asia bulletin no. 3 · Asia Bulletin no. 3 May 2004 editor Klara Sibeck writers Hugo Christiansson Martin Ekenbäck Thien Hoang Marcus Olsson Andreas Sigurdsson Yan Tai So Yan Po

asia bulletin no. 3

2ASIA BULLETIN May 2004 3ASIA BULLETIN May 2004

Asia Bulletin no. 3May 2004

editor

Klara Sibeck

writers

Hugo ChristianssonMartin EkenbäckThien HoangMarcus OlssonAndreas SigurdssonYan Tai SoYan Po So

Chalmers Asia

National Chiao Tung University

1001 Ta-Hsueh Rd., Hsinchu

Taiwan, 300 Republic of China

e-mail [email protected]

web www.cito.chalmers.se

phone +886 (0)3 573 73 69

fax +886 (0)3 573 74 69

Language lesson

(yazhou)

(nian)

(yue)

What is Chalmers Asia ?Chalmers Asia (formerly CITO) opened in March 2003 and is the result of a bilateral exchange agreement between National Chiao Tung University (NCTU) and Chalmers University of Technology. The Chalmers Asia office is strategically located at NCTU, near Hsinchu Science-Based Industrial Park and ITRI, Taiwan’s most important industry cluster. The purpose of Chalmers Asia v Increase awareness at Chalmers about the development in East Asia, with focus on China and particularly Taiwan

v Support mobility of students and staff between NCTU and Chalmers

v Enhance Chalmers’ visibility in

Taiwan and the neighboring region

Academic exchangeCurrently, eight Chalmers students are at NCTU, while eight students from NCTU are studying at Chalmers.

Contents

Letter from the head of office 3

Centered on Chalmers: 4 Spring semester at the Asia office

Smart Cards: 6 From magnetic stripes to

microprocessors

Industrial design: 9 Creativity in the Middle Kingdom

China: 11 Establishing production for SME

Replication Expo Shanghai: 13 Technologies in optical storage

Singapore: 15 - A historical overview

- Swedish student in Singapore


to Chalmers, in order to increase the awareness of this region.

If you are interested in learning more about the opportunities

the Chalmers-NCTU collaboration offer, you are welcome to

contact our office. Taiwan might seem far from Sweden, but the

distance is shrinking as we are increasing our knowledge about

each other. b

Letter from the head of office

Chalmers Asia, a concept that in just a year has sprung from an idea to reality, has its office located in the

heart of one of Taiwan’s most respected universities.

In this third edition of our bulletin, one year after the establishment, I find it appropriate to give an overview of what has happened here in Asia.

It all started in the spring 2003 when a team of six students from Chalmers managed to do what no one had expected: with assistance from NCTU they established an office and held a big opening that attracted many visitors and even local press.

During the autumn 2003, with a new group of students in place, a foundation for further activities was built. Consolidations of routines and making first contacts with companies were the main focus areas.

During this spring we have had many activities at the office, more contacts with companies have been made and discussions about cooperations have started. Travels have been done in the region, resulting in wider contents of this bulletin, but also resulting in more contacts with organisations and companies outside Taiwan. We have given extensive support to Taiwanese exchange students going to Sweden and we have come up with ideas for future activities together.

I have been head of the Chalmers Asia for almost one year now and I am proud to see what it has become. The effort made last spring and autumn was outstanding and we continue developing the concepts further.

The possibilities for Chalmers Asia are many. The model for the office is exciting and draws a lot of attention from universities all around Taiwan. The students that come from Chalmers to Taiwan are all putting a great effort and much of their time in taking Chalmers Asia forward. Furthermore, the office would not be possible without the large support we receive from NCTU.

We can now look forward to a closer cooperation with Asian companies and an increased exchange of students, PhDs and professors between Chalmers and National Chiao Tung University.

The purpose of Asia Bulletin is to gather information on the development in East Asia and share it with people connected

Andreas Sigurdsson, head of office for Chalmers Asia

bildtekxt bildtext bildtext

Chalmers Asia celebrates its one year anniversary with festivities and birthday card drawing at the office.


Centered on Chalmers:

Spring semester at the office

Events during the springv In the beginning of the semester, the personnel at NCTU’s R&D office arranged a lunch to welcome the new Chalmers Asia-members and to introduce themselves.

v The Swedish company Impact Coating came to Taiwan in the end of February. A meeting between representatives from the company and two professors from NCTU was arranged at the Chalmers Asia office.

v In early March, an information meeting was held for the nine NCTU students who are going to Chalmers this autumn for an exchange year. The Taiwanese students were given a presentation on Chalmers and Sweden.

v In the end of March, Chalmers Asia was visited by Chalmers’ vice president Johan Carlsten and the senior advisor to the president, Jörgen Sjöberg.

v Chalmers Asia’s 1 year anniversary was celebrated on March 27. The evening started at the Chalmers Asia office with a speech given by NCTU’s vice president, Wen-Hsiang Tsai. The celebration continued at a local restaurant which served delicious traditional Taiwanese food. Among the guests were students and staff from NCTU, the Swedish Trade Council, representatives from Sony Ericsson, and Jörgen Sjöberg from Chalmers.

v On April 28-29, NCTU together with Chalmers Asia participated in an education fair in Taipei at which 50 Taiwanese universities were represented. The topic of the fair was internationalization. Many visitors, among those representatives from the Ministry of Education, showed a great interest in the exchange program between Chalmers and NCTU.

v In order for everyone to get to know each other better, a social event was arranged for the Chalmers Asia members and the Taiwanese students that are going to Sweden next semester. We all had a very pleasant evening together, having dinner and singing karaoke. b

Chalmers Asia representatives: Andreas Sigurdsson, Hugo Christiansson, Klara Sibeck, Yan Tai So, Yan Po So, Marcus Olsson and Thien Hoang.

by Marcus Olsson

NCTU’s stand at the education fair in April was very popular thanks to Chalmers Asia’s head of office.


