One of Taiwan’s largest lenders is shifting its business and hiring focus to Southeast Asia as its corporate clients in high-tech and textile manufacturing seek to diversify supply chains away from China amid geopolitical tensions.
Cathay United Bank Co (國泰世華銀行) from 2020 to last year boosted headcount in Vietnam by 75 percent and increased hiring by more than a third in Singapore, according to Benny Miao (苗華本), the head of Southeast Asia for Taiwan’s second-largest lender by assets, which is a part of Cathay Financial Group Holding Co (國泰金控).
The lender’s expansion plans have “literally switched positions” with China, Miao said in an interview, pointing to Vietnam, Indonesia and Cambodia as focus countries.
Photo courtesy of Cathay Financial Holding Co
“We’re looking at where else our customers are going,” he said. “That’s a large component of what’s going to determine what we want to do and how big of an investment we’re going to make in each of these relative markets.”
The moves come as suppliers in Asia are under pressure to diversify production lines away from China — the “world factory” home to the majority of manufacturing capacity for everything from sneakers to smartphones.
The shift emerged during the US-China trade war in 2018, and has intensified in the aftermath of COVID-19 and increased geopolitical wrangling.
“Economically speaking, China is still a market,” Miao said. “But more and more attention now is focused elsewhere.”
Taiwanese companies, traditionally among the biggest investors in China, have also been pulling back because of increased competition and rising labor costs. More recently, manufacturers have been moving out because their customers are asking for diversification away from China, which is accelerating the shift, Miao said.
“A lot of their buyers are either European or American, so they’re giving them instructions that say, ‘I need you to do plus one,’” he said, referring to the business strategy of avoiding only investing in China. “I think that’s what’s really driving it.”
Cathay’s moves are in tandem with a measurable shift away from China by Taiwanese banks, which have slashed their exposure to the world’s second-largest economy to the lowest level in at least a decade. Total lending, investments and interbank transactions in China by Taiwanese banks fell 18 percent in the first quarter of this year.
More broadly, Taiwanese companies cut new investments in China by 14 percent last year from a year earlier. Investments to Southeast Asia, on the other hand, have grown to nearly half of Taiwan’s total foreign investments, according to a report from the Ministry of Economic Affairs.
Cathay Financial reported a drop in first-quarter profits due to increased foreign currency hedging costs and lower investment gains, according to a company presentation. Profitability in the banking arm, however, rose 33 percent to NT$9.2 billion (US$293.1 million) compared with the same period last year.
Most of Cathay’s business in Southeast Asia is focused on corporate banking, according to Miao. For its business clients, the bank provides services such as financial registrations, local government engagement and legal consultation.
Other banks are also trying to take advantage of capital flows between China and Southeast Asia. Singapore’s second-largest lender, Oversea-Chinese Banking Corp (華僑銀行), recently released a target to boost revenue from business between Greater China and Southeast Asia.
SELL-OFF: Investors expect tariff-driven volatility as the local boarse reopens today, while analysts say government support and solid fundamentals would steady sentiment Local investors are bracing for a sharp market downturn today as the nation’s financial markets resume trading following a two-day closure for national holidays before the weekend, with sentiment rattled by US President Donald Trump’s sweeping tariff announcement. Trump’s unveiling of new “reciprocal tariffs” on Wednesday triggered a sell-off in global markets, with the FTSE Taiwan Index Futures — a benchmark for Taiwanese equities traded in Singapore — tumbling 9.2 percent over the past two sessions. Meanwhile, the American depositary receipts (ADRs) of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock on the TAIEX, plunged 13.8 percent in
A wave of stop-loss selling and panic selling hit Taiwan's stock market at its opening today, with the weighted index plunging 2,086 points — a drop of more than 9.7 percent — marking the largest intraday point and percentage loss on record. The index bottomed out at 19,212.02, while futures were locked limit-down, with more than 1,000 stocks hitting their daily drop limit. Three heavyweight stocks — Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Hon Hai Precision Industry Co (Foxconn, 鴻海精密) and MediaTek (聯發科) — hit their limit-down prices as soon as the market opened, falling to NT$848 (US$25.54), NT$138.5 and NT$1,295 respectively. TSMC's
ASML Holding NV, the sole producer of the most advanced machines used in semiconductor manufacturing, said geopolitical tensions are harming innovation a day after US President Donald Trump levied massive tariffs that promise to disrupt trade flows across the entire world. “Our industry has been built basically on the ability of people to work together, to innovate together,” ASML chief executive officer Christophe Fouquet said in a recorded message at a Thursday industry event in the Netherlands. Export controls and increasing geopolitical tensions challenge that collaboration, he said, without specifically addressing the new US tariffs. Tech executives in the EU, which is
In a small town in Paraguay, a showdown is brewing between traditional producers of yerba mate, a bitter herbal tea popular across South America, and miners of a shinier treasure: gold. A rush for the precious metal is pitting mate growers and indigenous groups against the expanding operations of small-scale miners who, until recently, were their neighbors, not nemeses. “They [the miners] have destroyed everything... The canals, springs, swamps,” said Vidal Britez, president of the Yerba Mate Producers’ Association of the town of Paso Yobai, about 210km east of capital Asuncion. “You can see the pollution from the dead fish.
RSS