The Ministry of Economic Affairs last week reported that Taiwanese firms’ outbound investments approved by the Department of Investment Review last year reached a new high, totaling US$48.59 billion, led by Taiwan Semiconductor Manufacturing Co’s huge investments in the US and Japan. The data also showed that approved outbound investments to China were US$3.65 billion, which for the third consecutive year was lower than those to countries covered under the government’s New Southbound Policy at US$8.72 billion. The figures show that Taiwanese companies are continuing to reposition themselves amid the reorganization of global supply chains, while increasing their investments in the US, Europe, Japan and New Southbound Policy countries to diversify risk.
China-bound investments have been on a downward trend in the past few years. Last year’s US$3.65 billion was not only lower than the US$4.1 billion recorded in 2019 following a US-China trade spat, but its proportion of the total approved outbound investment was also substantially down to 7.51 percent, from 11.42 percent in 2023 and 33.62 percent in 2022. More Taiwanese firms are pursuing a “China Plus One” investment strategy to realign supply chains and avoid overconcentration on China, where political and economic risks have increased due to a slowdown in its economy, a rise in production costs and stricter national security controls. Countries in South and Southeast Asia, along with the North American market, are poised to be prime destinations for Taiwanese firms adopting the strategy.
Several Taiwanese firms are also following in the footsteps of their foreign peers in speeding up their withdrawal from China. For example, on Dec. 30 last year, silicon substrate maker Kinsus Interconnect Technology Corp announced the sale of an 80.5 percent stake in its Chinese substrate unit, Kinsus Interconnect Technology Suzhou Corp, and 100 percent of its Chinese printed circuit board business, Piotek Computer (Suzhou) Corp. It said it would use the proceeds to pursue new investments in Taiwan and elsewhere in Asia.
The withdrawal of Taiwanese and foreign companies from China can be seen as part of a global business restructuring triggered by US-China disputes. This is also one of the reasons China’s unemployment rate remains high. If the trade spat between the US and China escalates during a second term of US President Donald Trump — who was to take office after press time last night — the Chinese economy would only worsen and more foreign companies would choose to move elsewhere. However, Beijing might intervene, and Taiwanese businesses would likely be the first to bear the brunt of any restrictions.
Foreign media recently reported that Taiwanese contract electronics maker Hon Hai Precision Industry Co, known internationally as Foxconn Technology Group and which is a major assembler for Apple Inc, has paused dispatching Chinese workers to its iPhone manufacturing plants in India, while those already there have been instructed to return to China. The company has also delayed shipping specialized manufacturing equipment from China to India, reports said. Some sources said that the Chinese government was behind the changes. If that is true, then clearly the Chinese Communist Party is starting to take measures to stop the “Chine Plus One” trend.
The disruptions at Foxconn’s operations in India come against the backdrop of long-standing border disputes and economic rivalry between China and India. If China seeks to limit Taiwanese businesses’ transfer of labor, technology and equipment to other countries, it would affect their operations in Vietnam, Thailand and Malaysia, where they have been gearing up for expansions. Besides considering how to adjust their global deployment, Taiwanese businesses operating in China also need to think about how to respond to this new challenge.
When US budget carrier Southwest Airlines last week announced a new partnership with China Airlines, Southwest’s social media were filled with comments from travelers excited by the new opportunity to visit China. Of course, China Airlines is not based in China, but in Taiwan, and the new partnership connects Taiwan Taoyuan International Airport with 30 cities across the US. At a time when China is increasing efforts on all fronts to falsely label Taiwan as “China” in all arenas, Taiwan does itself no favors by having its flagship carrier named China Airlines. The Ministry of Foreign Affairs is eager to jump at
In China, competition is fierce, and in many cases suppliers do not get paid on time. Rather than improving, the situation appears to be deteriorating. BYD Co, the world’s largest electric vehicle manufacturer by production volume, has gained notoriety for its harsh treatment of suppliers, raising concerns about the long-term sustainability. The case also highlights the decline of China’s business environment, and the growing risk of a cascading wave of corporate failures. BYD generally does not follow China’s Negotiable Instruments Law when settling payments with suppliers. Instead the company has created its own proprietary supply chain finance system called the “D-chain,” through which
Denmark has consistently defended Greenland in light of US President Donald Trump’s interests and has provided unwavering support to Ukraine during its war with Russia. Denmark can be proud of its clear support for peoples’ democratic right to determine their own future. However, this democratic ideal completely falls apart when it comes to Taiwan — and it raises important questions about Denmark’s commitment to supporting democracies. Taiwan lives under daily military threats from China, which seeks to take over Taiwan, by force if necessary — an annexation that only a very small minority in Taiwan supports. Denmark has given China a
Last month, two major diplomatic events unfolded in Southeast Asia that suggested subtle shifts in the region’s strategic landscape. The 46th ASEAN Summit and the inaugural ASEAN-Gulf-Cooperation Council (GCC)-China Trilateral Summit in Kuala Lumpur coincided with French President Emmanuel Macron’s high-profile visits to Vietnam, Indonesia and Singapore. Together, they highlighted ASEAN’s maturing global posture, deepening regional integration and China’s intensifying efforts to recalibrate its economic diplomacy amid uncertainties posed by the US. The ASEAN summit took place amid rising protectionist policies from the US, notably sweeping tariffs on goods from Cambodia, Laos and Vietnam, with duties as high as 49 percent.
RSS