved its production of analogue cordless telephones to
ENGINEERING MANAGEMEm JOURNAL
Batam in the Riau Islands, for example, whilst the Singapore operation has moved on to the production of digital cordless telephones.
A similar geometrical situation exists with Hong Kong, Taiwan and Beijing in what is known as the ‘Greater China triangle’ which leverages the expertise of each country: the business skills of Hong Kong entrepreneurs, the technical competence of Taiwan engineers and the huge workforce and potential of mainland China. Hong Kong has already positioned itself as the gateway for foreign investment into China, and much of its own manufacturing base has already moved to the mainland. The number of employees engaged in the electronics industry in Hong Kong itself fell from nearly 110 000 in 1988 to only 71 000 in 1991. Our observations suggest that not only labour-intensive operations but also automated systems, such as surface mount lines, are moving rapidly to China from Hong Kong.
The NICs are attempting to move the low added-value manufacturing to the local, less developed countries, whilst retaining the manufacturing of less mature products for themselves. The retention of their own manufacturing base is therefore dependent on the NICs differentiating themselves from the lower cost countries in terms of the skills that they provide. As the lower cost countries become more capable of dealing with higher value-adding processes, the NICs must inevitably move towards providing skills which are less readily reproduced by the lower cost countries. This means moving into areas
Modern Singapore, a model ofexport-led Success in the Far East
AUGUST 1994 1 87
INTERNATIONAL MANAGEMENT
188
requiring not only excellent process under- standing, but also significant new product and process design, and R&D capabilities. With these skills, the NICs can be assured that they will always be near the forefront of technology, rather than positioning themselves as an intermediate technology country under threat from increasingly capable newcomers. Fig. 1 illustrates a typical scenario.
Whilst the NIC may be well placed to act as a regional hub for the manufacturing organisation at the moment, the long-term consequences of moving some manufacturing to lower cost countries are uncertain. As the capabilities of the lower cost sites improve, it may become feasible to move all the manu- facturing to the lower cost countries, with the consequent loss of manufacturing in the NIC. This is particularly significant if the product or manufacturing technology is likely to have a major change. In the medium term, however, the competitive advantage of the NICs compared to the traditional world technology leaders will rest in growing and maintaining a cheaper workforce for these highly skilled jobs than found in the older industrialised countries. Likewise, the NICs will maintain their competitive advantage over the ‘newcomers’ such as Thailand and Indonesia by keeping ahead and acting as regional technical and/or logistics hubs.
Moving back up the product cycle When considering how the move towards
more design and R&D capability can be achieved, it is useful to consider local companies and foreign-owned subsidiaries of multi-nationals separately, as their motivations can be very different. Local companies become more capable through a gradual learning process, acquiring skills that they did not have previously, allowing them to become more ambitious in their outlook and operations. At
Fig. 1 NIC hubs
the early stages of electronics development in the NICs, local companies emerged to supply the multi-national companies with basic parts and services. The owners of these companies had often gained their initial experience from working at the multi-national companies themselves. As the supply industry evolved, the supply companies were increasingly able to provide more complex services, such as subcontract assembly, or design of simple parts. Eventually, some of the local companies could provide full subcontract design and manu- facturing of complex products, and began to compete with the manufacturing operations of the original multi-nationals that spawned them.
Dr. Michael Hobday, of the Science Policy Research Unit at Sussex University, has studied this process of learning from the electronics multi-nationals in Hong Kong, Singapore, South Korea and Taiwan; he describes the process of learning about technology in electronics within these countries as ‘moving backwards along the product life cycle’, So, local companies start with manufacturing and gradually move into design and then R&D, compared with the traditional product life cycle approach of moving from R&D through design to manufacturing.
Distribution of R&D Within local companies, there is a clear
motivation to improve the services offered by the company, and to move into more value- added activities. Within the multi-nationals, however, these high-level skills already exist at other company sites, and there must be a very good reason to locate part of the design or R&D capability at an offshore site which was chosen primarily for its advantages as a manufacturing base. At Loughborough, we are trying to understand what drives the process by which multi-national electronics companies distribute research and development activities inter- nationally, particularly to countries that have a lower science and technology base than the home country of the company. The motivation for moving any R&D from California or Tokyo to Singapore, for example, is important to those countries that have a large number of multi-national companies and would like to encourage them to do R&D locally. An older view that it is important to use offshore expertise in the R&D activity is being tempered by concerns to conserve the home base of the company under recessionary pressures. It is therefore essential to understand the new
ENGINEERING MANAGEMENT JOURNAL AUGUST 1994
INTERNATIONAL MANAGEMENT
dynamics of this process. As part of the study, the authors have visited
18 multi-national electronics companies in Hong Kong, Singapore and Taiwan in order to assess the level of process and product development work being undertaken. Of these 18 companies, 12 were the offshore manu- facturing sites of European, Japanese or American multi-nationals, with whom we discussed the operation of their own offshore facilities in other countries. The companies were predominantly in the computer and peripherals, integrated circuit (IC) packaging, and consumer electronics businesses.
