SARS may stall investments in China

Uncertainty over the effectiveness of epidemic-control measures in China may hamper China-bound investments by Taiwanese, local business leaders said yesterday.

"Some entrepreneurs have begun to look at China's concealment of the epidemic [severe acute respiratory syndrome or SARS] as a risk in doing business there," George Lin (林添貴), deputy secretary-general of the Chinese National Association of Industry and Commerce (工商協進會), said.

Although small and medium-sized China-based enterprises may not have the flexibility of deploying their operations elsewhere, "some large-sized enterprises have said they are considering making some future investments in Taiwan following the SARS outbreak in China," Lin said.

Chinese National Association of Industry and Commerce Chairman Theodore Huang (黃茂雄) advised Taiwanese "not to put their all eggs in one basket."

Huang said that foreign buyers who refuse to travel to China could end up having a negative impact on its economy as well as on Taiwanese enterprises operating in China.

Formosa Plastics Corp (台塑) Chairman Wang Yung-ching (王永慶) also expressed concern over the negative impact of SARS on China's future.

SARS has hurt the region's tourism and aviation industries, and business activities across the Strait have been put on hold, Wang said. The disease may further upset the manufacturing sector as China's domestic demand slips, he said.

Short-term shock

Jason Fong (馮志良), deputy secretary general of the Chinese National Federation of Industries (工總), however, said that SARS is likely to be a "short-term shock" to commerce in the region.

"Unless SARS becomes a long-term problem and spins completely out of control, it's unlikely that Taiwanese investors will pull their operations out of China," Fong said.

After returning from China last week, Fong said that he noticed that Beijing had underestimated the seriousness of the disease at the beginning of the outbreak.

He said that a lack of transparent medical-information channels in China resulted in local SARS reports failing to reach the central government. As a result, quarantine efforts were not quickly implemented, he said.

Now that the authorities have made efforts to isolate the disease, the long-term effect on China's economy should be minimal, Fong said.

Beijing has decided to cancel its national-holiday activities on May 1 in an effort to curb the spread of the disease.

Eric Tang (譚仲民), a vice president of Powerchip Semiconductor Corp (力晶半導體), said that it's still too early to predict the impact of SARS on China-bound investments since China continues to be a highly competitive market.

According to the Investment Commission under the Ministry of Economic Affairs, the nation's China-bound investments grew 95.92 percent in the first quarter from a year earlier, with NT$1.11 billion in investments were approved to make in China.