Wed, Jan 01, 2014 - Page 8 News List

EDITORIAL: Exporters must act to stay competitive

Taiwan’s export figures used to closely track trends in the world’s major economies such as China, the US and Europe, as those markets are the main export destinations of electronic goods made by local manufacturers. Taiwan’s electronics and components makers used to be considered the bellwether of the global electronics industry.

However, things have been changing lately. There are growing signs that the nation has gradually become detached from global trends.

Taiwan’s exports are expected to post an annual decline for a second quarter, to US$75.89 billion in the fourth quarter last year from US$77.47 billion in the same quarter the year before, according to a forecast of the Directorate-General of Budget, Accounting and Statistics (DGBAS). The year-on-year reduction will deteriorate to 2.03 percent from 0.8 percent in the third quarter last year, according to the statistics agency.

The contraction is in stark contrast to the stronger-than-expected economic improvement in the country’s major trade partners.

China’s GDP was expected to grow 7.8 percent annually last year, Global Insights forecast. The Chinese economy is to grow 8 percent this year, according to Global Insights. A bulk portion, or 40 percent, of goods from local exporters go to China.

The GDP of the US, Taiwan’s second-biggest trade partner, was expected to grow 1.7 percent annually last year. This year, the world’s biggest economy is expected to expand 2.5 percent.

This while Taiwan’s exports are expected to have grown a lukewarm 0.44 percent annually last year and 3.07 percent this year, as the DGBAS projected. As a result, the country’s economy was to grow just 1.74 percent last year and 2.59 percent this year, the agency said. Exports make up 65 percent of Taiwan’s GDP. A third of the exports are electronic products, according to the DGBAS.

Why has Taiwan’s link with global economies become broken?

One of the main reasons is the popularity of mobile devices, which undermined the whole PC world and dealt a blow to local manufacturers. They have been focusing on making standard PCs and not on developing mobile phones and tablets.

Local PC brand Acer Inc suffered the brunt of this change in paradigm, with its market share shrinking to 8.3 percent in the third quarter last year from 9.8 percent in the same quarter in 2012, based on Gartner Inc’s tally.

Another major reason is the rise of Chinese electronics manufacturers. They used to be regarded as lacking technological capabilities and making only low-end products. Now they are playing catchup, nurtured by the Chinese government’s protectionism and a massive domestic market. They are poised to undercut Taiwanese manufacturers by providing equally good products at lower prices.

Local smartphone brand HTC Corp, which is struggling to restore its past glory, is considering reducing in-house production by outsourcing production of entry-level smartphones to Chinese manufacturers to cut costs.

Furthermore, Taiwanese component makers are the primary suppliers to some Chinese brands, but as their Chinese clients build their own technologies and capacities, those clients will gradually reduce sourcing components from Taiwan.

Chinese companies are posing a threat, because they can steal orders from local companies for chips, casings and batteries — the list goes on. This year, Taiwan’s Asustek Computer for the first time used chips from Rockchip Electronics, headquartered in China’s Fujian Province, in its tablets, instead of sourcing chips from VIA Technologies in Taiwan.

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