The investment environment in China deteriorated while investment risks increased for the first time this year, and nearly 10 percent of Taiwanese manufacturers in China expressed a willingness to return if the government would provide sufficient incentives, a report released yesterday said.
The report by the Taiwan Electrical and Electronic Manufacturers’ Association (TEEMA, 台灣電子電機公會) said it was time for Taiwanese makers based in China to upgrade their production technology and management skills to stay competitive in the arena.
“For the first time in nine years, we found investment conditions in China showed unfavorable signs while investment risks worsened,” said Leu Horng-der (呂鴻德), business administration professor at Chuang Yuan Christian University.
Leu, commissioned to carry out the study, said the severest challenge lay with a stronger yuan that significantly dented profit margins this year. He added that the US subprime crisis and global slowdown also weakened results.
But Leu said personal safety ranked as the second-highest risk facing Taiwanese businesspeople in China, citing the semi-official Straits Exchange Foundation’s (SEF) figures showing a total of 1,463 personal safety cases involving Taiwanese businesspeople between 1991 and this year.
Also, labor and land costs are on the rise while investment incentives are declining, Leu said, adding that the trend prompted 9.88 percent of Taiwanese manufacturers in China to express a desire to move their business back home. The figure stood at 1.83 percent last year and 1.97 percent in 2006, the report said.
Chang Pao-cheng (張寶誠), president of the China Productivity Center, said Taiwanese manufacturers in China should engage in radical reform or risk being forced out of the market.
Chang said that the bulk of Taiwanese firms across the Strait are run by family members and leave ample room for improvement in product innovation and management.
Cheng Fu-hsiong (鄭富雄), vice chairman of the manufacturers’ association, said the government could lend a helping hand by facilitating the enactment of rules governing cross-strait commerce to protect Taiwanese firms and help boost their business.
But SEF Secretary-General Kao Koong-lian (高孔廉), who also attended the event, said the issue was not on his agency’s agenda this year.
The SEF is expected to meet with its Chinese counterpart, the Association for Relations Across the Taiwan Strait, in October for talks on cross-strait transport links.
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