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Taiwanese firms losing interest in China: MOEA

Ministry of Economic Affairs sees marked decrease in China inquiries, increase in Southeast Asia inquiries

File Photo: Foxconn Factory, August 2015.

File Photo: Foxconn Factory, August 2015. (AP photo)

TAIPEI (Taiwan News) – According to statistics by Taiwan's Ministry of Economic Affairs (MOEA, 經濟部), a host of Taiwanese firms are considering moving some of their manufacturing bases out of China, in response to the U.S.-China trade war, reported CNA.

According to MOEA statistics, the ministry received a marked decrease in advice sought about doing business in China, which may suggest Taiwanese businesses are looking southbound.

The U.S.-China trade war is bringing about significant uncertainty for both businesses and markets, as retaliatory escalation of tariffs on a host of goods is dragging more countries into the fray.

According to the survey by MOEA's Investment Commission, 40 percent of inquiries related to investment in China, and 60 percent about Southeast Asia from January to August. Historically, inquiries about China accounted for around 60-70 percent of total inquiries.

According to the MOEA survey, Taiwanese bicycle, electronics and textile firms are most at risk from the ongoing U.S.-China trade war. On the other hand, Taiwanese machinery, petrochemical and steel firms are least likely to be affected from the trade war.

Major Taiwanese bicycle company, Giant, announced in July that the company will set up a European manufacturing hub to reduce its reliance on China.

Meanwhile, a string of Taiwanese electronics firms including Delta Electronics, New Kinpo Group, and Merry Electronics have began to switch some of their Chinese manufacturing to Southeast Asia, as they prepare for the trade war to enter into practice.

An unnamed official was quoted by CNA as observing that some Taiwanese bicycle and electronics companies have increased or restarted manufacturing in Taiwan, while others are bracing for the effects of the trade war.

Minister of Economic Affairs, Shen Jong-chin (沈榮津) said that if the trade war escalates, Taiwanese businesses might withdraw from China as a result.

Research director at economics think tank Chung-Hua Institution for Economic Research (中華經濟研究院), Liu Meng-chun (劉孟俊) told CNA that capital outflows from China is an existing trend, due to changes in the Chinese business environment including increasing labor costs, and strengthening of the U.S. dollar.

MOEA's Department of Investment Services head, Chang Ming-pin (張銘斌) told CNA that many Taiwanese firms are leaving China primarily because of the changes in business environment.