Process and product development In the computer and consumer electronics
sectors, the process development at the offshore sites centred on component placement machine software, test software, and low-cost automa- tion. The product development activities in these companies were mainly involved with the layout or re-layout of existing designs, either to reduce costs or to incorporate local components. Incremental design of key, but well-understood, sub-assemblies was also observed. The offshore packaging sites of IC companies specialised in test software design or modification, and process engineering skills such as injection mould specification. Some sites also participated in the packaging design, which could influence the layout of the IC chip itself.
The major design route for many of the IC packaging sites, however, was through a service role as a design house for application specific integrated circuits (ASICs). In some cases, the site had the capability to carry out all the design and engineering work for an ASIC product, leaving only the IC fabrication work to another part of the parent company. In other cases, the site would only be able to do the initial design work, while the detailed design would typically be done at the appropriate technology base located either in a more developed country or in the parent country of the MNC.
As a whole, the type of development work encountered at the offshore sites in these three countries did not qualify to be rated in the research category yet, although they are rapidly gaining skills which will provide a base for the move to research. The work generally used well established techniques inherited from the parent company, and the basic materials work or derivation of design tools was performed at the home base of the campanies. The
technologies and techniques needed to design new generations of products were therefore still held at the traditional R&D bases of the companies.
The local multi-national companies visited were all well known computer companies, now with brand name recognition in European and North American markets. Nevertheless, like many completely locally-based firms, they still carried out a significant amount of sub-contract work for other foreign multi-nationals. These NIC companies were international both in their research and manufacturing activities. Although they had considerable in-house design skills, giving them the ability to quickly follow, and in some cases lead product designs at a worldwide level, they were reaching out to the high-technology base of North America for even more complicated development work. They did this by acquiring high-technology computer companies in North America, which enabled them to move into the high end of the personal computer and workstation market, and to keep abreast of leading-edge research work in North American research centres and universities.
Meanwhile, as described above, their low- end manufacturing, such as the assembly of standard monitors, was rapidly moving to offshore sites in countries such as Malaysia and China, while the local facilities were contracting rapidly in terms of manufacturing employees. In common with many computer companies, they also had final assembly plants in several countries close to the final markets. These were used to finish the population of the motherboard of the computer with a central processor and memory, and to configure the final system, through buying the high value, but low weight, components at the most opportune moment-usually the last possible moment.
Even though the local computer manu- facturers did not necessarily possess technical product design skills in some specialised areas, what was very clear was that the companies we visited were generally excellent in manu- facturing. With only one exception, the local manufacturing organisation in the offshore companies was populated overwhelmingly with local staff, indicating that complete transfer of volume manufacturing skills of some companies, for certain products or product groups, now lie at the offshore site rather than the home base, which may account for the migration of product-specific development work. The coupling between the ability to mass
189 ENGINEERING MANAGEMENT JOURNAL AUGUST 1994
INTERNATIONAL MANAGEMENT
Hong Kong
low cost, high labour content low quality
4 4
c
good precision engineering (plastic, sheet metal)
light industry-electronics
and little intervention
recent initiatives -education -HKITC, HKPC
manufacturing equipment shipped to China
logistics gateway to c
China 4 good businesslcommercial infrastructure c brain drain problems (1977)
Taiwan
Japanese joint ventures vertically integrated US investment
steady reductions in vertical integration growth in local suppliers
c
actions to build technology base -science parks
strong indigenous cluster PC cluster with own brands and large OEM of boxes for Asia, boards and monitors for rest of world
silicon productionldesign 4 J.
