A US trade group has suggested that Taiwan leverage its strengths in high-tech manufacturing to position itself as a regional technology hub because more businesses would be willing to consider it as such when regular direct cross-strait flights commence.
“Numerous analysts say Taiwan’s best bet would be to leverage its existing strengths in high-tech manufacturing to position itself as a regional hub for technology-intensive industries such as ICT [information and communications technology] and biotech, though they caution that Taiwan has a window of about 10 years to accomplish this before cities in China start catching up,” the Taipei-based American Chamber of Commerce (AmCham) said in the cover story of its business publication, Topics.
Many Taiwan-based ICT companies are already playing important regional and even global roles, the report says, adding that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), for instance, is the world’s largest contract chip maker and that companies with head offices in Taiwan account for 80 percent of the world’s notebook computer production.
“In Taiwan, you have ready access to the electronic manufacturing chain and also access to distribution channels in China,” Peter Kurz, head of Taiwan research for Citi Investment Research, was quoted as saying.
“It’ll be the tech companies that draw foreign companies here, whether Japanese or Western,” he added.
Tristan Liu (呂曜志), an economist with the Taiwan Institute of Economic Research (台經院), reached the same conclusion about Taiwan’s prospects for serving as a regional center.
He views such a hub as encompassing tech-related downstream activity, such as chip packaging, venture capital firms and other financial services aimed specifically at technology companies, and other services such as recruiting and training.
Wang Jiann-chyuan (王健全), an economist with the Chung-Hwa Institution for Economic Research (中經院), estimates that 5 percent to 10 percent of Taiwanese companies based overseas intend to relocate more operations here because of the improvements in cross-strait ties and new, more stringent labor regulations that have been adopted in China.
Lim Tay Her (林泰禾), an analyst with Asia’s leading brokerage CLSA Asia Pacific Markets, notes that if 30 percent of the more than 1 million Taiwanese working in China return, added consumption would have a dramatic impact on the economy since most are highly paid professionals.
Besides technology expertise, Taiwan is also more attractive than Chinese locations in terms of living conditions, protection of intellectual property rights and employee loyalty — and, surprisingly, for costs in many cases. But it still needs to reduce government red tape to be competitive.
“We’ve found that the cost of running a business in Taiwan is actually slightly better than running the same business in other [Asian] locations — including things like cost of living, the cost of expatriate rent, office costs and manufacturing costs,” said Alan Eusden, chairman of AmCham and president of Corning Display Technologies Taiwan Co, a leading maker of glass substrate for liquid-crystal-display panels.
However, the report warns that inadequate infrastructure and the proliferation of red tape might be the two most daunting obstacles standing in the way of Taiwan becoming a regional operations hub.
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