Jenny Hsu (許淑娥), marketing manager at a Taipei discount retailer, will be fired in a month. She's considering joining the growing number of Taiwanese workers moving to China to escape a shrinking job market at home.
"In Taiwan, it's hard to find a job," said Hsu, 40, who has worked at Makro Taiwan Ltd (萬客隆) for eight years.
"A lot of my former colleagues and college friends have moved to China," she said.
Taiwan is losing jobs as consumer spending flags and electronics makers such as Asustek Computer Inc (華碩電腦) and Inventec Co (英業達) move factories to China, where wages and land are cheaper. The exodus of jobs and investment is damping growth.
The economy probably expanded 3.4 percent in the fourth quarter last year from a year earlier, according to economists, after growing 4.8 percent the previous quarter. The government will release fourth-quarter and 2002 figures today.
Manufacturers' shift to China helped push the jobless rate to a record 5.2 percent last year and has drained cash from the country. Taiwanese investment in China rose about 39 percent in 2002 to US$3.86 billion, according to the Ministry of Economic Affairs' Investment Commission. Overseas investment dropped by more than a third to US$3.27 billion, the commission said.
China attracted a record US$52.7 billion in overseas investment last year. Its economy expanded 8 percent, the fastest in Asia.
Asustek said last week it will fire about 1,000 workers at home, or a seventh of its staff, as it moves production lines to China. Asustek said cost savings from the move this year alone will exceed the cost of firing its local workers.
Inventec, the nation's notebook-computer maker, said in December it would trim about 500 jobs, or a quarter of its workforce. It plans to produce four-fifths of its computers this year at the Shanghai factory, where a computer costs about US$6 less to make -- up from half last year.
Taiwanese companies are reluctant to invest at home, even after the central bank cut its key interest rate 14 times between December 2000 and November 2002 to a record 1.625 percent. Lending by the nation's biggest financial institutions fell in December from a year earlier for an 18th month, according to the central bank.
"We are worried that corporate customers aren't borrowing money and are only seeking refinancing," said Steve Chou (周榮生), corporate finance chief at Chinatrust Financial Holding Co (中信金控).
Companies' shift to China is partly to blame for the drop in lending, he said.
Consumer prices fell 0.2 percent last year as stores offered discounts to attract customers reluctant to spend.
To reduce unemployment, the government is seeking legislative approval for a NT$70 billion (US$2 billion) public-works program aimed at creating 75,000 jobs.
Exports of mobile phones, computer chips and other goods probably fueled fourth-quarter economic growth -- rising 10 percent from a year earlier, according to figures released earlier -- as investment and spending flagged. Exports account for about half of the country's GDP.
That growth partly reflects the shift in production to China from Taiwan. China overtook the US last year as Taiwan's biggest overseas market, absorbing about a quarter of the nation's exports, as Taiwanese companies shipped more parts to China for assembly at their Chinese factories.
Taiwan-based companies aren't just using China as a cheap manufacturing base. They're also targeting the Chinese market, where incomes have doubled in the past five years, spurring the country's 1.3 billion consumers to buy more mobile phones, computers and cars.
China Motor Co (中華汽車) expects its factory in China's Fujian Province to double sales to about 100,000 vehicles and contribute NT$4 billion to profit this year.
Taiwan's export growth is already flagging as the prospect of war in Iraq curbs spending and investment worldwide. Exports rose 4 percent in January from a year earlier, slowing from a 14 percent gain in December. That may hinder efforts to reduce unemployment, analysts said.
"While the government's job-creation scheme might prove conducive to reducing unemployment, we believe that any improvement will still largely depend on how the export sector fares," said Damian Gilhawley, an economist at KGI Securities Co (中信證券), in a research report.
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