Taiwanese enterprises have struggled for years to enter China, but now, just when access to the Chinese market is becoming easier than ever, many are paradoxically heading back to their home country.
One of them is Taipei-based restaurant giant Namchow Group (南僑集團), which was a relative late-comer in China, but is an early bird in the reverse drive back across the Taiwan Strait.
“Taiwanese people’s income is higher,” said Alfred Chen (陳飛龍), chairman of the group, which derived about half of last year’s NT$9.6 billion (US$325 million) in revenues from Taiwan.
“Besides, local consumers provide us with valuable experience regarding emerging consumption habits,” added Chen, whose company is maintaining its China operations while boosting those at home.
Chen is building a culinary empire in Taiwan centered around a German and a Chinese restaurant chain, plus he is planning to modernize his edible oil and fats plants in Taiwan at a cost of NT$500 million.
Cheng Shin Rubber Industries (正新橡膠), a tire maker with plants in China, Vietnam and Thailand, -invested NT$10 billion at home last year to boost its local capacity and plans to spend another NT$20 billion over the next two years.
“The investments are aimed to boost the manufacturing capacity of our high-price items,” company spokesman Wu Hsuan-miao (吳軒妙) said.
This appears to be the beginning of a broader trend. Taiwanese companies with a majority of their business in China invested NT$40.9 billion at home last year, a tripling of the figure in 2007.
“There are signs that such investments are on the rise,” said Tristan Lu of the Taiwan Institute of Economic Research (台灣經濟研究院), a private think-tank based in Taipei.
It is somewhat ironic that this should happen now, at a juncture in history when China and Taiwan are getting friendlier than ever and have started removing many of the remaining obstacles to business.
When Taiwanese companies started funneling funds out of the country in the 1980s, they were attracted by China’s cheap labor and land prices, but they acted without government permission.
Since then, however, they have got the official stamp of approval and President Ma Ying-jeou’s (馬英九) administration is promoting -economic exchanges more -actively than ever.
China does still attract large Taiwanese funds, with enterprises from Taiwan investing US$6.7 billion in China last year, according to the Chinese Ministry of Commerce.
However, at the same time, China’s investment climate has changed dramatically, investors say, as skyrocketing labor costs, a new business income tax and a more cumbersome labor contract law combine to sour the outlook.
“Lots of Taiwan-invested companies have been forced to close their plants there,” said Ling Chia-yu (凌家裕), the head of the Ministry of Economic Affairs’ Department of Investment.
However, Taiwan-invested companies that are getting less -enthusiastic about China may find that returning home is not a solution to their woes, analysts said.
“Those companies, mostly small ones without competitiveness, won’t be able to survive in Taiwan even if they come back,” said Tung Chen-yuan (童振源), an expert on China-Taiwan economic ties at National Chengchi University.
“Their only chance is if they can upgrade their industrial technologies, but that might be very hard considering their modest scale,” he said.
So most of them have either moved to Southeast Asia or provinces in western China where labor cost is cheaper, he said.
Other investment barriers are the decades-old restrictions that have barred Taiwan from further liberalization and internationalization, Tung said.
“Poor,” Chen said when asked to comment on Taiwan’s investment environment. “There is much the government needs to do.”
This was disputed by government officials, who argued the government has provided a full range of benefits to potential investors coming back from China. They include tax reductions, loans and assistance in the acquisition of land, the officials said.
RECYCLE: Taiwan would aid manufacturers in refining rare earths from discarded appliances, which would fit the nation’s circular economy goals, minister Kung said Taiwan would work with the US and Japan on a proposed cooperation initiative in response to Beijing’s newly announced rare earth export curbs, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. China last week announced new restrictions requiring companies to obtain export licenses if their products contain more than 0.1 percent of Chinese-origin rare earths by value. US Secretary of the Treasury Scott Bessent on Wednesday responded by saying that Beijing was “unreliable” in its rare earths exports, adding that the US would “neither be commanded, nor controlled” by China, several media outlets reported. Japanese Minister of Finance Katsunobu Kato yesterday also
Jensen Huang (黃仁勳), founder and CEO of US-based artificial intelligence chip designer Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Friday celebrated the first Nvidia Blackwell wafer produced on US soil. Huang visited TSMC’s advanced wafer fab in the US state of Arizona and joined the Taiwanese chipmaker’s executives to witness the efforts to “build the infrastructure that powers the world’s AI factories, right here in America,” Nvidia said in a statement. At the event, Huang joined Y.L. Wang (王英郎), vice president of operations at TSMC, in signing their names on the Blackwell wafer to
‘DRAMATIC AND POSITIVE’: AI growth would be better than it previously forecast and would stay robust even if the Chinese market became inaccessible for customers, it said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its full-year revenue growth outlook after posting record profit for last quarter, despite growing market concern about an artificial intelligence (AI) bubble. The company said it expects revenue to expand about 35 percent year-on-year, driven mainly by faster-than-expected demand for leading-edge chips for AI applications. The world’s biggest contract chipmaker in July projected that revenue this year would expand about 30 percent in US dollar terms. The company also slightly hiked its capital expenditure for this year to US$40 billion to US$42 billion, compared with US$38 billion to US$42 billion it set previously. “AI demand actually
RARE EARTHS: The call between the US Treasury Secretary and his Chinese counterpart came as Washington sought to rally G7 partners in response to China’s export controls China and the US on Saturday agreed to conduct another round of trade negotiations in the coming week, as the world’s two biggest economies seek to avoid another damaging tit-for-tat tariff battle. Beijing last week announced sweeping controls on the critical rare earths industry, prompting US President Donald Trump to threaten 100 percent tariffs on imports from China in retaliation. Trump had also threatened to cancel his expected meeting with Chinese President Xi Jinping (習近平) in South Korea later this month on the sidelines of the APEC summit. In the latest indication of efforts to resolve their dispute, Chinese state media reported that
RSS