As the China government has tightened financing conditions, it has become more difficult for small- to medium-sized Taiwan-based PC supply chain makers in China to obtain loans, with many of them exposed to the risk of closing business operations.

Since the makers are also seeing orders diminishing and labor costs rising, some players fear the situation may not improve until the second quarter of 2012.

Several PC-related players have already demanded their sales units to closely monitor the companies' finances to avoid any issues from arising.

Currently, interest rates for loans in US dollars from China's banks are around 6-8%. But since it is hard to obtain bank loans, some firms have been forced to lend from underground financial operations in China with interest rates going up as high as 13-14% and in some cases even at 36%, sources noted.

Meanwhile, some Taiwan-based players have turned to Taiwan banks, but their borrowings have resulted in a rise in Taiwan's interest rates for US dollar loans to 2-3%.

Source:digitimes