Encouraged by rising interest in Vietnam as a manufacturing base, Taiwanese injection press maker Chuan Lih Fa Machinery Works Co. Ltd. plans to start making its machines there.
The company, which is one of the biggest press makers on the export-oriented island, said it plans to open a large facility in Vietnam next year to make injection molding machines, eventually hoping to produce at least 600 a year there.
``A lot of Taiwanese factories are moving to Southeast Asia, especially Vietnam, so we are following the customer,'' said Jackie C.C. Lin, vice general manager of the Tainan, Taiwan-based firm.
He spoke to Plastics News on June 23 at the company's booth at the NPE trade show in Chicago.
Communist-led Vietnam and its 80 million people look likely to join the World Trade Organization this year, and the country is attracting interest from investors. Intel Corp., for example, is building a computer chip plant there, and plastics firms, particularly from its Asian neighbors, are starting to put in money.
Chuan Lih plans to finish construction in Vietnam next year and make about 150 machines a year there initially, but has plans to train staff and expand to a goal of 600-700 machines a year, Lin said.
The company has another, more geopolitical reason for setting up in Vietnam, Lin said.
Given the tension between China and Taiwan, and China's rising clout in regional trade deals that can exclude Taiwan, Taiwanese firms want to find manufacturing bases that will allow them to export throughout the region without suffering trade restrictions, Lin said.
Taiwan is the world's fourth-largest exporter of plastics machinery, after Germany, Japan and the United States.
Chuan Lih has manufacturing in mainland China, in Zhongshan, where it makes about 1,000 presses a year, and it also makes presses in Taiwan.
The pace of the Vietnamese factory will depend in part on growth there, but Vietnam is projected to consume about 30 percent of the machines made there, he said.
Labor in Vietnam is cheaper than on mainland China, and there is less uncertainty and unpredictability in government rules in Vietnam, he said.
Chuan Lih, which does about US$70 million in annual sales, also is expanding its business into providing turnkey construction of molding plants, working with auxiliary equipment makers to provide manufacturing plants to customer specifications, Lin said.
It's a move in part to deal with the cost pressures accompanying the rise of low-cost manufacturing locations like China and Vietnam, because it sees less competition in that market segment, he said.