Life in Hong Kong When imagining what Hong Kong University of Science and Technology (HKUST) might be like – don’t you picture a crowded place in the middle of skyscrapers and traffic? Well, rethink that idea. On a remote Hong Kong hillside, facing Clearwater Bay, you find the probably most beautiful university in Asia. Common people bring their children to the university beach during weekends, and busloads of Chinese tourists come just to see the campus with its outdoor swimming pool and sports field by the ocean.

Ok, so how can you get to this wonderful place? Chalmers sends two master students each year. On higher levels there is no agreement, some Swedish professors have been visiting the university but on a peer to peer basis. The university lists 25 core research strengths on its home page, among them Nanoscience, Advanced Manufacturing Technology and Traditional Chinese Medicine. - The faculty here is very research-oriented and has a high publication rate, says Toste Wallmark. Meanwhile, certain programs receive impressive rankings as well. Financial Times rank HKUST top 1 in Asia for its MBA and Executive Education.

Toste has been at HKUST for almost two years, staying after his master to pursue an MPhil degree which means he will be in Hong Kong for at least another year. - Living in Hong Kong is easy since English is an official language. The Swedish people I have met in Hong Kong do not have problems working with locals; the cultures seem to go well together. People here are pragmatic and very hard-working. Sofia Wong, student from Industrial Engineering at Chalmers, agrees. - Most westerners who come here want to experience something different, yet avoid the culture shock you might get in other Asian countries. Sofia Wong has been at HKUST for a year, taking management courses. She has relatives in Hong Kong and has decided to write her master thesis in China.

Finally, is Asia full of opportunities? Toste says: - It is of course easier to see opportunities in economies that are growing quickly, but Sweden certainly has opportunities as well, it just depends on where you look. b

www.ust.hk

by Marcus Olsson, Klara Sibeck

Ei-Lin is on her way to Sweden One of the students from NCTU who is going to Chalmers next semester is Ei-Lin Hsu. She is currently doing her third year at the department of Industrial engineering and management.

How did you find out about

the possibilities to participate

in an exchange program with

Chalmers?

I know someone who is at Chalmers now as an exchange student and she told me it was fun to live in Sweden. It was mostly because of her that I decided to apply for the

exchange program. Going to Sweden is also a good opportunity for me to travel around Europe.

What do you know about Sweden and Göteborg?

I know that Ericsson and Volvo are Swedish companies. I have also heard that it is a beautiful place and that the people are friendly, but also that it can be very cold and rainy.

Are you nervous about moving to Sweden?

Not yet, but I will probably be nervous soon.

What are you going to study at Chalmers and why?

I am going to study at a new master program called Management and Economics of Innovation. I decided to apply for this program because my teacher encouraged me to do so, and it also suits my background well. In addition, I find the concept of a master program that focus on innovation interesting. b

Sofia Wong and Toste Wallmark, enjoying their studies


Asia Pacific accounts for approximately 30% of worldwide smart card sales, making it the second-largest market after Europe. Asia’s technology and banking infrastructure and diverse markets make it the ideal test-bed and "hotspot" for multi-application smart cards. This article will give an overview of smart cards and the technology of RFID.

The 9th annual Cards Asia 2004 was held together with RFID

World Asia 2004 at Suntec Singapore on April 21-23. On the

onsite education and technical seminars, speakers from all

around the world but mainly from Asia addressed technology

and business issues surrounding smart cards in vertical sectors

such as healthcare, transportation, banking and retailing.

Smart Cards

Smart cards, also know as IC cards, look like standard credit card-

sized plastic cards in which a microchip has been embedded. The

origin of the smart card can be traced back to the 1950s when the

first all-plastic cards were produced, which replaced the previous

conventional paper based cards. The magnetic stripe payment

card can easily be read, written, deleted or changed with off-

the-shelf equipment. The capture of magnetic stripe data from

a credit card is simple since the transactions are uni-directional;

it can be "skimmed" and then copied onto a fraudulent card.

The main idea of smart cards is that it contains a microprocessor

for computing and a memory chips that can save data. Security

features and cryptographic systems can be built into the card

to protect the data. Thus, it is very difficult for a fraudster to

replicate a smart card.

There are single-function and multi-application smart cards.

Single-function smart cards can be used for payphones, debit

functions (like cash-cards) and TV-subscription cards, while

multi-application smart cards are capable of holding data for

several functions. Most often, multi-application cards are used

for holding personal information. Smart cards frequently use

offline operations – functions that can be performed without

immediate access to the central system. Contact cards are cards

with a chip visible on it, as in sim-cards for mobile phones, while

contact-less cards use radio frequency technology to transmit

power and data to the card. This can be done with an air gap

up to 10 cm. The contact-less card utilizes an aerial coil which is

wrapped into a card and allows communication even if the card

is retained in a wallet or purse.

