Taiwanese enterprises have struggled for years to enter China, but now, just when access to the Chinese market is becoming easier than ever, many are paradoxically heading back to their home country.
One of them is Taipei-based restaurant giant Namchow Group (南僑集團), which was a relative late-comer in China, but is an early bird in the reverse drive back across the Taiwan Strait.
“Taiwanese people’s income is higher,” said Alfred Chen (陳飛龍), chairman of the group, which derived about half of last year’s NT$9.6 billion (US$325 million) in revenues from Taiwan.
“Besides, local consumers provide us with valuable experience regarding emerging consumption habits,” added Chen, whose company is maintaining its China operations while boosting those at home.
Chen is building a culinary empire in Taiwan centered around a German and a Chinese restaurant chain, plus he is planning to modernize his edible oil and fats plants in Taiwan at a cost of NT$500 million.
Cheng Shin Rubber Industries (正新橡膠), a tire maker with plants in China, Vietnam and Thailand, -invested NT$10 billion at home last year to boost its local capacity and plans to spend another NT$20 billion over the next two years.
“The investments are aimed to boost the manufacturing capacity of our high-price items,” company spokesman Wu Hsuan-miao (吳軒妙) said.
This appears to be the beginning of a broader trend. Taiwanese companies with a majority of their business in China invested NT$40.9 billion at home last year, a tripling of the figure in 2007.
“There are signs that such investments are on the rise,” said Tristan Lu of the Taiwan Institute of Economic Research (台灣經濟研究院), a private think-tank based in Taipei.
It is somewhat ironic that this should happen now, at a juncture in history when China and Taiwan are getting friendlier than ever and have started removing many of the remaining obstacles to business.
When Taiwanese companies started funneling funds out of the country in the 1980s, they were attracted by China’s cheap labor and land prices, but they acted without government permission.
Since then, however, they have got the official stamp of approval and President Ma Ying-jeou’s (馬英九) administration is promoting -economic exchanges more -actively than ever.
China does still attract large Taiwanese funds, with enterprises from Taiwan investing US$6.7 billion in China last year, according to the Chinese Ministry of Commerce.
However, at the same time, China’s investment climate has changed dramatically, investors say, as skyrocketing labor costs, a new business income tax and a more cumbersome labor contract law combine to sour the outlook.
“Lots of Taiwan-invested companies have been forced to close their plants there,” said Ling Chia-yu (凌家裕), the head of the Ministry of Economic Affairs’ Department of Investment.
However, Taiwan-invested companies that are getting less -enthusiastic about China may find that returning home is not a solution to their woes, analysts said.
“Those companies, mostly small ones without competitiveness, won’t be able to survive in Taiwan even if they come back,” said Tung Chen-yuan (童振源), an expert on China-Taiwan economic ties at National Chengchi University.
“Their only chance is if they can upgrade their industrial technologies, but that might be very hard considering their modest scale,” he said.
So most of them have either moved to Southeast Asia or provinces in western China where labor cost is cheaper, he said.
Other investment barriers are the decades-old restrictions that have barred Taiwan from further liberalization and internationalization, Tung said.
“Poor,” Chen said when asked to comment on Taiwan’s investment environment. “There is much the government needs to do.”
This was disputed by government officials, who argued the government has provided a full range of benefits to potential investors coming back from China. They include tax reductions, loans and assistance in the acquisition of land, the officials said.
Intel Corp has landed Microsoft Corp as a customer for its made-to-order chip business, marking a key win for an ambitious turnaround effort under chief executive officer Pat Gelsinger. Microsoft plans to use Intel’s 18A manufacturing technology to make a forthcoming chip that the software maker designed in-house, the two companies said at an event on Wednesday. They did not identify the product, but Microsoft recently announced plans for two homegrown chips — a computer processor and an artificial intelligence (AI) accelerator. Intel has been seeking to prove it can compete in the foundry market, where companies produce custom chips for clients. It
AI EFFECT: Nvidia CEO Jensen Huang moved up to 21st on the Bloomberg Billionaires Index on Thursday after his wealth skyrocketed by US$9.6 billion to US$69.2 billion The artificial intelligence (AI) mania sparked by Nvidia Corp’s sterling results has given a lift to Asia’s major chipmakers, but it has not closed the valuation gap with their US peers. A Bloomberg gauge tracking Asia’s top semiconductor firms, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co, widened its under-performance against the Philadelphia Semiconductor Index this week. While the Asian index trades at 17 times forward earnings, the US measure is at 27 times, pushing the gap close to a record after Nvidia’s blowout revenue outlook reinforced investor conviction in the boom in generative AI use. Nvidia’s 8 percent
The arrival of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in Japan’s Kumamoto Prefecture marks the regaining of the area’s pivotal position established during the Meiji Restoration in the 19th century, a local business leader said in an interview with CNA. The first fab of Japan Advanced Semiconductor Manufacturing Inc (JASM), TSMC’s majority-owned manufacturing subsidiary in Kumamoto, is set to open today. After the 1868 Meiji Restoration, Kumamoto was of key importance as it was home to a major garrison national defense. However, that position was ceded to Fukuoka after World War II as Japan turned to foreign trade for post-war economic development,
The sound of gentle tapping filled a jewelry workshop in southern China as a craftsman hammered pine-leaf patterns onto a soft slab of gold in the style of old ink paintings. Elaborate traditional pieces created by master goldsmiths have always been popular in China, bought as gifts for special occasions such as the Lunar New Year or simply as investments. But jewelers are now having to consider a new and fast-growing consumer base — younger people, who are increasingly keen to buy gold, seeing it as a safe investment in uncertain economic times. Key to gold’s popularity is China’s lackluster post-COVID-19 recovery, which