Taiwan firms in mainland China turn ‘more cautious’ with investments as cuts and offshoring increase, survey finds
- Geopolitical tensions, coupled with a weakened and more uncertain business environment on the mainland, keep taking a toll on investor confidence among Taiwanese
- Analysts have also flagged that higher US tariffs on Chinese exports keep pushing manufacturers toward other Asian manufacturing hubs, including Vietnam
Taiwanese firms, a historical source of capital for mainland China, have grown extra cautious when it comes to expanding those investments, and many are also considering capacity cuts or offshoring as they seek safeguards against geopolitical risks.
About two-thirds of Taiwanese firms in mainland China plan to sustain their current levels of investment over the next three to five years, but the number planning to make cuts is twice that of those anticipating increases, according to a recent industry group survey.
The Taipei-based Chinese National Federation of Industries, an industrial association that represents most Taiwanese manufacturing businesses and comprises 158 separate trade organisations, said that 21.5 per cent of surveyed investors expected to cut back assets while 10.6 would add them. It also found that 41.6 per cent of respondents planned to reduce staffing, and 38.7 per cent were looking to reduce capacity.
“This shows that manufacturers are worried about market prospects and are becoming more cautious about investing in the mainland,” the federation said in a summary of the survey conducted last year.
Meanwhile, hitches in the Chinese economy, concerns about any potential impacts from a military conflict, and the enduring impact of geopolitical tensions – including from the US-China trade war – are said to be underpinning the decisions of Taiwanese businesspeople with regard to the mainland.
