In anticipation of a tougher global business environment, China-based Taiwanese companies should focus on their core businesses to stay competitive while expanding domestic demand in China to offset possible losses in their export markets, analysts said yesterday.
“Chinese markets now present the biggest opportunities to China-based Taiwanese businesses,” said Kenneth Cheng (鄭克家), head of the Hongkong and Shanghai Banking Corp’s (HSBC, 匯豐銀行) commercial banking.
He made the remark at the launch of Top 1,000 Taiwanese Corporations in China 2008, which was compiled by China Credit Information Services Ltd (CCIS, 中華徵信) and sponsored by HSBC.
Cheng said firms doing businesses in China will face many challenges this year.
China’s tightening credit policy has reduced the chances that China-based Taiwanese businesses will be able to secure bank loans, while rising labor and raw material costs and a cut in tax rebates from 13 percent to 5 percent threatens their survival.
“The large reduction in the tax rebates is the main reason behind the failure of some Taiwanese businesses there,” he said.
Cheng said firms should reduce capital spending by liquidating idle assets while making their China-based subsidiaries financially transparent to earn the trust of Taiwanese banks.
CCIS editor-in-chief Liu Jen (劉任) said export-oriented businesses in China should look for ways to tap China’s domestic markets. But he voiced concern about China’s ability to sustain its economic growth after the Olympics, although the company expects China to deliver an 8 percent GDP this year.
Meanwhile, CCIS general manager David Chang (張大為) praised the government’s decision to relax the cap on Taiwanese companies China-bound capital from 40 percent of their net value to 60 percent.
“Businesses know where to go and what is best for them,” Chang told a luncheon organized by the European Chamber of Commerce Taipei (ECCT).
ECCT chairman Philippe Pellegrin said the chamber was very pleased to see such policies, adding that “it was in the right direction.”
As a strategy against inflation, James Huang (黃維祝), chairman of Roma & United International Group (羅馬磁磚), said yesterday that his tile company focuses on high-end customers, allowing sales to continue to grow despite the economic slowdown.
Roma, which entered the Chinese market 15 years ago, was one of the top 1,000 Taiwanese corporations in China last year, the CCIS’ annual survey showed.
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