Attracted by China's giant market potential, Taiwan CD-R makers are speeding up investments there through joint ventures, as Chinese authorities still place rigid controls on CD-R disk production.

Ritek Corp., a leading brand of local CD-R products, has formed a 49 percent stock-holding company with Sichuan Xinhua Book Store and plans to expand the Chinese company's production volume to 60 million units this year.

CMC Magnetics Corp. is closely watching the development of the Chinese market, waiting for the announcement of a liberalization policy following China's WTO entry.

Some second-ranking CR-D makers, including Princo Corp. and Digital Storage Technology Co., Ltd., are said to be visiting China with the aim of speeding up contacts for the possibility of production cooperation.

Ritek is enthusiastic about the Chinese CD-R market in view of its huge market potential. Its joint-venture company with a Chinese partner has four production lines with a total capacity of 3.3 million units of CD-Rs monthly. It will complete a production-expansion project by the end of February. The expansion is expected to bring the company's annual production to 60 million units of CD-Rs this year, making it the largest CD-R producer in China.

However, a CD-R producer based in Hangzhou, Zhejiang province, is competing with intensity against Ritek and its strategic partner. The company plans to expand its capacity to 100 million units of CD-Rs by the end of this year as it expects China's total demand for the disks to surge to near 1 billion units in 2005.

China consumed 250 million units of CD-Rs in 2001.

CMC Magnetics applied to Chinese authorities for a 100%-owned factory, but failed to win approval. The Chinese government is wary of foreign-owned CD-R companies setting up in China because of the implications of this kind of product for national security. However, CMC Magnetics hopes that liberalization will occur after China's entry into the WTO. Senior officials at CMC Magnetics said it has targeted the Shanghai area to set up a plant.

Several other smaller local CD-Rs makers are said to be conducting strategic production cooperation talks with Chinese counterparts and considering building facilities in Zhuhai and Shenzhen, Guangdong province, or in the Shanghai area.

Some producers still believe Taiwan is a better place for the CD-R producers, due to its peripheral facilities and the quality of CD-R dyes. But they stressed that "go-west" is a must for the industry, and that it could not afford to ignore the huge potential Chinese market.