I software science park
Singapore
offshore plants (major sub-assemblies)
market sector (disc drives)
sewer plants for Asian low end market
conditions improved
strategic actions to support -education systemdenginwring insts. -communications infrastructure -automation investment --steps in labour costs
~
PCs and peripherals consumer electronics high value components
apparently entrenched MNEs best logisticalltechnological infrastructure knowhowlvaiue-adding MNEs indigenous PC manufacturers (high quality)
4 institutes: microelectronics,
wireleas wmms., magnetics, IT, systems science, supercomputing
4 using adjacent nation factor advantages b
0 = direct and indirect intervention
Fig. 2 Development of the manufacture a Droduct and the ability to electronics industry in Hong Kong, Taiwan and Singapore
perform effectiv; incremental design on' that product may make it inevitable that offshore sites inherit part of the company's development work.
190
Government initiatives and support The ability to upgrade the physical resources
used for both design and manufacturing, and the manpower skills needed to accompany the upgrade of the physical infrastructure, were addressed in these three countries by govern- ment initiatives on equipment, education, and training. The experience and training levels of engineers were also enhanced significantly by rapid job-hopping by young engineers taking advantage of skill shortages. Fig. 2 illustrates how the industry has developed over time in each of the countries, highlighting direct and indirect government interventions.
Hong Kong The official government initiatives were
substantial in Singapore and Taiwan, but comparatively smaller in Hong Kong where the government is largely non-intenrentionist in terms of trade and concentrates on providing general facilities such as industrial parks.
Nevertheless, even in Hong Kong there was some support for manufacturing industry, and electronics in particular. The main thrust of government support is provided by the Hong Kong Productivity Council (HKPC), which provides consultancy, training and design prototype services at an overall rate subsidised to 60% by the government.
The HKPC was the main independent source of expertise and technology transfer of surface mount technology in Hong Kong. They have also recently begun to organise product design consortia to enable local companies to enter into more high-technology markets. To date, a consortium of 15 companies has been managed for the design of leadless telephones, and another of eight companies to design a palm-top computer. These consortia use external or HKPC experts to carry out the design of key components to a specification produced by the participating companies.
The Vocational Training Centre of the government also runs an ASIC training centre, and provides training grants of up to 50% of the cost of training in technologies new to Hong Kong. This training can take place either in Hong Kong or abroad. Another more recent initiative has been the establishment of the
ENGINEERING MANAGEMENT JOURNAL AUGUST 1994
INTERNATIONAL MANAGEMENT
Singapore
Table 3 Key technologies for Singapore and Taiwan
Taiwan
Hong Kong Industrial Technology Centre (HKITC) which has been established to help incubate small high-technology companies and will initially receive a subvention from the government to fund its operations.
Singapore In Singapore and Taiwan, the level of support
is considerably higher than in Hong Kong, and focuses on higher technology products and processes. There is also an emphasis on providing incentives for the introduction of automation, in order to increase productivity at a time of high growth and full employment in these countries. Singapore has used a number of schemes to drive the upgrading of its industry, including: low interest loans for computer- aided design and manufacturing equipment; finance for strategic management consultancy projects; assistance with design for automation expenses; and subsidised automation feasibility studies performed by consultants. Like Hong Kong, Singapore also provides training grants for new technology training, and these grants can be used to finance employees through periods spent on MSc courses. One of the most important infrastructural schemes is the Investment Allowance Scheme, which enables companies to deduct up to 50% of their capital investment from their taxable income; the actual amount allowed depends on the importance of the technology involved.
Addressing the softer issues of organisation and encouraging more development work, there are three notable programs. The first is the Local Industry Upgrading Program (LIUP), which part finances the transfer of management skills, new products and processes from multi- national companies to their local supply companies. At least 27 multi-nationals and 143 local companies have so far participated in the LIUP scheme.
To encourage companies to move into more R&D work, there are two main incentives. The first is Pioneer Status, which allows a company to pay no corporate income tax for up to 10 years. Most of the companies with Pioneer Status are foreign, but nearly 40% of the companies granted this status between 1987 and 1992 were local companies, showing that Singapore is responding to the challenge of growing its own high-technology sector as well as encouraging the multi-nationals to import R&D.
The second development scheme is the R&D Assistance Scheme (RDAS), which is pivotal to
Singapore’s Blueprint to improve its R&D capability-the National Technology Plan. The plan sets out the broad technology areas in which Singapore can hope to compete internationally, and sets national targets for expenditure on R&D of 2% of gross domestic product, and the number of research engineers and scientists to 40 per 10000 of the labour force. These are targets for 1995, and the levels are comparable with those of industrialised countries such as the UK and Switzerland.
