Taiwanese companies should develop multiple supply chains, rather than relying heavily on operations in China or Southeast Asia, to avoid heavy tariffs on goods as global trade tensions linger and deepen, Ernst & Young Taiwan said yesterday.
Taiwan could bear the brunt of tariff exchanges between the US and China due to the nation’s focus on the Chinese market for manufacturing activity, and could face further pressure if Europe and other nations enter the row, partner Lin Yi-shain (林宜賢) told a media briefing.
A strategy driven by cheap labor and short-term gains reflects a lack of risk diversification and exposes companies to unforeseen costs in the long run as countries raise trade barriers, said Lin, a specialist on international taxes and transfer pricing services.
Many Taiwanese companies are talking about relocating to Southeast Asia as their profits are being squeezed by extra tariff burdens imposed by Washington on Chinese goods, Lin said.
However, that would simply be repeating the business model and the companies could run into the same predicament when the trade dispute sweeps across Southeast Asia, which is not unlikely, Lin said.
Instead, local firms should create multiple supply chains, and assign more importance to political stability and rule of law when weighing investment destinations, Lin said, adding that investment protection should also sit high on the list of concerns.
“We don’t see exporters in Japan or South Korea worry as much, because they have a better risk diversification strategy,” Lin said.
Even Chinese firms are less susceptible to the US-China trade spat than local peers, thanks to their deployment beyond Asia, Lin said.
Local firms could do the same and set up supply chains in Europe, the US and elsewhere around the globe to serve customers and diversify risks, Lin added.
“Multiple supply chains would allow goods to benefit from free-trade agreements with the host nations and save on tariff costs, a factor that was underestimated in the past,” Lin said.
Firms should also brace for greater difficulty with hiding assets overseas, as tax authorities are drafting rules that support the Common Reporting Standard, a global framework aiding the exchange of tax data.
Several Ernst & Young clients are seeking help after Beijing adopted the standard to battle tax evasion, business tax and regulations compliance services partner Michael Lin (林志翔) said.
The customers consider the proposed 10 to 12 percent tax rates unacceptable, but do not want to invest in Taiwan’s “five plus two” innovative industries plan to qualify for capital repatriation, Michael Lin said.
Companies must also meet tougher requirements regarding labor disputes, as legal revisions have shifted the burden of proof to them, he said.
They must provide evidence that employees are not working when differences arise regarding overtime pay, the company said.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last