Smart Cards:

From magnetic stripes to microprocessors

RFID - Radio Frequence Identification DeviceThere are many interesting issues concerning card technology and one of the most rapid developing technologies right now is RFID which stands for Radio Frequency Identification Device. Smart cards using the technology have become increasingly important. RFID is not a new technology – it has actually been around for a half century already but is now reaching another stage. RFID is a wireless system using radio frequency that automatically can identify, track and manage objects, people or animals. Examples of its uses are Electronic Road Pricing (ERP) and Electronic Library systems. It can also be used in gas stations, car parkings, Hospital Movement and Tracking Systems (HMTS). The wireless system consists of two main components: a transceiver (an RFID reader) and a transponder (an RFID tag). Reading and writing distances varies from a few millimeters up to several meters depending on the technology used.

Use of RFIDSingapore is the first country to use an ERP system based on RFID for such a large number of users. About 600.000 people in Singapore use the system in which a RFID tag is mounted on the vehicle and pays toll-fees automatically. Singapore is also the first country in the world using the Electronic Library Materials Management System (EliMS). The EliMS system uses RFID tags to make maintaining and loaning process much faster and simpler. The system was introduced in March 2003 and started off with 10 millions books with RFID tags.

RFID is also used to facilitate verification of goods. In order to import an animal to the US, one will have to prove that the animal is the right one. This can be very hard to prove but with RFID it can be verified immediately since the radio waves come directly from the animal. After 9/11, the US government decided that everything imported to the US will have to be checked carefully, which had the affect that it took a few months longer to get items into the country. This was the case for all items except those that had RFID tags.

eEPC – Electronic Product Code ePC stands for Electronic Product Code and is a unique object identifier; it knows where the product’s destination and where it

by Yan Po So and Yan Tai So


Smart Cards:

From magnetic stripes to microprocessors

has been. Each individual item gets an ePC assigned to it, which

makes it possible to differentiate items from each other. The

ePC-tag contains of 96 bits of identification data, including a 40-

bit serial number. Instead of encoding catalog-type information

directly within these bits, an ePC acts like a URL and functions

as a reference to a document which exists on a network. The

ePC number is designed to be embedded within an electronic

tag that for a very low cost can be applied to each item. The ePC

uses RFID, which enables automatic scanning. Manual input

of bar code will no longer be necessary, and tracking products

anywhere in the supply chain process becomes feasible. Wal-

Mart, the world’s biggest retailer, support the new technology by

demanding that all of its suppliers use ePC from January 2005.

The ePC will allow every company in the supply chain, including

retailers, to track products at individual item level.

Tagging Arowana fishes The Arowana fish is an interesting example where the RFID

technology has been used to identify animals. Arowana, also

known as Dragon Fish, is an endangered species. Since the fish

is believed to bring wealth to the owner it can be sold for a lot

of money. The United Nation’s Convention on International

Trade in Endangered Species requires that every Arowana fish

has to be tagged in order to breed it. RFID tags are inserted into

each breaded fish, thus certifying that the Arowana is a second

generation fish bred in captivity rather than one caught from

the wild. Without the tagging technology, all trade of Arowana

fish would be illegal. Another benefit of using the RFID system

is that a lot of money is saved by reduced packaging time and

human error.

Many of Singapore’s vets also offer implants of tracking

devices into pets to help the owner identify their animal if it gets

lost. For pet owners this is just as an option, while it is a must for some of the island’s specialist fish breeders.

Case study: The Octopus cardThe Octopus card is very similar to the Easytravel system in Taipei and EzLink in Singapore, which are contact-less cards for transit systems. What makes the Octopus card special is that it can be used everywhere in Hong Kong, not only for public transport but also at 7-eleven, in access controls, when buying fast-food, and in leisure facilities and schools to see when people arrive and leave. The Octopus card is the world’s most used smartcard system with 8 millions transactions made daily, worth 55 million HK dollars. This makes it the world’s highest acceptance commercial smartcard with 7.1 million active cards in Hong Kong, where the population is about 7 million people.

Simplicity was the goal of making the Octopus Card, i.e. to make life easier. Before the Octopus card was launched in Hong Kong, there were many different pay methods for the metro, train, ferries, bus companies and minibuses. Therefore, the first step was to make all these different companies cooperate in using a common system. The mission of the Octopus card was to build a cardholder brand using values of simplicity:

v short learning time

v intuitive

v consistent

v convenient

v “beep and you are there”

Important issues were easy and fast use of the card. The card only needs to be placed near the reader for 300 ms, then the user hears a beep and is ready to go. The secret of reaching this short time is that the complexity is hidden inside the card: it will


continue to work for a while after leaving the reader. Another important issue for the simplicity is that it must be easy to add value to the card. This is ensured by 21 000 reload machines, and the Octopus card is often linked to a bank or a credit-card. Three million cards were issued in the first three months, which shows that the system succeeded from the very beginning. After initial use in the public transit system the usage area for the cards was expanded. New interesting items with integrated Octopus chips have been developed: there are already watches and mobile phones using the application.

Case study: Fighting SARS with RFIDSingapore hospitals were the first ones to use a specially developed Hospital Movement and Tracking System (HMTS) during the SARS outbreak in 2003. HTMS is used to keep track of doctors and everyone else who has been in contact with a suspected SARS patient. The system was developed by Singapore’s Defense Science & Technology Agency (DSTA) on a request from the Ministry of Health. DSTA decided to use RFID because of its ability to track people without interrupting operations in the hospital and without requiring much additional work for the staff. Visitors and patients were equipped with sensor cards which contained personal details. Receivers were installed in the ceilings in every zone. The HMTS tracked the sensor cards, that emitted radio signals sent to receivers and forwarded to central computers via the Local Area Network (LAN). By storing the information in a database, authorities successfully used the tool to track and identify visitors for quarantine in the event the patients they had visited were infected by SARS.