Within this plan, RDAS is to be used to provide grants for R&D expenditure, with S$80 million set aside for the five-year period up to 1995. This spend on RDAS is a relatively small part, however, of the S$2 billion provided for by the National Technology Plan. The majority of the money is to go to provide improved university research facilities and manpower, and to finance the further development of a science park on the island. The lack of local highly skilled personnel is regarded as a limiting factor on this R&D expansion program, and so the recruitment of foreign experts in the targeted technology areas is seen as an important measure to ensure the success of the plan.
Taiwan In Taiwan, many programs similar to those
found in Singapore are available to encourage the movement to higher value-added processes and products. Both countries have identified key growth areas of technology through which they hope to be able to compete in the future; these are summarised in Table 3.
The main differences lie in the fact that Taiwan has targeted particular products and components that companies are encouraged to manufacture, and the amount of money avail- able is much larger than in Singapore. Taiwan is currently embarked on a programme to upgrade its general and manufacturing infra- structure for which US$300 billion had originally been earmarked, but which is now
AUGUST 1994
energy conservation
191
INTERNATIONAL MANAGEMENT
192
reported to have been cut back somewhat. Much of this spend will be on transport, public facilities, housing, energy supplies and pollution control. A substantial slice, however, is allocated for developing ten high-growth industries, and eight technology areas that span these industries.
As part of this programme, 22 critical products and 44 critical components have been identified for local research and development. These vary from products as broad as ‘aircraft’ to components as specific as ‘thin-film disk drive head’. What they have in common is that they are all high-value items, and many of them are imported from Japan, with which Taiwan currently has a large trade deficit. One of the options available for the programme is for companies to develop these products in associa- tion with government research institutes. The most notable of these is the Industrial Technology Research Institute (ITRI) at Hsinchu, which employs nearly 6000 engineers and scientists, and which has a number of departments which provide support for the local electronics industry. Much of the IC industry in Taiwan can be traced back to technology transfers and spin-offs from ITRI, and the target annual resignation rate is 15%- if it is less than this there is not sufficient technology transfer taking place.
One of the main technology transfer mechanisms used by ITRI other than resignations is to form consortia of companies to develop particular products. Indeed, the product consortia organised by the Hong Kong Productivity Council, mentioned above, were based on the ITRI model. In general, however, ITRI does not need to engage the services of external experts, as it has considerable human resources of its own, and close links to research in local universities. Consortia organised to date include those for Sparc based Unix workstations and notebook personal com- puters.
The general support for increasing the amount of automation and R&D in Taiwanese industry is provided under the 1991 Statute for Upgrading Industries. This introduced tax credits and low-interest loans for automation projects, and tax credits for product R&D, amongst other incentives. The R&D activity in high-technology industry is also driven by the incentives available for companies that locate at the Hsinchu Science-based Industrial Park. Here the government has spent US$300 million on the park infrastructure, where 20000
employees work for over 130 electronics, automation and biotechnology companies. Companies are entitled to five-year tax holidays, 15% tax credits for equipment, low- interest loans, and can have up to 50% of their R&D costs paid for by the government. The park is administered by the National Science Council (NSC), which is responsible for the academic research in Taiwan; only companies which can prove to the NSC that they carry out substantial R&D are eligible for location in the park.
The implications There are, therefore, clear national strategies
at work in Singapore and Taiwan to improve the level and amount of R&D work being done in the two countries. Electronics will benefit from many of the incentives, building on the strength of the electronics sector already in place. Taiwan’s strategy is more finely targeted than Singapore’s in terms of particular products and, due to the industry structure in Taiwan, it will reach local companies to a greater extent than in Singapore. Hong Kong, by comparison, does not appear to have a strategy to move towards increasing levels of R&D, but rather depends on its thriving market-driven model and its favourable position as a recognised route into the vast markets in China. As part of the study of the electronics industries in these countries, the authors will attempt to gain a better understanding of areas in which the government support for R&D in the offshore sites of multi-nationals has been particularly successful, in terms of the quality of the R&D work being undertaken at the offshore site, and also in terms of its direct commercial application.
Acknowledgments The work of the authors on this topic was
funded by the ACME directorate of the SERC, under grant number GWH 91022, and by the project sponsors, Scottish Enterprise. We would also like to thank the many world-class companies which have been so kind to provide us with frank and informative discussions on the subject area.
0 IEE: 1994 Dr. Tilley is a Research Associate, Prof. D. J. Williams is Head of Department, and MI. Conway is a Lecturer, Department of Manufacturing Engineering, Lough- borough University of Technology, Loughborough, Leics. LEI1 3 T u , UK. Prof. Williams is an IEE Fellow and Mr. Conway i s an IEE Associate Member.
