China-, Taiwan- and Hong Kong-based second-tier DIY motherboard vendors in the China market have been forced to hike retail prices to cover tax payments as the China government steps up efforts to crack down on tax evasion.
The price hikes will make it more difficult for these second-tier makers to compete with the top-two vendors Asustek Computer and Gigabyte Technology, according to local retail channels.
The second-tier vendors were previously able to offer lower prices for their products by running illegal tax evasion schemes.
Most vendors have already changed their production models to meet China’s taxation policies and the issue is expected to cause second-tier vendors to raise their product prices by at least 10%.
Since most first-tier vendors such as Asustek and Gigabyte have been paying their taxes regularly to maintain good brand reputation, the China government’s crackdown will almost have no effect on them, the sources noted.
The China government’s move is also expected to accelerate second-tier vendors’ paces of quitting the motherboard market.