Wed, Feb 11, 2009 page3

• FEATURE : Taiwanese businesspeople cool on incentives

  ‘NOT A SUITCASE’ A survey found that almost 42 percent of China-based Taiwanese companies were on the verge of shutting down, but not many plan to return home

  • By Ko Shu-Ling / STAFF REPORTER
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  In a bid to salvage Taiwan’s export-driven economy, President Ma Ying-jeou’s (馬英九) administration has announced several economic revival packages, including offering incentives for China-based Taiwanese businesspeople to invest at home.

  But while many China-based Taiwanese companies have suffered because of the global economic downturn, not many seem interested in returning home.

  Joseph Chang (張文潭), deputy director of the Association of Taiwan Investment Enterprises on the Mainland, said he did not plan to relocate his business or invest at home.

  “Companies are not like a suitcase that you can easily carry around,” he said. “It’s a tough time and it would be difficult to move.”

  Liu Yu-hung (劉昱宏), who owns a zipper factory in Shandong Province, said the US-led economic slowdown had had a more immediate and noticeable impact on southern China than the north because there are more Taiwanese merchants in the south and most of the businesses in the south are export-based.

  Although things are difficult in China, Liu did not pin his hopes on the government.

  “You have no one else to depend on except yourself,” he said. “What can you expect from the government? It is at its wits’ end.”

  Chang, who owns a fabric-dying firm in Shaoxing, Zhejiang Province, said the worldwide economic slowdown had cut his export-based business by between 30 percent and 40 percent.

  As he did not anticipate the situation would improve any time soon, he said he was pessimistic about the future.

  However, he emphasized that although pessimists always look at the down side, they also prepare for the worst.

  “I think I will be fine even if the economy continues to be as bad as it is now for five more years,” he said.

  The latest study released by the Chinese National Federation of Industries found that China’s investment environment has been deteriorating rapidly.

  The China-based Taiwanese businesspeople interviewed by the federation said that about 42 percent of the companies they dealt with were on the verge of shutting down and about 58 percent had scaled back their manpower.

  Before the global financial crisis hit late last year, China-based Taiwanese businesspeople had already suffered because of a slew of new measures announced by the Chinese government, including a new labor law.

  The study showed that the new policy not only cut profit by at least 10 percent, but also drove up their costs by a minimum of 15 percent.

  The report also said that more businesses would close down in the first quarter of this year. More than 30 percent of respondents said they would not make any new investment and only 28 percent said they planned to expand their business.

  Liu’s business, which mainly exports to Europe and Southeast Asia as well as Taiwan, had dropped 30 percent, he said, but it began to rebound at the beginning of this year. However, he had to cut prices by between 20 percent and 30 percent to keep his business afloat.

  Liu tapped into the Chinese market about six years ago, when labor was cheap and costs were low. Cross-strait direct transportation links could cut transportation time and costs, but would not lower overall costs or drive up profits, he said.

  Despite rising costs in China, Liu said it was comparatively cheaper than at home. It was unlikely that a business like his, which is labor intensive, would invest at home, he said, adding that the government’s plan was more of a “slogan.”

  Eyeing the potential market of Chinese tourists, Liu said he would like to expand his business interests into tourism. He estimated the economy would improve in the first half of the year, which meant that the next six months would be a good time to get things up and running, he said.

  Tang Chin-hsiang (湯進祥) said he never thought of coming home to invest because China was almost like his second home.

  Since he opened his bakery in Changzhou, Jiangsu Province, about 16 years ago, Tang said his business was doing well. The worldwide financial crisis had a limited impact on his sales, which focused on the Chinese market.

  Soaring material costs did not affect his business either, he said, because ultimately customers would be the ones paying the price.

  Tang said the government could be of little help to him because his business is in China. If he had suggestions for the government, he said he would like to see more agricultural produce allowed to enter the Chinese market.

  It would also be a good idea to establish a “taxation protection zone” and further deregulate labor policies, he said.

  Dong Ssu-an (董賜安) said the financial storm had dealt a significant blow to his fish farming business in Tangshan, Hebei Province.

  While he exported 50 percent of his fish to Asia and sold the other 50 percent to the Chinese market, Dong said the export market had hit a snag since the latter part of last year.

  He had high hopes for the Chinese government’s plan to boost domestic consumption, he said. Aside from that, he was seeking a change.

  “I cannot depend solely on the Chinese government,” he said. “I must figure out a way to survive.”

  When Dong started his business in China five years ago, he said he was attracted by its cheap labor, enormous market and various incentives.

  But because of rising costs, Dong said he was interested in the Ma administration’s plan to entice China-based Taiwanese businesspeople to invest at home. He hoped to decide whether to do so by the end of this year.

  Dong said he would like to keep his roots in Taiwan and hopefully establish businesses in Ilan and Kaohsiung, provided government policies could make this possible.
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