Taiwanese machinery manufacturers facing US tariff challenges and unfavorable exchange rates must provide customized products or services to secure orders and regain customer loyalty, a Taiwan Association of Machinery Industry (TAMI) official said yesterday in Taichung.
“Taiwan’s machinery export market is shrinking,” the Chinese-language Liberty Times (the Taipei Times’ sister newspaper) quoted TAMI secretary-general Hsu Wen-tung (許文通) as saying on the sidelines of an international forum marking the 80th anniversary of the establishment of the association.
“We can no longer rely on price-performance ratios and after-sales services to retain customers, as exchange rate fluctuations pose a greater disadvantage to our products... Differentiation and customization are needed to attract customers and make it impossible for rivals to compete,” Hsu said.
Photo: Huang Hsu-lei, Taipei Times
For instance, some companies said that order visibility for customized semiconductor, woodworking and food machinery is clear through the first or the second quarter of next year, reflecting their still high international visibility and limited impact by exchange rate changes, he added.
From January to last month, Taiwan’s machinery exports reached US$23.26 billion, an annual increase of 6.6 percent. In New Taiwan dollar terms, the total was NT$725.07 billion, up 3.8 percent, the association’s data showed, an indication that the NT dollar’s appreciation this year has eroded the real growth of export value.
Taiwan’s price advantage — with machinery equipment priced 20 to 30 percent lower than Japanese products — has effectively disappeared, as from 2021 to Oct. 8, the NT dollar depreciated only 7.4 percent, compared with the yen’s 48.1 percent plunge, the association said in a statement.
Given unfavorable exchange rates, “Japan’s high-end products are almost all cheaper than Taiwan’s,” Hsu said.
A stronger NT dollar has an even greater impact than US tariffs, with the effect especially evident in machine tool exports, the association said.
From January through last month, Taiwan’s machine tool exports totaled US$1.52 billion, down 6.4 percent from US$1.63 billion for the same period last year, association data showed.
While competing with Japan and South Korea on the high-end segment, Taiwan’s machinery makers also compete with Chinese firms on the low to middle end.
However, after Chinese firms’ aggressive international expansion over the past few years and a spree of acquisitions of many European and US companies, the quality and output of Chinese products have increased rapidly, Hsu said.
In particular, China’s low-priced steel — only one-third of Taiwan’s — and lower production costs are also making it difficult for Taiwanese makers to compete with their Chinese peers in Southeast Asia, he said.
Speaking at the international forum, Vice Minister of Economic Affairs Ho Chin-tsang (何晉滄) said the Legislative Yuan on Friday passed the Executive Yuan’s special resilience budget, which includes a NT$46 billion (US$1.5 billion) spending plan proposed by the Ministry of Economic Affairs to help local industries bolster their resilience and competitiveness.
The ministry would step up efforts to help companies in terms of financial support, technology upgrading and talent development, as well as assist them in integrating artificial intelligence into their operations and entering global supply chains, Ho said.
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