Taiwanese companies should accelerate expansion in India and ASEAN countries to exploit rapidly rising domestic demand, the Taiwan Electrical and Electronic Manufacturers’ Association (電電公會) said yesterday.
The association made the recommendation after releasing an annual survey of more than 2,000 Taiwanese firms with operations abroad.
“Expansions in India and ASEAN nations offer the advantages of lower production costs, geographical proximity and a labor surplus,” said Leu Horng-der (呂鴻德), a business administration professor at Chung Yuan Christian University, who announced the results of the survey at a news conference in Taipei.
Vietnam is the best destination for Taiwanese firms seeking to relocate their manufacturing facilities, Indonesia offers the greatest potential for developing domestic demand-oriented businesses and Malaysia is the best fit for traditional industries looking to expand abroad, Leu said.
Singapore tops other destinations for services-oriented businesses and the Indian city of Bangalore is the most competitive when it comes to high-tech investment, the survey showed.
“Taiwanese firms should weigh the pros and cons of individual nations and cities before venturing overseas,” Leu said.
Insufficient infrastructure facilities, bureaucratic corruption and political instability pose the biggest investment risks that firms must factor in before making a move, the academic said.
Leu also called attention to a rapidly rising middle-class population in India and ASEAN countries, as the trend suggests huge business potential for firms involved in meeting domestic demand.
The large Muslim population in the region spells great demand for Muslim food products and consumer goods, for example, Leu said.
Leu said Taiwanese companies may seek first to cut into local supply chains and delay building their own brands until they gain a better understanding of local tastes.
It may take a while for consumers in those markets to appreciate the value and benefits of branding, Leu said.