Security Aspect More and more applications, like access control, electronic commerce, authentication and privacy protection, are now starting to use smartcards. Security is therefore becoming an important aspect since there might be a risk of someone hacking and misusing the system. Luckily, smart card attacks are classified as class 3 attacks, meaning it takes longer time and costs more to hack a system than building it. By the time one manages to attack the system, the technology would have moved to a new generation. Except for the risk that someone hacks the card itself, there is another important issue which is authentication. U.S. Federal Trade Commission survey reports that 27.3 million Americans have been victims of identity thefts in the last 5 years. Many enterprises have started to use both password and token-based security system. They do not necessarily want better authentication, but rather a more convenient authentication method. Ray Wagner, analyst with Gartner Group, says that use of token-based authentication is cheaper and easier to maintain than password-based authentication. PKI is often related to smartcards, but actually smartcards

security systems can be made without the use of PKI. PKI

has many disadvantages and the major one is the cost. Still,

governments have invested a lot of money in developing

PKI-enabled smart cards. In Canada, an ongoing project uses

smartcards to carry fingerprint and iris biometrics for access

control.

The cost for a card-based project is still very high and for the

time being it could be more attractive to enterprises to use an

USB token instead of smart-cards. However, since governments

still invest in projects, it will not be too long before we start using

smart-cards as our token-based authentication tool. b

Sources

“Network Security Made Easy – Or Easier”, Michael Fenner,

CardTechnology, April 2004

http://www.nepc.sanc.org.sg/

http://www.apsca.org/

http://www.smartex.com/

http://www.ida.gov.sg/idaweb/wireless/infopage

http://www.aquariumfish.net/catalog_pages/wild/arowanas.htm

http://www.privacyrights.org/ar/idtheftsurveys.htm

http://home.hkstar.com/~alanchan/papers/smartCardSecurity/

http://www.baselinemag.com/article2/0,3959,655991,00.asp

http://news.com.com/2100-1022-1013767.html

http://asia.cnet.com/newstech/specialreports/

0,39001151,39135393-2,00.htm

http://www.rfidjournal.com/article/articleview/446/1/1/

http://www.sciencedaily.com/encyclopedia/octopus_card

No more need for coins when buying soda.


Industrial Design:

Creativity in the Middle Kingdom

Product development and industrial design is a rushed process in China and the rest of Asia. This is hardly any news. How rushed can it really be, you might wonder? “One hour, that might be the time spent on coming up with the design of a product. Then the designer starts building a model in the computer. Most designers adapt to the market, which means too little time is spent on thinking.”

Max Hsu is Design Manager at Motorola in Beijing, one of few work places in China where industrial design is allowed to take some time and cost money. In Beijing, Motorola develops high-end cell phones that are tested in Asia before they go to other markets. The consumer preferences vary between the regions. Transparent materials and rubber, which has been popular in the rest of the world, is considered cheap by the Chinese who want more luxurious products. Metal is one of the choices. The unpredictable Chinese consumers give Hsu a headache and market research can not be trusted. “If you test which colour the consumer prefers, the answer will vary day to day. Last quartile people wanted silver, now they don’t.”

Despite China’s enormous market potential, few international companies have established design departments in the country. Nokia and LG are two of the exceptions, along with Sweden’s Electrolux, which recently put up a design branch in Shanghai. “If I quit Motorola, I would not know where to go” says Max Hsu who is not interested in working for a local design firm. Most designers work as consultants since few Chinese companies have in-house designers. IT-related products offer the highest salaries, while doing a microwave or a fridge pays less. The industry is very competitive, with countless design consultants, and freelancers who require even less compensation. Price is the crucial factor in the competition. Why would clients pay for design when they do not appreciate design quality?

Such questions are everyday matters for Jan Hampf whose consultancy Hampf Industrial Design has worked with several clients and suppliers in Asia. Jan Hampf is a professor of industrial design and a former chairman of SVID, the Swedish Industrial Design Foundation. In April 2004 he visited Beijing and Shanghai with the China Forum, a Swedish organisation that has been working since 1996 on increasing contacts between the two countries. At the request of Shanghai University, the theme of this year’s trip was Swedish design, and Hampf hosted a seminar entitled “Why Swedish products are so successful”. His connection with Asia started in the late 1980’s, while designing telephones that were manufactured in Hong Kong. Hampf

contacted Chinese companies and started designing for them as

well, and later for companies in Japan and Korea. Nowadays he

talks with suppliers in Xiamen and Taiwan on a daily basis.

“The first thing we ask new clients about is their profile

and identity. Often they can not answer, so before we start

working on the product we might need to make the board set

the direction for the entire company.”

Hampf says Asian companies have started to get a

better understanding of the value of design. Of course it is

more expensive to have the design done in Sweden, but the

product is also more likely to succeed. Chinese designed

products are still difficult to sell in western countries. One

must not forget the fact that industry and industrial design

were originally European phenomena, profoundly rooted

in western society. There are big differences in mindsets and

Hampf says it takes time for Chinese to learn how westerners

think about design.

“They lack a basic understanding of why you should listen

written by Klara Sibeck

Poster made by an industrial design student in Beijing. This concept car participated in a competition held for Chinese design students.


