Despite the rising salaries of Chinese tech workers, there's still a huge cost advantage in building your hi-tech products in China rather than in the west.
3Com of the US, perennially cast as the also-ran in the data networking industry behind Cisco, says that rivals' wage costs are up to five times higher than those of 3Com.
While Cisco and others rely on expensive talent in the west, 3Com says the cheaper labour costs of its China-based workforce give 3Com an advantage, allowing it to price its products 30% to 40% lower than its competition.
Regular EngagingChina readers will remember that 3Com last year took control of H3C, a China-based joint venture with China's Huawei, and the deal gave 3Com 2,400 R&D workers in China.
The comments on labour costs were made during 3Com's annual results announcement. The H3C business unit, which specialises in enterprise networking products for the Asian market, accounts for 57% of 3Com's turnover and its revenues grew 13% in the fourth quarter compared to the year-earlier quarter. The other leg of 3Com's business saw revenues decline slightly. In the fourth quarter, China accounted for almost half of 3Com's revenues.
While it is still early days, the decision to take full control of H3C appears to have been a good one.
More in this ComputerWorld story.