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Taiwan Maneuvers in the Outsourcing Game
December 31, 1969 |Estimated reading time: 1 minute
By Meredith Courtemanche, assistant editor
"Outsourcing" has become a term intrinsically linked with China, but with several expansions, collaborations, and acquisitions, Taiwan is emerging as a diverse, lucrative region for contract manufacturing. What are Taiwanese companies doing? Outsourcing to China, of course. With easy access to the mainland and proximity to the established trade infrastructure that recedes inland from Hong Kong, Taiwan's enterprising companies may establish a presence as intermediaries of trade between the West and China.
Several companies native to Taiwan are outsourcing to eastern China. EMS provider Hon Hai Group of Taipei, Taiwan, has opened its second China facility, producing optical components in the Shanxi province. Shanxi is farther inland than the company has previously ventured for electronics production. A group of Taiwan-based flexible circuit producers are clustering production in eastern China. For more on this story, read Taiwan's Flex Companies Cluster in East China.
In a recent acquisition, materials supplier Henkel cited customer migration to Taiwan as a top reason for buying up a Taiwanese company, Accurus Scientific Co. Ltd. If assemblers are moving to the region, suppliers will want to stay near by, noted Doug Dixon, Henkel representative. For details on this acquisition, click here.
Unlike China, Taiwan's economy is openly capitalist with more privatization and less governmental limitations on investment and trade than China. However, the complex historical and ethnic relationship between the two countries is current and ongoing, which bears recognition in economic relations with either state. "Cross-straights" tensions can lead to economic backlash between the neighboring countries, though both call for diplomacy and mutual encouragement.
In late September, the China Economic News Service (CENS), out of Taiwan, reported that statistics interpreted by the Ministry of Economic Affairs showed investments in mainland China rising from Taiwan-based electronics firms, despite a general trend of diminishing interest. The report found that Taiwan's companies applied for about US$4.592 billion in investments on the mainland in the first eight months of 2006, up about 28% from last year. Huang Chin-tan, executive secretary of the Investment Commission under the ministry, stated that electronics companies receive investment incentives from China's county- and city-level governments.