Singapore

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In the late 1960s, Hewlett Packard Company was looking around Asia for a low cost location to produce electronic components that were to be manufactured using labor intensive processes. The company looked at several Asian locations but eventually settled on Singapore, opening its first factory there in 1970. Although Singapore did not have the lowest labor costs in the region, costs were low relative to North America. Plus, the Singapore location had several important benefits that could not be found at many other locations in Asia. The education level of the local work force was high. English was widely spoken. The government of Singapore seemed stable and committed to economic development, and the city state had one of the better developed infrastructures in the region, including good communications and transportation networks and a rapidly developing industrial and commercial base.

HP also extracted favorable terms from the Singapore government with regard to taxes, tariffs, and subsidies. To begin with, the plant manufactured only basic components. The combination of low labor costs and a favorable tax regime helped to make this plant profitable early. In 1973, HP transferred the manufacture of one of its basic handheld calculators from the United States to Singapore. The objective was to reduce manufacturing costs, which the Singapore factory was quickly able to do. Increasingly confident in the capability of the Singapore factory to handle entire products, as opposed to just components, HP's management transferred other products to Singapore over the next few years including keyboards, solid state displays, and integrated circuits. However, all of these products were still designed, developed, ...