South Korea listing boosts supplies
- By Dan Carney
- May 05, 1996
Federal PC buyers can expect lower prices and better supplies for some key components, such as monitors, because of the recent addition of the Republic of South Korea to the list of approved countries under the Trade Agreements Act.
Also, effective at the beginning of 1996, Singapore and Hong Kong were deleted from the list of designated countries.
"It is going to mean two things," said Bob Guerra, executive vice president of Sysorex Information Systems Inc. "Substantially increased availability and lower prices."
Products such as 15-inch monitors, which were chronically in short supply last year, would be more readily available to federal buyers who are tired of waiting for their new computers, he said. "We couldn't get them from IBM [Corp.], and we couldn't get them from Digital [Equipment Corp.]," Guerra said.
Furthermore, Guerra pointed out, those monitors would each cost about $20 less than the 30,000 Japanese- and Finnish-brand monitors Sysorex shipped to customers on its Army PC-1 contract last year.
"That is $600,000 somebody would have saved," he said.
"The change has a major impact on the way companies like ours do business, if South Korean products are designated products," said Chuck Spence, director of marketing for Dunn Computer Corp. "It opens up a whole host of manufacturers from Korea. The cost is going to be lower than the cost of products made in Japan."
The competition from Korean suppliers will force other vendors to cut their prices to compete, Guerra said, so that even if resellers do not switch suppliers, the prices should fall. "There is absolutely no difference between these products except the price," he said.
"We were anticipating that Korea would come on the list, but we didn't expect that was going to happen until Jan. 1, 1997," said Beth Policay, contract negotiator for IBM Federal PC Co. "I'm very excited about Korea coming on the list," she said. "I'm not excited about Hong Kong and Singapore coming off it."
Losing Singapore as a potential supplier could exacerbate notebook computer flat-panel display shortages, said Jan Morgan, research analyst for International Data Corp. Government Market Services.
Another problem is that vendors who bid products from Hong Kong and Singapore could be left out in the cold.
"The biggest potential pitfall is that somebody actively bidding might not be aware of the changes," said Carl Peckinpaugh, an attorney with Winston & Strawn, Washington, D.C.
Hong Kong is not as large a manufacturer of information technology as the other countries, so its loss is not terribly relevant, he said.
South Korea makes more than just monitors. The country is a major manufacturer of dynamic RAM semiconductors, and it is gearing up to build CD-ROM drives in large volume, Peckinpaugh said.
"There is a lot of computer equipment made in Korea," he said.
Some products that are losing favor, such as 5-1/4-inch floppy disk drives, are only available from countries such as South Korea that are not necessarily building the very latest technology yet.
The older-style floppy disk drives are still required by some federal buyers for the sake of compatibility with old PCs that are still installed, Guerra said. But those drives are getting harder to find, and South Korea will provide a good source of the drives, he said.
In the future, South Korean manufacturers will offer modems and other popular components that federal buyers want so that the nation's importance as a supplier will grow, Guerra said.
Singapore did not sign the General Agreement on Tariffs and Trade, so the country was automatically dropped from the list, said Ken Salaets, director of government relations for the Information Technology Industry Council.
"The administration is trying to find a way to allow them back in," he said.
South Korea might not be the only country that is on the fast track for approval. Taiwan, expected to be approved for 1998, may now make the list starting Jan. 1, 1997, Spence said. That country is a major supplier of notebook computer technology and components.
"I haven't heard that, but it wouldn't shock me," Guerra said. A potential obstacle standing between federal buyers and South Korean-made products is that the new list, which includes South Korea, only applies to solicitations issued since the change took effect on the first of the year. But contract officers for older contracts will have the ability to allow South Korean products because they are currently approved, Guerra said.
"It may vary from agency to agency," he said. "I think every contracting officer ought to jump on it."
Even with that uncertainty, federal buyers will not have to wait long for better pricing and supply of some items, Spence said. There should be an impact soon, in plenty of time for the busy summer federal buying season.