Audience at the Swedish Design seminar. Now they know why Swedish products are so successful.

Swedish forests or Asian skyscrapers? The challenge for today’s designers is to make cars that fit in everywhere. Volvo does not make different cars for different regions, but can adapt colour and equipment to the market.

to the user and why it is important to understand how the product will be used.”

It is not always easy to make clients understand that part of the design time will be spent on researching matters such as how the product will be used and produced. “They assume that since I have a long experience I can just start drawing. The analysis phase in China is very short, which is like shooting arrows blindfolded. It does not matter how much time is spent on refinement.” Hampf says Chinese are extremely good at handling shapes, yet have some problems putting those shapes in the right place. Over time however, he believes that China will become competitive in design – thanks to the Chinese crafts and art tradition. First however, they have to develop their own thoughts instead of copying.

Some Chinese companies have already succeeded outside the nation’s borders, like Haier which has a large market share in the US, primarily selling refrigerators. Ten years from now it is not unlikely there will be Chinese equivalents to Sony and Samsung. Haier is a possible candidate, so is Lennovo – a company making computer peripherals and cell phones. China’s future competitiveness creates anxiety in many fields, so also in design.With 300 (!) design educations, China will soon have large and inexpensive manpower. Skilled people from the rest of Asia are an important asset in raising their proficiency level. The fact that Max Hsu and three of his designer colleagues at Motorola are from Taiwan are a case in point. China is also good at profiting on knowledge from the outside world in other ways since laws on foreign establishment in certain sectors require knowledge transfer. The numerous automobile companies that have set up production in China hire Chinese designers – trained in the US or Italy – who are put to work at the production sites making adjustments to the design for manufacturing. This trend is not only due to regulations but also to the fact that salaries for such jobs are too low to attract foreigners. Furthermore, working conditions and facilities are not up to western standards. “The knowledge goes in one direction, we would not get much in return” says Jose Diaz de la Vega, creative director for Volvo Cars and one of the speakers at the Swedish design seminar at which he explained Volvo’s design philosophy. Volvo Cars has design departments in Sweden, the US and Spain, and production in numerous countries. For the time being no production or development is done in China. “That is the Swedish approach, waiting and observing how the market develops” says Diaz. Volvo Cars’ current interest in China is rather about understanding the lifestyle and culture. The sametrends apply to cars as to cell phones – cars sold in Asia are luxurious, with a lot of equipment. Colors are classic, the most extreme one being silver.

However western China wants to be, the differences are bigger than one might think when seeing modern Shanghai. Although Max Hsu and the other designers at Motorola are all mainland or Taiwan Chinese, most of them find it easier to work with foreign colleagues than with locals. So how is it possible for westerners to get by? Hsu says American design consultants like IDEO and Frog have approached the market for several years but have failed so far. “They have difficulties working with Chinese and they do not understand the market. Methods and ways of working are different here.” According to Max Hsu, in China you find possibilities in chaos. Rules and systems are difficult for Chinese, who are not used to standardized procedures. He gives a final description of local culture: “A red traffic light in China is just a reference; you can keep driving and hope for the best.” b


Establishing production in China for SME

Many multinational companies are heading towards China in order to reduce production cost and benefit of inexpensive labour. Hundreds of development zones and industrial parks in the region are competing in attracting foreign investments. However, among small and medium sized enterprises (SMEs), it is still quite uncommon to start up production abroad. Tradex-Converting is one of the exceptions: this small company with head office in Kungälv, Sweden, has successfully established a branch in mainland China.

In the case of Tradex-Converting, who are delivering parts to the cellular phone industry, the idea of establishing a production facility in China came from one of the customers who demanded local suppliers to the production line in China. Finding a good location for the facility was not easy but finally they decided to start up production in Langfang, one hour drive south-east of Beijing. - We visited 26 possible locations in different development zones, but many of the zones focus on very large companies and our investment seemed too small for them, says Olle Hellberg, deputy area manager for Asia Pacific and a Chalmers Alumni. In Langfang, Tradex-Converting finally found an industrial zone where their investment was considered large enough, and they were greeted very well. One reason was that other Scandinavian companies, like Swedish tool producer Sandvik and Danish window manufacturer Velux successfully had established subsidiaries in that development zone. - Being a Swedish company, we have advantages. Chinese people know quite a lot about Sweden and they consider Swedish companies attractive. This makes it easy for us to employ skilled labour. Moreover, we do not have as much problem with "job-hopping" as many other foreign companies, says Olle Hellberg. Tradex-Converting in Langfang has a strategic location just an hour drive from the production facilities of Motorola, Sony Ericsson and Nokia. These mobile phone producers together produce more than 100 million handsets a year and their capacity will soon be even larger. As the customer demand is increasing very fast, the production facility of Tradex has been expanded in a series of steps since the company was established in 1998.

Tax reductionTaxes in China are quite high, even compared to Sweden. Corporate tax is by law 33% but foreign companies can apply for all kinds of reductions. In order to attract foreign direct

investments (FDI), different development zones can negotiate

about the tax rate, and normally foreign companies pay 10-

20% tax. During the first years they may pay even less. This

method of attracting FDI has been very successful but is now

criticized by Chinese companies who do not receive the same

tax reductions. As China entered the WTO in 2001, the nation

agreed to unify tax rates for domestic and foreign companies.

According to officials within the ministry of finance, a unified

tax rate may be in use as early as 2006. This might make China a

little less attractive in a tax rate point of view, but China will still

be one of the worlds biggest markets and it is expanding quickly.

