High-tech firms stick with Asia outlays
usatoday.com
08/24/98- Updated 07:50 AM ET
The Nation's Homepage
PALO ALTO, Calif. - Asia's economic woes are battering U.S.
high-tech companies, but most are sticking to or stepping up
investments in the region.
That's because Asia still represents the biggest long-term growth
potential of any region for everything from personal computers to
computer networking gear.
"If you leave the market now, you open yourself up to a lot of risk
when the situation turns around," says Bill Nuti, vice president for Asia
operations at Cisco Systems, the biggest U.S. computer networking
company.
But high-tech companies are being more selective in their investments.
In Indonesia, Cisco is slowing its expansion. Motorola is closing a plant
in the Philippines.
And Hewlett-Packard has all but curtailed hiring worldwide. It gets
about 16% of its revenue from Asia. Last quarter, sales were off 13%.
The cutbacks are aimed at offsetting lower revenues. High-tech
spending by Asian governments and businesses - which had grown
about 6% a year - is expected to be flat for the next three years,
predicts Yankee Group President Howard Anderson."We need to do
things smarter, " says David Tang, 3Com's director of marketing for
Asia.
China is an obvious investment target. Even as PC revenue dropped in
eight of 10 Asian countries in the first quarter, they rose 21% in China,
market researcher Dataquest says. Last year, Cisco's China revenue
was up 90% over 1996.
Last week, PC maker Dell Computer launched its direct sales model in
China. In May, chipmaker Intel announced plans to spend $50 million
over five years in a research center in Beijing.
LSI Logic just opened a design center there. Adaptec, a maker of PC
peripherals, is adding sales and marketing offices.
"China is the key country," says Morton Topfer, Dell's vice chairman.
He expects China to be the No. 2 PC market, after the USA, in five
years. It currently ranks 10th.
While Dell forges new ground in Asia, 3Com, already the No. 1
networking company in China, sees an opportunity to win market share
from struggling Asian competitors. Other companies, including Bell
Canada International, LSI Logic and H-P, are buying up assets of
troubled Asian companies.
More deals are expected. "The savvy players are making moves now
while countries are eager for the investment," says Jessica
Madoc-Jones, an Asian Pacific associate director with the Yankee
Group.
By Julie Schmit, USA TODAY
cCOPYRIGHT 1998 USA TODAY, a division of Gannett Co. Inc. |
