Tue, Oct 23, 2018 - Page 14 News List

Ministry of Economic Affairs: Time for Taiwanese manufacturers to come home
台商遷廠美國、東南亞? 經濟部喊話:台灣好

Taiwanese cyclist Feng Chun-kai stands next to a Merida bicycle on Jan. 10 at a promotional event in Taipei. Merida Industry Co earlier this month announced production of the majority of its bicycles destined for the US market will be returning to Taiwan.

Photo: Nien Miao-yun, Liberty Times

As the US-China Trade War continues to intensify and many observers are predicting it will turn into a protracted war of attrition, Taiwanese companies operating in China are one after another heading for the exit, turning to Southeast Asia, the US or returning to Taiwan.

According to Minister of Economic Affairs Shen Jong-chin, the ministry is currently aware of 35 Taiwanese businesses that intend to “reshore” production to Taiwan, which includes 25 publicly-listed companies the Ministry of Economic Affairs (MOEA’s) Industrial Development Bureau is aware of, as well as 10 smaller-sized companies known to the MOE’s Department of Investment Services. Additionally, over 20 Taiwanese businesses plan to relocate to Southeast Asian countries. Department Director-General Chang Min-pin says that the ratio of China-based Taiwanese businesses looking to relocate to Southeast Asian countries or Taiwan is currently 45:55. The main considerations driving relocation decision-making are sufficient availability of land and labor and whether there are readily available supply chain clusters.

Chang says that Taiwanese businesses are adopting a phased approach in their response to increased friction between between Washington and Beijing. In the short-term businesses are considering whether to shift production capacity, however in the medium-to-long term, the location of new production lines and entire production bases are both up for consideration. Which course of action to take is invariably dependent on whether supply chains are able to be relocated in their entirety, which would require manufacturers to negotiate with all of their suppliers and customers. A consensus must be achieved between all parties before they are able to relocate production.


1. intensify phr.

越演越烈 (yue4 yan3 yue4 lie4)

2. war of attrition phr.

持久戰 (chi2 jiu3 zhan4)

3. head for the exit phr.

出逃 (chu1 tao2)

4. supply chain phr.

供應鏈 (gong1 ying4 lian4)

5. production capacity phr.

產能 (chan3 neng2)

6. which course of action to take phr.

何去何從 (he2 qu4 he2 cong2)

7. magicked out of nowhere phr.

從無到有 (cong2 wu2 dao4 you3)

According to Chang, the completeness of Taiwan’s supply chains and its close proximity to China means that manufacturers will find it relatively easy to relocate production back to Taiwan. Chang adds that Taiwan is an excellent choice for businesses whether they intend to source a new supply chain in Taiwan or continue working with existing suppliers which have yet to move out of China.

However, the cost of land in Taiwan is relatively high and businesses will also have to deal with other challenges, including importing labor from abroad. Chang emphasizes that some large Taiwanese manufacturers already operate manufacturing plants in Taiwan, while smaller-sized businesses will find that it is relatively easy to acquire land and set up a water and electricity supply. Therefore, if companies are able to satisfy their labor requirements, says Chang, then they should find “reshoring” to Taiwan is in fact a smooth process.

By comparison, if Taiwanese businesses relocate to Southeast Asian countries such as Indonesia, India or Thailand, one consideration worth bearing in mind is that it may not be possible to move entire supply chains. Chang says that a supply chain cannot be magicked out of nowhere and transportation lines will necessarily be longer. If a manufacturing company’s upstream and downstream suppliers remain in China, the problem of increased transportation costs will also need to be factored in, says Chang.

As for Taiwanese manufacturers relocating to the US, Chang says that due to the relatively high costs involved, only companies with a truly global presence are able to shoulder the financial burden, such as Formosa Plastics or Hon Hai Precision Industry Co (also known as Foxconn). Since regulations and requirements differ from state-to-state in the US, Chang says the MOEA’s Industrial Development Bureau provides help to Taiwanese companies such as obtaining information, negotiation assistance and facilitating Taiwanese companies’ participation in US investment events such as the recent Select USA investment summit.

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