Low labour costs make it very interesting not only for large

companies, but also for SMEs to establish subsidiaries in China.

Low labour cost - When we started production in Langfang, we only

employed engineers with good English skills in the production.

It made the start-up more convenient but would have been far

too expensive in any industrialized country, says Olle Hellberg.

A salary for an engineer can be around €150 per month. The

company normally add another €100 to ensure insurances and

other benefit programs for the employees.

The cost of labour varies a lot between different parts of

China, with the highest costs in Shanghai and Beijing. These

cities are developing extremely fast, resulting in high living costs

and frequent shortage of electricity. In order to benefit from

by Hugo Christiansson and Martin Ekenbäck

Many multinational companies have already established subsidiaries in mainland China. One example is this German shock absorber factory outside Shanghai.


Conference Report:

Replication Expo

low cost of labour it could therefore be advisable to establish production facilities some distance away from these cities.

Closed marketsAs China tries to develop the domestic industry, some markets are not open for foreign companies. Two of the many closed markets are mobile communication and the automotive sector. In order to establish subsidiaries working in these sectors, joint ventures between foreign and domestic companies are normally founded. To form a joint venture is often a fast way of getting into business, but problems are common to occur when it is time for reinvestments and recruitment of key employees. Even though Tradex clients are in the restricted mobile communication market, the company itself was not considered a threat to the Chinese domestic cellular phone development. Tradex could therefore establish a fully owned subsidiary in Langfang, which has saved them from many of the common problems concerning joint venture companies.

Even though there are limitations for establishing subsidiaries in China, for example uncertainties about the future tax system and the rapidly increasing living costs in the big cities, there are many business opportunities in the country due to the huge potential market. Many multinational companies have already started profiting; not only on the low production cost but also from the increasing domestic market. Many small and medium sized companies are still to discover their future possibilities in China. b

Further readingTradex Converting www.tradex-converting.com

Chinese government investment agency www.chinainvest.gov.cn

Swedish Trade organisation in China www.swedishtrade.se/kina

by Thien Hoang

The storage exhibition Replication Expo took place in Shanghai in December 2003, and introduced different technologies in optical storage: Digital Video Disc (DVD) and Compact Disc (CD). The latest technology development, consumer use and market forecast were presented.

Currently there is a DVD recordable format race going on between two major alliances with Philips and Pioneer as the front figures for each alliance. In the CD recordable days you could just purchase a CD-R and burn it, but in the DVD recordable era this has changed. Currently there are three recordable DVD formats: DVD-RAM, DVD-RW and DVD+RW, and there might be more to expect as the pace of technology development increase. DVD+RW is mainly developed and promoted by Philips while DVD-RW is mainly developed and promoted by Pioneer. These two major companies are in the threshold of creating confusion in the consumer market. If you want to burn a DVD+R disc you will need a DVD recorder that is able to write this format and DVD-RAM and the same applies for DVD-RW, although some companies offer drives that support multiple formats. There is a consistent development of increasing use of DVD +R/+RW in the market. Producers without +R/+RW are rapidly declining, giving the market further consistency of general standards. The market still consists of many different players with different standardizations, which causes inconvenience for the end costumers. Figure 1 indicates that DVD -R/-RW is still the market dominator with 40 percent of the market share. But with a decrease for -R/-RW and more rapid growth of +R/+RW, the market is shifting towards more equal share of costumers (Figure 2). The use of DVD -R/-RW is dominated by the home electronics area such as DVD players for North American consumers. PCs mostly use the DVD +R/+RW standards since major computer companies have contracted the technology. Dell and Hewlett Packard (HP) have recently announced the launch of DVD+RW double-layer (DL) burners bundled with their PCs early next month and their Taiwanese OEM makers will soon begin production of such DL burner models in small volumes. This indicates a further increased market dominance of DVD+RW technology since the Dell and HP are major computer companies in the PC market and their choice of technology has a strong influence on the market development.

The market structure of the DVD standardsOn the media side. interesting development is going on. More


Conference Report:

Replication Expo

will dictate which format will become the industry standard for both DVD drives in computers and DVD recorders that attach to TVs.

The joint venture of BenQ and Philips seems to work out very well. Philips is technology provider, developing production lines and moving them to Taiwanese BenQ that do the production, as production costs are much cheaper in Taiwan than in Europe. Together they seem to be partly responsible for the progress made by the DVD+RW alliance. The DVD+RW format has not been on the market as long as the DVD-RW and currently seems to profit from a technological advantage.

Figure 1. Market structure of DVD standards

and more Japanese companies take part in joint ventures with Taiwanese companies in order to reduce costs. Japanese Ricoh delivers the stamper and production guidelines for media manufacture in Taiwanese Riteks production facilities.

During the press conference of the DVD+RW alliance, interesting market prospects were announced. Panasonic and Toshiba, both manufacturers of DVD-RAM and/or DVD-RW products, are now also licensing DVD+RW technology. This indicates that the industry structure is changing and manufacturers are creating security by managing two technologies; giving increased advantages to DVD+RW technology. The race of standards in the market is increasing and more alliances are created with the two major industry leaders. The shift is rapid in the DVD market and is heavily dependent on the consumers’ behaviour but also on the computer companies’ choice of standard. The choice of DVD+RW standard by Dell and HP will probably make a difference in the market development of DVD standards.

