Sun, Apr 14, 2019 - Page 6 News List

US-China dispute benefits Taiwan

By Juan Fernando Herrera Ramos

At the beginning of last month, US President Donald Trump tweeted that he was going to delay further increasing tariffs on Chinese goods. The planned increase was part of the US government’s efforts to significantly change the way that China conducts its economic affairs, tackle intellectual property issues and some of the policies it considers unfair toward US companies doing business in the Asian country.

In Trump’s tweet, he wrote that because there were “productive talks, I will be delaying the US increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi [Jinping, (習近平)] and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for US & China!”

While this was without a doubt good news for global markets, which have been rattled by the tension between the two countries, the fact that there was not a signed agreement cannot be ignored. For now, no one knows for sure what the ultimate result will be.

At the beginning of the conflict, the future looked very dark for Taiwanese companies, especially considering how intertwined Taiwanese and Chinese production lines were.

However, after months of conflict with no resolution in sight, it is worth asking: Can Taiwanese companies benefit from the trade dispute between China and the US?

The simple answer is yes, and it seems that there are many Taiwanese companies that have either already benefited or are in the process of moving their manufacturing lines to seize new opportunities.

Among the companies that have already moved their production lines from China is Eclat Textile, an apparel supplier to companies such as Adidas, Nike and Under Armour. Eclat Textile left China for Cambodia and Vietnam a few years ago and was one of the first companies to benefit from the trade spat.

The Nikkei Asian Review in September last year reported that key iPhone assembler Pegatron has discussed plans to move from China to avoid tariffs on networking devices.

Some Taiwanese electronics manufacturers, such as New Kinpo Group and Delta Electronics, have also reportedly announced plans to move their factories to other countries in Southeast Asia.

Reuters has reported that Apple plans this year to begin assembling top-end iPhones at Hon Hai Precision Industry’s unit in India. This is in addition to the smartphones they already make in that country for Xiaomi, and is an attempt at mitigating the effects of the trade spat.

It is not only countries such as Vietnam, Cambodia and India that Taiwanese companies are looking to, Taiwan has also emerged as a good option.

President Tsai Ing-wen’s (蔡英文) administration is well aware of this and is trying to capitalize on it. The government last year launched a three-year program offering benefits to companies moving their operations back home, such as tax credits, discounts on utility fees and assistance with finding land and recruitment.

All of these incentives have one goal: to tackle the criticism that her government has received for not doing enough for the Taiwanese economy and increase the number of jobs in the nation. If successful, this will help her re-election campaign.

In November last year, Bloomberg published an article that said there were signs that the trade dispute was having a positive effect on Taiwan, describing a jump in industrial production that was a direct result of companies moving their production lines back home.

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