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China making great leap forward in tech

Once thought of as a cheap manufacturer of computer parts, country is poised to do more and more design work.

SANTA CLARA, Calif.--China's growth into a nation that leads in the use of broadband technology, and the changing role of its manufacturing companies from just assemblers to designers, were among the trends analysts discussed at a conference here Thursday.

Research firm iSuppli hosted the event, and its analysts warned against the mistaken notion that China will remain a relatively unsophisticated country when it comes to the use of technology.

The ability of Chinese companies to make computing and electronics gear has made them longtime favorites of firms looking to lower manufacturing costs. Once the guts of products are made, they're shipped back to companies who add design touches and specialized features and sell them.

But in the coming years, Chinese companies will do more and more design work, said Joe Abelson, vice president of emerging markets at iSuppli, a development that could threaten companies who can't compete with China's manufacturing prowess.

"We disagree with the impression that China is not a player in design," Abelson said. "If you're resting on the belief that design will continue to only be done in Europe or the states, you may need to reconsider that."

Abelson pointed to cellular handsets as an example. Many of the major manufacturers of handsets are Chinese companies, but in 2002 only 10 percent of handsets made in China were designed in house by the companies that made them. That figure will increase to 40 percent by 2008.

The change isn't limited to handsets. Chinese television makers are also designing their own sets and have even begun to sell them directly in U.S. stores.

The technology transformation will also take place in the use of broadband Internet access, speeding the flow of information. Chinese telecommunications companies will increase the installation of broadband technology to spur use of their wired networks. The result will be that by 2008, China will be the leading user of broadband technology in homes.