Taiwan companies leave China for ASEAN
Last year, for the first time, Taiwan companies invested more in the 10 countries of Association of Southeast Asian Nations (ASEAN) than in China. These countries are setting up a new global supply line that can make them a second “factory of the world”.
The Taiwan firms are moving because of the escalating U.S.-China trade war and high tariffs, the demands of their customers, higher production costs in China and worsening Beijing-Taipei relations which have led to penalties for them.
Darfon Electronics Corp is building two factories, each of 90,000 square metres, one outside Hanoi and the other outside Ho Chi Minh City, to make computer keyboards and electric bicycles. They will open in the third quarter of this year.
“We are doing this to meet the demands of our clients, who want to avoid the rising tariffs between the U.S. and China,” said Su Kai-chien, Darfon chairman. “Electronics production in North Vietnam is moving to replace China as the factory of the world.”
Darfon’s products include laptop keyboards, desktop keyboards and IT accessories to gaming products. It is the world’s largest manufacturer of laptop keyboards, according to its website. In the mainland, it has factories in Chongqing, Suzhou and Huaian, Jiangsu province. Its headquarters is in Taoyuan, Taiwan.
According to figures from Taiwan’s Ministry of Economic Affairs, in the first 11 months of 2021, investment by Taiwan firms in ASEAN was US$5.39 billion, accounting for 37.13 per cent of overseas investment, compared to 34.6 per cent of investment in China. In previous years, China always ranked number one.
The main countries benefitting from this investment are Vietnam, Thailand, Singapore, Malaysia, Philippines and India, with Singapore, Vietnam and Thailand the top three in terms of investment volume. A new model is forming for Taiwan firms – their factories in the mainland serve the Chinese market and those in ASEAN supply non-China clients.
The main products affected by the move are mobile telephones, printers, automobiles, servers and laptops, and other kinds of electrical and electronic products.
Taiwan has become the fourth largest foreign investor in Vietnam, after South Korea, Japan and Singapore.
The main trigger for this migration was the U.S.-China trade war which began in 2018, and the tariff barriers that resulted. Many Taiwan firms supply parts and components to major foreign companies, especially American ones. They see no easing of the trade war.
Taiwan firms are following the path of Samsung Electronics which has closed all its plants in China and moved their production equipment to new facilities in India and Vietnam.
Taiwan companies are also victims of the worsening relations between Beijing and Taipei after the election of Tsai Ing-wen as president in 2016.
Last November China imposed a fine of 474 million yuan on subsidiaries of the Far Eastern Group in China for reasons including the violation of rules in environmental protection at its factory.
“No one or any company is allowed to provide financial aid for ‘Taiwan independence’ secessionists while making money on the mainland,” said the Taiwan Affairs Office.
The fine stunned the Taiwan business community, because Far Eastern has always given financial donations to the Kuomintang, in addition to the Democratic Progressive Party. “I have always been opposed to the independence of Taiwan,” wrote its chairman Douglas Hsu in a letter to the United Daily News. “Like most Taiwanese, I hope cross-strait relations can be maintained at the status quo.”
Richard Leung, an investment consultant, said that the fine showed politics was taking precedence over good economic sense. “There are about one million Taiwan business people in China. They have developed close relations with the local governments and are natural allies of Beijing. Most vote for the KMT. Why antagonise them? This fine and this attitude will accelerate the flight out of the mainland.”
Another factor pushing Taiwan firms out of China is the “New Southbound Policy” launched by the DPP government in September 2016, to deepen co-operation between Taiwan and the 18 countries of ASEAN, South Asia and Australasia. It aims to lessen the island’s dependence on the mainland.
-
The hidden heroine behind GPS Dr. Winnie Tang
According to a report by investment bank Goldman Sachs, there has been an upward trend of women in the workforce around the world over the past 25 years, especially in Japan and Germany. However,
-
To Be Free Brian YS Wong
I have long been fascinated by the question – “What does it to be free?” Freedom is something both coveted and feared at once – much as absolute authority. To be free, and to be a maximal authority,
-
Wayne McGregor’s Deepstaria toured Hong Kong Kevin Ng
Sir Wayne McGregor, the resident choreographer of the Royal Ballet in London since 2006, also directs his own modern dance company, Company Wayne McGregor. Nine dancers from this troupe performed
-
LawTech strengthens Hong Kong’s position as a financial centre Dr. Winnie Tang
The Hong Kong Judiciary issued guidelines on the use of generative artificial intelligence (GenAI) earlier to judges and supporting staff, stressing that the use of technology should not “undermine
-
Living Life to the Fullest Brian YS Wong
I used to think I had lived life to the fullest. I now think I’m beginning to see what that in fact entails. I grew up in a culture that treasured hard work – industriousness was prized as a norm. To