[Vnbiz] Compal decides to relocate to Vietnam from China

[Tai Phan]

Compal decides to relocate to Vietnam from China

*02/19/2008  (CENS) *
Compal Electronics Inc., one of Taiwan's leading manufacturers of notebook
computers, has resolved to speed up the pace of relocating production from
China to Vietnam.

Since 1996 Compal has set up production facilities in the mainland. With the
plant relocation to Vietnam, the company will become the first domestic
manufacturer of notebook PCs to pull out of the mainland.

Compal's relocation move is triggered by the mainland`s implementation of
the new labor law which is expected to impact its profitability. In
addition, the investment incentives for foreign investors located in the
coastal area have been called off.

Compal originally planned to begin mass production on the proposed plant in
Vietnam in 2010. But recently the company has resolved to launch the mass
production at the end of this year or in the beginning of next year ahead of
the original schedule.

J.T. Chen, Compal president, noted his company would have to shoulder a 20%
increase in labor costs in the wake of the implementation of the mainland`s
new labor law.

For years, Compal has been the biggest foreign exchange earner in Kunshan
City of Jiangsu province. Recently it has expressed its intent to relocate
its production facilities to Vietnam if the Kunshan government couldn`t
offer incentives to help it cut production costs in the wake of the
implementation of the new labor law.

Compal said it has begun construction of a plant in northern part of Vietnam
which is expected to launch trial production sometime in the fourth quarter
of this year.

If everything as planned, Compal's new plant in Vietnam will begin mass
production in the first quarter of next year. The plant is designed to have
a monthly production capacity of 500,000 units of notebook PCs.

Compal said it would continue to expand production capacity in Vietnam after
the inauguration of the new plant. The company predicted it would see an
annual output of 25 million units of notebook PCs in Vietnam in 2014.

It took Compal 10 years to upgrade to an annual output of 30 million units
of notebook PCs in Kunshan of the mainland. It is expected Compal will do
better this time-replacing the Kunshan plant with the Vietnam one in only
six years.
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