Fewer German companies in Taiwan met their business targets last year than in 2017, which should serve as a wake-up call for economic development, the German Trade Office Taipei said yesterday.
Although 49 percent of German companies achieved or exceeded their business target, this represents a decline of 8.5 percentage points from a year earlier, according to the office’s annual survey that polled 250 companies in November last year.
Most German companies in Taiwan are small and medium-sized enterprises in the machinery equipment, logistics, sales and marketing sectors.
“We observe that there is a slightly less optimistic outlook in terms of economic expectations, although the business climate is still regarded as positive,” office chief representative and executive director Axel Limberg said.
This year, 44.3 percent expect to meet or exceed their business target, which signals a further decline in confidence, he said.
Maintaining a presence in Taiwan is highly important to most German companies, especially in terms of following key accounts and customers, sales potential, ability to adapt products to the local market, presence in Asian markets and cooperation with local companies, according to the survey.
Other motives include proximity to suppliers, lower costs, and research and development, the survey showed.
The survey found that 50.7 percent of German firms are expecting an increase in business turnover this year, while 40.8 percent have the same attitude toward profit growth.
Most of the polled firms do not expect big changes in investments or employment.
About 46 percent of the companies identify cross-strait relations and political stability as top challenges for their business activity in Taiwan, the survey showed.
The reliability of the governmental framework, bureaucratic and administrative hurdles, participation in public tenders, and the absence of free-trade and investment protection agreements are also regarded as challenges, the poll showed.
The office urged the government to improve political stability to maintain the high level of trust in Taiwan as a destination for business and investment.
“This requires long-term commitments to uphold projects and the agreed time schedules,” Limberg said.
In addition, personnel recruitment poses an urgent challenge, the office said, recommending a dual vocational education system to address the issue so that companies will be able to hire more qualified staff.
Despite these challenges, Taiwan remains attractive for future considerations and business activity by German companies, with services, sales, marketing and trade, and sourcing and procurement being the most attractive sectors, the survey found.
Production and research and development are lagging, and play a minor role, it said.
More than 30 percent of companies said the government’s efforts to boost the “five plus two” industries is relevant to their business activities, particularly in the field of intelligent machinery.
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