Case study: Silitech
With China's reform and opening up from 1978, because of the advantage of abundant labor and land in china, a lot of Taiwanese enterprises went to invest and set up factories, however, in recent years, the global economic environment and government policy in China have been changing, that make the Taiwanese enterprises in China face the difficulty to survive. To understand the success formula of Taiwanese outsourcing company in China, what are the differences of the company’s leadership in China and Taiwan and what kind of threats and opportunities in the local environment. So I use my father’s company-Silitech for study, which is an outsourcing company for keyboard products, due to it has the operating experience in china over ten years, and has been facing the challenges of China.
Silitech Technology Corporation was one of nine companies in the Lite-On Group. The company was founded in 1978, and became independent from the Lite-On Group in 2002. It is principally engaged in the manufacture, design, development and distribution of keypads and other products. The company provides keypads, including products for mobile phones, telephone apparatus, automobile audio products, remote controllers, computer keyboards, personal digital assistants (PDAs), language translators and other input products; module products, including integrated products for mobile phone and automobile, joint keypads, flexible printed circuit boards, backlight modules and integrated circuits, among others, as well as metal structures, including products for mobile phones, as well as computer, communication and consumer electronic products. However, the company obtained approximately 97.59% of its total revenue from keypads. Customers Base:
Black Berry is the main client in the United States. And Samsung is also the client to Silitech. * Initial reasons of establishing factories in China
China’s growing presence in the global outsourcing industry. Outsourcing started in the early 90’s as a phenomenon of sending unskilled and labor intensive work from developed countries to developing countries. China’s outsourcing industry is fast picking up and currently occupies a big part of the global outsourcing market. Currently, China stands second only to India in the preferred outsourcing destinations globally. China’s growing presence in the global outsourcing industry influenced by many factors, such as strong infrastructure, lower cost, labor intensive, government support, diverse materials, and demographics. After all these factors mentioned previously were contemplated, the company set up the first factory in Shenzhen, China. Cultural differences
Generally speaking, China and Taiwan have similar cultures and languages, but, still, the living style and some custom are different between these two places. So I interviewed the Silitech Site Manufacture Director, Casper Yang, about the differences between these two places and what problems or issues they faced or are facing in external and internal environment. * External factors
Chinese government enacts “New Labor Law” to protect employees. China introduced a new labor law that enhances rights for the nation's workers, including open-ended work contracts and severance pay. Namely, the government is making the most concerted effort to protect workers’ rights in China. The Labor Contract Law aims to improve job security for workers, making open-ended terms of employment an option for those who have completed two fixed terms. However, the new law will make it more difficult for companies to hire temporary workers, a practice favored by exporters to cope with fluctuations in orders. “‘Employee’s Termination of Labor Contract’ raises companies’ costs”, Casper Yang said. Government promotes “expanding domestic demand” which makes foreign companies pay higher wages and lack of...