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Shenzhen logistics convince Hitachi

Hard disk drive vendor Hitachi Global Storage Technologies (GST) will invest US$500m to build a ‘mega-manufacturing centre’ in Shenzhen, China.

Hard disk drive vendor Hitachi Global Storage Technologies (GST) will invest US$500m to build a ‘mega-manufacturing centre’ in Shenzhen, China. The city’s close proximity to Hong Kong’s world-class logistics capabilities was a decisive factor.

“The new site will give Hitachi a supply chain management capability that is unmatched in the industry,” said Glenn Larnerd, chief operating officer at Hitachi GST.

Shenzhen and Hong Kong, which share a common river boundary, have been working hard to develop ever-closer bilateral co-operation. The two governments recently signed memorandums to promote the Pearl River Delta’s potential as a global manufacturing hub. The agreement includes increased pooling of logistics resources such as ports and airports.

Hitachi’s new facility will focus on disk drive final assembly and bring Hitachi closer to its existing Shenzhen-based component manufacturing operation and local supplier network. The 35,000 square metre facility is expected to employ 7,000 staff and start producing 3.5” disk drives in the fourth quarter of 2005. The facility will also be equipped to produce various other disk drive form factors.

Hitachi is banking on future disk drive demand from makers of consumer electronic devices to push sales higher. Research firm Trend Focus believes that consumer electronics devices could account for 30% of hard disk drive shipments by 2006. Hitachi’s investment in Shenzhen fits neatly with the city’s aspirations to develop its high-tech industry and turn South China into a manufacturing and logistics hub.

Production of IT goods continues to move to China at a rapid pace. Taiwanese sources claim that A-brand vendors such as Dell, HP and IBM are driving their contract assembly partners to produce over 80% of the notebooks they order in China. Acer is also pushing its three contract notebook assemblers — Quanta Computer, Compal Electronics and Wistron — to increase the proportion of units made in China.

With vendors rapidly shifting production to China, exporting product out of the country is a rapidly growing business. Container line OOCL recently revamped its global operations and renamed its China-Middle East service as Asia Middle East Service (AMS). OOCL’s AMS operation consists of six ships of 1,500 TEU covering 15 destinations across the region including Jebel Ali. The AMS network has also been extended to include Korea as well.

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