Merryn's Blog

Where to find the big IT brands of the future

An article on the BBC website about the smartphone market caught my eye the other day because of the prominent mention of two Taiwanese firms, Acer and HTC.

This piece on the BBC website about the smartphone market caught my eye the other day because of the prominent mention of two Taiwanese firms, Acer and HTC.

As economies develop, their leading companies move up the value chain from being low-cost producers to trusted brands in their own right. Japanese firms did this in the eighties, when auto manufacturers such as Toyota evolved from being merely the cheapest imports around to leaving Detroit in the dust when it came to quality and reliability. In the last few years, Korea's Samsung has reinvented itself as a top consumer electronics label, eclipsing rivals such as Philips.

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So far, Taiwan's firms haven't taken that step. The island is home to many of the world's top electronics manufacturers, but most are only known within their own industries. Their products are used in or badged as the work of someone else. Apple has never assembled a phone in its history; the iPhone is put together by Foxconn/Hon Hai (and the components made by dozens of other companies), but few users would know that.

But this is starting to change. Acer is slowly emerging as a PC brand, although it's still a lot more low-profile than you'd expect, given that it's the world's largest laptop manufacturer. HTC is building a reputation for well-designed premium phones (it makes the G1, labelled with the name of carrier T-Mobile in the UK and US, but sold as the HTC Dream elsewhere). Perhaps most successfully, Asus has one of the best-known netbook lines in the shape of the Eee PC.

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Why is this important? Because, as I've discussed before, Taiwan needs to evolve. It's no longer enough to be a low-cost manufacturing centre; Taiwanese firms need to move into higher-value areas. Becoming a brand is a small step towards that.

For more on other emerging market giants of the future, you might want to read this piece my colleague Jody Clarke wrote in MoneyWeek magazine earlier this year: How to profit as wealth and power head East

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