Sat, Jul 10, 2004 - Page 10 News List

China's energy woes hurt local investors

GOING WITHOUT Taiwanese businesspeople are increasingly worried about being able to meet shipping deadlines as production lines shut down during power cuts

By Amber Chung  /  STAFF REPORTER

Tougher power-rationing measures in China may cause many of the Taiwanese companies based there to have problems making their shipment deliveries on time, industry insiders said yesterday.

"China has seen a 4 percent shortage in power supplies in the first four months of this year, with a 19 percent growth in power consumption but only a 15 percent increase in supply over the same period," said Tsai Horng-ming (蔡宏明), deputy secretary-general of Taipei-based Chinese National Federation of Industries (全國工總).

The worsening power shortages, exacerbated by the increasingly hot weather, has Taiwanese companies there worried, he said.

China's fast growing economy has pushed demand for power to exceed supply since the beginning of this year, leading to brownouts in over 20 provinces and in major cities.

Taiwanese-owned businesses in Zhejiang Province are suffering more than their peers in places such as Shanghai or Jiangsu Province, a China-based entrepreneur told the Taipei Times in a phone interview yesterday.

"Most of the companies in Zhejiang receive electricity on a rotating basis -- three days off and four days on per week," said Hector Yeh (葉惠德), president of the Association of Shanghai Taiwan Businessmen Invested Enterprises.

Businesses in Shanghai, however, are only going without power for one day a week, he said.

A few large-scale investments in Zhejiang regarded as key industries by the local government are receiving preferential treatment, he said, losing power just two days a week.

Yeh said his food factory in Zhejiang, worth US$30 million, has received such a dispensation.

Electricity output in China during the first half of the year rose by 15.8 percent over the same period last year, the highest growth rate since 1975 and 6.7 percentage points higher than the average half-year growth rate in the last 15 years, according to a statement issued yesterday in Beijing by China's National Bureau of Statistics

Yeh said the hot weather would only make the situation worse and electricity supplies for industries would possibly be diverted for household use, he said.

To avoid production losses due to power outages, many companies are building their own generators, Yeh said, with the help of Chinese government subsidies

Even though self-generated electricity can increase power costs by up to 30 percent, that increase is affordable compared with the losses that would be incurred by failing to make delivery times due to power outages.

One local analyst said yesterday that electricity rationing may not pose a huge threat to the output of China-based Taiwanese companies for the time being, unless the cutbacks increase to four days a week or sudden blackouts increase in frequency.

"The decrease in output would not be able to be made up easily by three shifts per day," said Eric Chou (周榮正), who manages NT$4 billion worth of funds with Prudential Financial Securities Investment Trust Enterprise.

The worst-case scenario could see shipments of Taiwanese personal-computer makers affected in the traditional high season, which starts in the third quarter, Chou said.

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