Linux hot, standards not with China, Taiwan

Earlier this year, members of Chinese and Taiwanese IT associations announced broad plans to work together to jointly develop and promote Linux as well as home-grown standards for certain IT components. The idea is to match Taiwan's technology prowess with China's huge number of users as a base for a global Linux putsch, and to create new standards to compete with global initiatives from Blu-ray to CDMA (Code Division Mutliple Access). At an IT trade show in Shanghai, IDG News Service (IDGNS) caught up with Roger Liao, deputy director of international affairs at one of Taiwan's biggest industry groups, the Taiwan Electrical and Electronic Manufacturers' Association (TEEMA), to discuss progress on both fronts, in addition to other IT developments in China.

IDG News Service: How is work on Linux progressing? What's popular and what's not in Taiwan and China?

Liao: It really depends on what kind of product you're talking about. For example, China really wants to promote Linux as an OS, because it's more stable. But Microsoft is by far the more popular OS here because people are used to it and it has a larger market share. Microsoft's recent deal with Novell is another aspect that's very interesting, but it's too early to say how that will affect Linux development and usage in China.

Linux is still mostly used in servers and as embedded software in China and Taiwan. A number of Taiwanese companies have opened Linux development centers in China for embedded software development. Although Chinese engineers are less experienced, they are not expensive to hire, and they learn quickly. Even we (TEEMA) use Chinese engineers for all of our software needs, but that's mostly our Web site and e-commerce platform.

IDGNS: What about the development of new technology standards? We've heard a lot about meetings between Taiwanese and Chinese IT associations to create new global technology standards. What's been accomplished so far?

Liao: There’s not a lot going on so far, just a lot of talking. Developing standards is very difficult, it’s actually a very political issue. It’s something we (Taiwan-China) always talk about – we even held discussions at the recent APEC meeting (Asia Pacific Economic Cooperation, Hanoi, Nov. 18,19) – but nothing concrete has come from these discussions.

Most of our members are manufacturers, contract manufacturers, so they normally wait and see what standard wins out, and then embrace the winner. That's the way it's been for years, and I don't see it changing anytime soon.

IDGNS: Speaking of manufacturing, is the growth of China really hurting Taiwanese manufacturers?

Liao: A lot of Taiwanese companies are already using China as a manufacturing base, so they're taking advantage of the low costs. But the other issue is quality. Even Chinese companies that are making components on their own, well their quality isn’t as good as Taiwan.

There are also more risks in doing business with China. Chinese companies will always say "can do" even if they can't, which is a problem if your business depends on their delivery.

So overall, it may be less expensive on the surface, but other problems such as low quality and business risk in China can increase expenses over the long run, and then it doesn’t seem so cheap anymore.

Taiwan has been involved in international business for years, particularly in IT. China is rather new to the game, and they still have a lot to learn.

Taiwan is actually the best partner for foreigners to approach using China as a manufacturing base and as a market. Japanese companies tend to prefer partnering with Taiwanese companies when entering China. They take advantage of Taiwan's long experience in China as well as better communication skills (Mandarin is spoken in both Taiwan and China). It's more difficult for Japanese companies to do it on their own, the costs are much higher. They definitely can do it, but there is a learning curve and it’s expensive to climb.

Taiwan still has a big advantage in know-how, the knowledge of the local people, the education, and the experience with international business practices and standards.

(Liao was in Shanghai for a major electronics trade show in China, a three-in-one combo; the China Electronics Fair (CEF Shanghai 2006), Asia Electronics Exhibition in Shanghai (AAES 2006), and the 2006 International Electronics Expo (IEE Shanghai 2006).