More pain for HK ahead of recovery
technology.scmp.com
Tuesday, July 10, 2001
LYDIA ZAJC
Hong Kong, wounded by this year's global slump in the technology industry, will have to endure the pain until early next year.
According to analysts, early optimism for a quick recovery is not well founded. International Data Corp (IDC) forecast the economic gloom in the United States, especially in information technology, would lift in the third quarter.
Avneesh Saxena, associate director of IDC's systems and servers research in Hong Kong, said: "Now it looks like it's going to take longer than that."
Hong Kong, which has yet to recover from the Asian crisis, would see its technology industry pick up early next year, he said. "It's a little more vulnerable than we've seen in the past."
The economy usually lagged world pace by a quarter, so it would take longer to come back if other countries revved up by the end of this year, Mr Saxena said.
The pop of the dotcom bubble was heard around the world last year, but overall IT optimism remained high, despite the rapidly dwindling enthusiasm for Internet companies. Industry stalwarts in the US, which enjoyed a roaring economy for most of the 1990s, saw customer orders drop earlier this year. They began cutting revenue forecasts and staff to improve their bottom line.
Asia-Pacific branches of national concerns have escaped much of the bloodletting this year. Although computer maker Hewlett-Packard asked for volunteers to take a pay cut or eight paid days' leave, other manufacturers did not. Compaq did not have any proposals to enforce an unpaid holiday scheme in Greater China, despite a shutdown in the US last week.
Tommy Chan, spokesman for the firm's Asia-Pacific division, said: "Because it's different in the US, we have not implemented this in the Asia-Pacific."
Neither Dell nor Sun Microsystems have asked Asia-Pacific workers to take time off, while IBM declined to comment. But regional markets have been infected by the negative sentiment emanating from the US.
Frank Yu, analyst at online business consultancy Ion Global, said: "A lot of people are taking a wait-and-see attitude. People are not committing to a technology or company."
While the US received a pummelling, Asia escaped with some bruising because it had suffered a major downturn in recent years, Mr Yu said.
But the regional branches of big US companies still laboured under the constraints of their head offices, Mr Yu said.
"The nuts and bolts is that you have to report quarterly.
"Under quarterly reporting schemes, publicly traded companies need to justify their numbers to public shareholders - which means they tighten belts abroad as well as at home," he said.
Asian nations, which rarely act as a block, have reacted differently to the slowdown.
Mr Saxena said China, with its huge domestic market, had been only slightly hurt, and Singapore and Malaysia could bounce back quickly due to pent-up spending demands. Other countries such as Australia, which did not have a strong 2000, would take longer to rev up. Taiwan, packed with chip makers and other component manufacturers, would have a bigger struggle due to its export-based economy.
"They're facing tough times, too. I think things will improve only next year," he said.
Analysts said there were a few bright spots on the horizon, including China's impending accession to the World Trade Organisation. The long-anticipated signing has been repeatedly delayed, but it might go through by the end of this year or the beginning of next.
China, with more than a billion people, has been the Holy Grail for international companies eager to take advantage of a freer market and tap an increasingly wealthy pocket of consumers.
Mr Yu said: "People do realise, long-term, Asia's a great market."
Mr Saxena agreed. "In this time of uncertainty, China promises a lot."
Hong Kong, the gateway to the mainland, could be helped by a quick WTO signing, Mr Saxena said. |
