Investing overseas will not hollow out Taiwan's industries as many were concerned previously, and will further help the industries to grow, according to a report released yesterday by the Industrial Development Bureau.
The research, polling over 100,000 local companies during 1993 to 1999, was conducted by the ?Chung-hua Institute for Economic Research (CIER,
The report found that instead of negatively impacting the domestic economy, companies doing business overseas have helped to boost their revenues at home.
According to the report, revenues of companies doing investment outside Taiwan accounted for 41.5 percent of total sales of the polled enterprises in 1999, up from 33.1 percent in 1993.
The domestic fixed assets of manufacturers who moved part of their business overseas also increased from 39.7 percent in 1993 to 44.5 percent in 2000, the study said.
Furthermore, companies with overseas investment on average saw 18.28 percent growth in sales, while those who only conduct business in Taiwan reported 4.19 percent.
The same phenomenon was prolonged throughout 2003, the report said.
As a large number of companies are flocking to China to save costs, the report found the strategy did little to help the local economy, as those who put all their eggs in the Chinese basket only saw sales grow 47.89 percent in the 1993 to 2000 period, while companies invested elsewhere enjoyed 114.3 percent growth in earnings during the same period.
During the 10 months to October, trade between Taiwan and China rose 22.2 percent from a year earlier to US$37 billion, the Board of Foreign Trade said.
The total accounted for 17 percent of Taiwan's total external trade, compared with the 15.1 percent posted the year before, the bureau added.
But due to the similarity in language and culture, Taiwanese manufacturers operating in China tended to entirely replace Taiwan and make China their production base, which resulted in their miniscule contribution to the Taiwanese economy, the CIER report said.
Taiwanese companies operating in China have harmed the job market, cutting 7.8 percent of their Taiwanese staff over the 1993 to 2000 period, the report added.
In comparison, companies that invested in places other than China still shipped a large percentage of goods back to Taiwan for further processing.
Companies having investments abroad increased their Taiwanese staff by 11.2 percent during 1993 to 2000, while those having no overseas operations cut 2.6 percent of their staff in the same period, the report said.
The report concluded by saying the government should provide incentives for local companies to diversify their investments overseas to reduce risk and increase competitiveness, and that they should especially focus on countries outside China.
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