Wednesday, July 27, 2005

Yuan Changes Seen Forcing Taiwan investors to Relocate

Facing rising costs for the last decade, some Taiwan investors may relocate to other countries:

According to Chinese National Association of Industry and Commerce Chairman Huang Mao-hsiung, China's 2 percent revaluation of its currency, which puts the renminbi at 8.11 to the U.S. dollar, will cause an impact on export-oriented Taiwan companies operating in China, and the extent of follow-up consequences will depend on business scale and management capacities.

Although Huang acknowledged that the pickup in the value of the renminbi is not expected to slow the investment pace or long-term market deployment by Taiwan businesses in China, he said that some Taiwan enterprises that set up operations both in China and countries in Southeast Asia are mulling the possibility of relocating to other countries.

Operating costs in China have been mounting since about 10 years ago, and the further strengthening of the renminbi is set to slash Taiwan businesses' profit margin, a situation that has led many Taiwan companies to consider relocations, a Taiwan investor said.

If this becomes a trend, how will it affect Cross-Strait tensions? The Taipei Times reports that China will probably gradually let the Yuan rise 10-15%. Just a 2% rise in the Yuan triggered shifts in Taiwan investment....

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