Wed, Feb 11, 2009 - Page 3 News List

FEATURE : Taiwanese businesspeople cool on incentives

‘NOT A SUITCASE’ A survey found that almost 42 percent of China-based Taiwanese companies were on the verge of shutting down, but not many plan to return home

By Ko Shu-Ling  /  STAFF REPORTER

In a bid to salvage Taiwan’s export-driven economy, President Ma Ying-jeou’s (馬英九) administration has announced several economic revival packages, including offering incentives for China-based Taiwanese businesspeople to invest at home.

But while many China-based Taiwanese companies have suffered because of the global economic downturn, not many seem interested in returning home.

Joseph Chang (張文潭), deputy director of the Association of Taiwan Investment Enterprises on the Mainland, said he did not plan to relocate his business or invest at home.

“Companies are not like a suitcase that you can easily carry around,” he said. “It’s a tough time and it would be difficult to move.”

Liu Yu-hung (劉昱宏), who owns a zipper factory in Shandong Province, said the US-led economic slowdown had had a more immediate and noticeable impact on southern China than the north because there are more Taiwanese merchants in the south and most of the businesses in the south are export-based.

Although things are difficult in China, Liu did not pin his hopes on the government.

“You have no one else to depend on except yourself,” he said. “What can you expect from the government? It is at its wits’ end.”

Chang, who owns a fabric-dying firm in Shaoxing, Zhejiang Province, said the worldwide economic slowdown had cut his export-based business by between 30 percent and 40 percent.

As he did not anticipate the situation would improve any time soon, he said he was pessimistic about the future.

However, he emphasized that although pessimists always look at the down side, they also prepare for the worst.

“I think I will be fine even if the economy continues to be as bad as it is now for five more years,” he said.

The latest study released by the Chinese National Federation of Industries found that China’s investment environment has been deteriorating rapidly.

The China-based Taiwanese businesspeople interviewed by the federation said that about 42 percent of the companies they dealt with were on the verge of shutting down and about 58 percent had scaled back their manpower.

Before the global financial crisis hit late last year, China-based Taiwanese businesspeople had already suffered because of a slew of new measures announced by the Chinese government, including a new labor law.

The study showed that the new policy not only cut profit by at least 10 percent, but also drove up their costs by a minimum of 15 percent.

The report also said that more businesses would close down in the first quarter of this year. More than 30 percent of respondents said they would not make any new investment and only 28 percent said they planned to expand their business.

Liu’s business, which mainly exports to Europe and Southeast Asia as well as Taiwan, had dropped 30 percent, he said, but it began to rebound at the beginning of this year. However, he had to cut prices by between 20 percent and 30 percent to keep his business afloat.

Liu tapped into the Chinese market about six years ago, when labor was cheap and costs were low. Cross-strait direct transportation links could cut transportation time and costs, but would not lower overall costs or drive up profits, he said.

Despite rising costs in China, Liu said it was comparatively cheaper than at home. It was unlikely that a business like his, which is labor intensive, would invest at home, he said, adding that the government’s plan was more of a “slogan.”

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