June 4, 2003 – Beijing, China – Electronics manufacturers, facing continuing pressure to cut costs, will transfer even more of their production to developing countries in coming years, with China the biggest beneficiary, predicts a new study by consultants Booz Allen Hamilton and the International Finance Corp., an arm of the World Bank, and reported in Dow Jones.

Mainland China will account for 14% of global electronics output by 2005, up from an estimated 8% in 2001. China will get the lion’s share of the growth in world electronics production in coming years, and the size of its output, at $80 billion, will surpass that of western Europe by 2005, says the study.

Of the 117 industry executives interviewed for the survey, 64% said the spread of the virus causing SARS, or severe acute respiratory syndrome, would have only a “slight, temporary” impact on the movement of electronics production to China.
Still, even by 2005, China’s share of electronics output will still rank behind that of North America, Japan, and the combined total of the developed Asian economies of Taiwan, South Korea, Singapore, and Hong Kong.

Most of the growth in China will be in the more labor-intensive parts of electronics production, where its cost advantage is greatest: assembly, and the manufacture of components like displays, cables, and batteries.

The emergence of China as “the hub” for electronics manufacturing presents challenges to other developing countries, particularly Mexico, the study says. But all developing countries are expected to see some growth in their