Tuesday, October 18, 2005

Taiwanese move as Guangdong's Importance Fades

India Monitor reports that Guangdong is encountering trouble as Taiwan companies pull out, leaving behind unpaid debt:

But in January, the factory's 2,000 Chinese employees took to the streets to demand the company pay four months in overdue wages. The protest ended up with the arrests of eight workers. About two months later, another Taiwanese-invested factory, owned by Compex, which produced outdoor furniture, unexpectedly closed after its Taiwanese managers left Chinawithout notice, leaving some 3 million yuan (US$370,924) in unpaid salaries and 300 million yuan in loans. The hasty nature of the two companies' departure, and they fact they wanted to leave at all, is a reflection of the changing dynamics of China's economic system.

And further...

While there is no data on the number of factories that have closed as a result of worsening conditions, customs figures show that Guangdong has slipped from the nation's leading exporting province to just eighth. Luo Huai-jia, an executive director of the Taiwan Electrical and Electronic Manufacturers' Association, said around 20% of the area's 4,000 Taiwanese manufactures have already withdrawn from the area, or would soon have to. An estimated 600 Taiwanese manufacturers, including Paragon and Compex, have pulled out of Shenzhen in the past two years alone.

Taipei-based accountants and economists have suggested that Taiwanese enterprises are slowly shifting toward China's Bohai Sea area in the northeast, while those who are seeking cheaper labor are looking at Vietnam. According to the Ministry of Economic Affairs, Taiwan's investments in Vietnam increased from $321 million in 2003 to $469 million in 2004 and reached $7,629 million total as of this June. Few of these businessmen, however, are considering returning to Taiwan, observers suggest

Shockingly, Taiwanese businessmen prove to have no civic responsibility:

Anna Lu, an accountant with KPMG, criticized Taiwanese businessmen for lacking social responsibility, noting that it was easy for Taiwanese businessmen to wire several hundred thousand US dollars of capital out of China, then claim bankruptcy without the government knowing about it. "There are reasons Taiwanese businessmen are not so welcome anymore," she said.

A blip? A trend? Probably the latter.

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