Taiwanese companies are becoming less competitive amid a brain drain triggered by lower salaries and strict control over mergers and acquisitions (M&A) by the government, according to an annual survey of the top 1,000 companies in the Greater China region.
The survey, released yesterday by the Chinese-language Business Today magazine, showed that only 106 Taiwan-based firms made it into the top 1,000 list this year, falling for the third consecutive year.
Last year, there were 111 Taiwanese firms on the list, after dropping from 122 in 2009 and 182 in 2008.
This is the eighth year the magazine has held the survey, which ranks companies based on their market value.
Taiwan Semiconductor Manufacturing Co (台積電) ranked the 14th largest this year and remained the biggest among Taiwanese companies, the survey showed.
“The results indicated that local companies are losing their competitiveness to companies in China and Hong Kong,” Lin Chien-fu (林建甫), head of the National Policy Foundation and professor of economics at National Taiwan University, told a media briefing.
Lin said tight government control over M&As was holding back local companies, as M&As could help industries expand and prosper.
The relatively low pay for skilled workers has also driven local talent to move to companies in China or Hong Kong, he added.
However, Michael Ding (丁予嘉), chairman and chief executive at Taipei-based Waterland Securities Co (國票證券), said he expected the number of Taiwan-based corporations in the top 1,000 list to rebound in 2013.
“The number may hit the bottom next year and rebound [in 2013], driven by the momentum from companies like HTC Corp (宏達電), which ranked 27th this year,” Ding said.
China-based companies led the top 1,000 list, with 571 firms this year, with China National Petroleum Corp (中國石油天然氣) remaining the largest company on the list for the second consecutive year.
The number of companies engaged in mining and precious metals, mechanics and the medical industries increased from last year, suggesting that domestic demand-related industries in China may top the list in succeeding surveys.
Lin said Taiwanese firms could take advantage of the Economic Cooperation Framework Agreement signed in June to tap into China’s huge market.