DVD+R/+RW Formats Gain Market SharesAbout two dozen manufacturers have announced plans to introduce new DVD recorders using the DVD+R/+RW recording format. According to Maureeen Weber, chief spokesman for the Alliance (an organization of DVD business related companies where Philips is the main initiator), these new Plus format recorders will further solidify DVD+R/+RW’s presence in the consumer electronics space at a time when DVD recording is moving into the mainstream.

The plus format is increasingly becoming the standard for DVD recording in personal computers and this trend is set to continue. Figure 2 shows the market share of the DVD market and it indicates that the +R standard is growing quickly. Five out of every six DVD recording devices now sold are for PCs. Because of this, many industry analysts suggest that PC market

Figure 2. Market share of DVD standards

Philips Leads in High Speed DVD+R Recording Philips has demonstrated the world’s highest ever recording speed of recordable DVD in an experimental set up built by Philips Research. The system is able to record 16 times faster than the normal playing speed of video DVDs, allowing you to burn a DVD+R with video or data up to the maximum capacity in less then six minutes. This recording speed is close to the highest possible speed, which means that this represents the ultimate performance of any DVD recording system. However, the main competitor Pioneer has announced that they are planning to bring dual layer DVD technology to the market. Although the technology might be partly ready, it will take some time before it is widely available in the consumer market.

Pricing the ProductsThe pricing of hardware and media is an important issue that will either boost the market development or delay the pace of the DVD technology. According to the developers, the production of the media should not be much more complicated than the production of current dual layer DVD-ROM discs. The production process is similar for single and dual layer. However, the prices will be kept secret until the disclosure of the launch

DVD Dual 12%

DVD+R/+RW30%

DVD-RAM18%

DVD-R/-RW40%

DVD Writers Total = 4.6 Units

Market Share

Mar

ket S

hare

(%)

Time


to the consumers. Another source indicates that the pricing level of a dual layer should be reasonable, at an initial stage being double the price of single DVD media.

The small production volumes and lower initial yields on the DVD+RW DL burners will correspond to Original Equipment Manufacturer (OEM) prices for Dell and HP at around US$130-140 at first, much higher than the current price for 8x DVD+RW burners of below US$90. Due to such high OEM prices, Dell and HP are expected to ship only high-end PCs bundled with DVD+RW DL burners for the time being. The high price will affect the speed of market growth. However, with improved production technology and increased production volumes the prices will drop heavily.

Prospects of the FutureThe new DVD DL technology is only demonstrated by Philips. Announcement from Pioneer indicates that they will release DL technology during year 2004 although no one has seen anything outside of their research lab, which indicates that technology is lead by Philips. Philips has announced that they will release DL products in the first half of 2004. The speed of Pioneer’s DL is unknown while Philips is more specific and has announced that the first generation of dual layer writers will write the discs at 2.4x. Philips has developed the technology jointly with Mitsubishi Kagaku Media and that is a major advantage in research and development cost. Pioneer has no media partner of similar size. However, announcement from Pioneer indicated that they will share the technology with their partners to increase market share. As this is also the strategy of Philips; to make the technology available for the DVD+RW alliance members, no market advantages will be won by either part.

Although dual layer DVD recordable discs have not even been introduced yet there will certainly be a large market for the products. Once the technology has matured it will likely become cheaper and more reliable and will probably go the same way as single layer discs. However, some businesses such as the entertainment industry might dislike the development of the technology sine it will increase the opportunities to make copies without reducing the size of the movie, as is currently needed.

Another factor of unsolved technical problem is the fact that the compatibility of the discs is rather low. Consumers will likely have to purchase new hardware to be able to use the new technology to its limits. Quality is also a concern since more information is stored into the same size of disc which can lower the quality. However, both Philips and Pioneer announced that the quality will be the same as in single layer discs.

The race between the two standards continues. DVD+RW is increasing the market share and DVD-RW has to improve to not fall behind. While currently DVD-RW is widely supported,

the DVD+R(W) might become the first choice for consumers because of its speed and wide availability of devices, which most likely will make prices decrease. The announcement from Dell and HP will also play a major role for development of DVD+R(W) standards. b

SourcesJimmy Hsu, Taipei; Adam Hwang, DigiTimes.com [Wednesday 28 April 2004]

Willem, J., The dual layer DVD recordable, November 2003

Spath, M., Why DVD+R(W) is superior to DVD-R(W), June 2003

Conference material and speeches at Replication Expo December 2003, Shanghai, China


Historical overview

The republic of Singapore, situated in South-East Asia, is

renowned worldwide as a thriving, dynamic centre for commerce

and industry. According to a Malay legend, it got its name when a

Sumatran prince encountered a lion (although he was mistaking

a tiger for a lion), thus called the city Singapura – a Sanskrit

term meaning Lion City. When visiting Singapore it may be

hard to believe, but as recently as 1965, when Singapore became

independent of Malaysia, Singapore was a backwater stopover

with a few colonial trappings and not much more. The colonial

period began in 1819 when Sir Stamford Raffles, a British civil

servant, "founded" Singapore. As an official of the British East

India Company, Raffles was charged with combining the Straits

of Malacca to find a suitable trading station to counter the Dutch

influence in the area. Raffles thought the tiny fishing village of

Singapore was perfect since it was at the crossroads of the East

and West. Sir Stamford was a man of visions, he recognized the

island’s potential with a deep water harbour and he early started

planning the city – a trait that continues to this day. In 1824

Raffles bought out the Malaysian Sultan and Singapore became

British. In 1867 it became a crown colony.

In hope to get independence from Britain, Singapore became

part of the Federation of Malaya after the World War II.

