TAIPEI (Taiwan News) — Taiwanese companies in China are reducing their operations in the communist country due to the Wuhan coronavirus' (COVID-19) continued impact on their bottom line, despite Beijing's claims that its economy has "recovered" after local cases were allegedly brought down to "zero."
A survey of 157 Taiwanese companies released by the Chinese National Federation of Industries (CNFI, 全國工業總會) on Monday (Oct. 5) found that 80 percent of the Taiwanese firms that participated have reported a decline in their investments and business operations in China, particularly small- and medium-sized businesses. The survey, which was carried out between July 7 and Aug. 25, found that the pandemic caused impeded labor flows and logistics, losses of overseas orders, and an inability to perform transactions on time.
The federation said that traditional industries were more severely affected by the pandemic, with more than 90 percent having suffered a contraction and 70 percent involved in telecommunications and electronics experiencing a downturn. Despite Beijing's claims of an economic rebound, only 49.2 percent of Taiwanese companies reported a return to 70 percent of production capacity, while 6.9 percent said their plants were still shuttered.
The survey found that nearly 60 percent of Taiwanese companies operating in China had responded to the pandemic by "reducing the scale of production lines and postponing scheduled investments," while others took measures such as "implementing work from home" and "implementing unpaid leave or reducing wages."
Most respondents believe that the impact of the pandemic will continue for another half year, and 65.7 percent of Taiwanese companies investing in China believe market conditions in the second half of the year are "not too optimistic" or "extremely pessimistic." Due to the uncertain prospects, nearly 80 percent of responding companies said they will not increase the scale of their investment in China for the next two years.
"It is obvious that Taiwanese companies investing in the mainland have room to move back to Taiwan," wrote the federation.
The report then pointed out that the Taiwanese business community recognizes the Taiwanese government's achievements in combatting the coronavirus in Taiwan. However, because more than 60 percent of Taiwanese companies have investments in China, they fear Taiwan's economy could suffer a "tsunami-like impact" if aid is not provided by their government.