The nation’s electrical engineering and machinery industry could consider Southeast Asia as a market for new demand, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said last week.
Given the region’s stable economic growth, demand from Southeast Asian countries would be more favorable in the long term, TIER senior analyst Wang Chung-ching (王忠慶) told a seminar organized by Taiwan Stock Exchange Corp (台灣證券交易所) on Wednesday.
As demand in Taiwan is unlikely to increase significantly in the near future, manufacturers need to seek new sales drivers in emerging markets while the government could help manufacturers find new buyers via existing channel networks, as many Taiwanese companies have operated in Southeast Asia for years, Wang said.
Taiwan’s exports of machinery equipment dropped 6.9 percent to US$19.4 billion last year from a year earlier, the fourth consecutive year of decline, data compiled by the Taiwan Association of Machinery Industry (TAMI, 台灣機械工業同業公會) showed.
Shipments to China and the US, the top two markets for local machinery makers, declined by 12.7 percent and 0.6 percent year-on-year last year respectively, TAMI’s data showed.
China was the destination for about 26 percent of all Taiwanese machinery exports last year, followed by the US, with 17.9 percent, while Southeast Asia accounted for 16.7 percent or US$3.24 billion, the TAMI data showed.
“The machinery industry’s exports have been stagnant since 2011, mainly dragged down by the sluggish demand after the global financial crisis [2008 to 2009],” Wang said, adding that challenges also comes from the supply side.
Local manufacturers face a rising competition from their global peers, such as Germany and China, who have used new technologies to enhance their capabilities.
Germany, which initiated the idea of “Industry 4.0” in 2011, has extended its focus to the computerization of manufacturing process in all its industrial sectors, Wang said.
Foreign exchange fluctuation is another drag on Taiwan’s exports, he said.
The dramatic depreciation of China’s yuan against major global currencies significantly hurt the industry last year, he added.
Local manufacturers should boost their niches in the global market through product differentiation, he said.
“Most machinery companies only provide individual machines or components. They should try to develop total solutions for end-market customers,” he said.
To raise the competitiveness of the nation’s traditional industries, the Taiwan Machine Tool & Accessory Builders’ Association (台灣工具機暨零組件工業同業公會) has said that it is seeking to cooperate with companies in different fields, including the semiconductor industry, to differentiate their products from those of their rivals.
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