However, the union with Malaysia was fraught with problems.

After many difficult years, on August 9th 1965 Singapore finally

announced its independence. The man in charge was Mr. Lee

Kuan Yew under whose guidance Singapore with virtually no

natural resources became one of the world’s economic success

stories and the gateway to Southeast Asia. Singapore is modern

– no doubt about it – but is at the same time still very traditional.

A peek behind the new skyscrapers reveals a citizenry proud of

its heritage. The main population is Chinese, Malay and Indian.

taking a closer look at

Singapore

Nanyang Technological UniversityThe wealth of the nation lies in its people and therefore

Singapore strives to mould the people who will determine the

future of the nation through the education system. The bilingual

policy requires that each child learns English as well as his or

her mother tongue. This enables children to be proficient in

English, which is the language of commerce, technology and

administration, but at the same time know their native language,

the language of their cultural heritage. Shools are equipped with

computers and learning programmes to ensure that the students

are ready to meet the challenges of the 21st century.

Nanyang Technological University (NTU) is one out of three

universities in Singapore. It has its origin in the former Nanyang

Technological Institute (NTI), a small engineering institute. With

the incorporation of the National Institute of Education in 1991,

NTU has developed into a premier university for industry and

business. Its Engineering and Business related programmes are

most notable and have received accolades from international

organisations. NTU also aims to produce top-class researchers

for the biotechnology industries.

New initiatives are adopted to provide the necessary

impetus to propel NTU in becoming a University of Global

Significance and Excellence in the 21st Century. One of NTU’s

new learning paradigms is to empower the community with

"Anywhere Anytime Computing", which strikes the visitor

immediately when stepping inside the campus. Since the end of

2000, the campus has a wireless network. Teaching facilities and

environment for the students are top-modern.

A ”Chalmerist” at NTUChalmers University of Technology has 4 exchange students in

Singapore, two of them studying at NTU and the other two at

National University of Singapore (NUS). One of the exchange

by Yan Po So and Yan Tai So

16ASIA BULLETIN May 2004

students at NTU is Jerker Helander. He originally comes from Borlänge in Sweden and moved to Gothenburg after his military service to study at Chalmers University of Technology, where his major is Computer Science and Engineering.

Jerker got a summer internship at ABB in Singapore after his second year at Chalmers and he has been interested in Asia ever since. Back in Sweden, Jerker decided to apply for the

exchange programs that Chalmers offer its students. Jerker likes NTU and is very positive when talking about campus life and Singapore. The university has 20.000 students and a campus with an area of 200 acres. It also offers 15 dining halls with food from many different parts of the world. Weekly events are arranged on the campus and there is always something happening.Except for the great food, a

postive aspect is that living costs are much lower in Singapore than in Sweden, which makes Jerker love the place even more. The admission fee for one semester at NTU is about 2000 SGD (approx. €950) and a dormitory room costs about 200 SGD per month.

During the spring semester Jerker has taken courses on Distributed Systems, Operating Systems, and basic courses in economy and robot-technique. All courses at NTU are held in English and Jerker is satisfied with the courses he has taken. Getting used to campus life has not been a problem for Jerker. There are a lot of different clubs at the school and students are encouraged to join those associations by a system that gives credits according to how many clubs you have joined and your position in them. Credits can be used in order to advance within the dormitory system; more credits will give you better room standards. Almost all of the students live in the campus area although the dormitories lack air condition. The information and help for international students at NTU is very good and they take good care of their 180 foreign students. Overseas Chinese are not included in this number since they often study their whole education at NTU, thus counts as full-time students.

According to Jerker, the biggest difference between Singapore and Sweden is the very strict policy in Singapore. The law book is written in a positive manner, as what you may do. What is not written in the law book is not allowed. Another example of the strict policy is that the school does not allow old exams and tutor solutions to be handed out to the students. Signs about what you are not allowed to do can be seen everywhere and there is

even a sign which prohibits bringing the smelly but according to the Chinese very delicious durian fruit inside the metro system. Some of the cultural conflicts which Jerker has encountered is that local people do not drink alcohol, which results in different party cultures. Another cultural conflict is that the older generation in Singapore is very conservative.

During his exchange year in Singapore, Jerker has traveled through the nearby countries; Vietnam, Laos, Cambodia and Malaysia. He has experienced a lot and recommends that one should be open-minded and accept new things when traveling in Asia. His semester at NTU has ended and he says he will miss most of the things in Singapore but especially the food, like Chicken Rice which he almost eat every day. Although Jerker do miss his friends, relatives and the Swedish seasons, he wants to remain in Asia for a longer time. When we say goodbye to Jerker at the campus, we see him carrying a language book about learning Thai. You might want to ask why? When the semester ends, he is moving to Bangkok to do his thesis work on computer security at a company there. He gets a very exciting expression when talking about Bangkok, and we know he has found a new home in Asia. b

Special thanks to:

Jerker Helander, Master student from Chalmers University of Technology

Henrik Persson, Deputy Head of Mission at the Swedish Embassy in Singapore

SourcesMinistry of Education - Singaporehttp://www.moe.gov.sg/

Nanyang Technological Universityhttp://www.ntu.edu.sg

Documents

asia bulletin no. 3 · Asia Bulletin no. 3 May 2004 editor Klara Sibeck writers Hugo Christiansson Martin Ekenbäck Thien Hoang Marcus Olsson Andreas Sigurdsson Yan Tai So Yan Po