The Island nation that led the way into China is playing a key role in creating options off the mainland. The shift in focus is convincingly explained by the U.S.-China trade war which has forced companies in not only high-tech but also more basic metal fabrication industries to reorganize their supply chains out of China to avoid hefty U.S. tariffs.The coronavirus pandemic is only expected to accelerate the shift.
Taiwan’s manufacturers have found themselves at the forefront of the global push to move supply chains out “the world’s factory” as rising tensions between Washington and Beijung fuel change. Global politics is not only the factor affecting the shift as the cost advantage of producing in mainland China has narrowed.
An estimated 700,000 to 1 million Taiwanese entrepreneurs have sought their fortunes on the People’s Republic.
Taiwan is now looking inward. Cross-Strait Taiwanese investment. Even as Taiwanese investments have continued to flow into the mainland.Taiwan has not become complacent. Taiwan is also investing in other parts of Asia. In the first 10 months of 2019, Taiwanese firms poured more than US $1.2 billion into Vietnam, up 56% from a year earlier. Taiwan and Vietnam have signed a new version of a bilateral investment agreement (BIA) in a bid to provide better protection for Taiwanese investors in the Southeast Asian country.
These Taiwanese businesses are providing more than investment capital but are also providing knowledge in terms of tool and die making, organizational management, manufacturing engineering and quality assurance- very reminiscent of what we observed 25 years ago when Taiwan played a key role in bringing this expertise into China. They are developing these needed manufacturing competencies by relocating engineers from Taiwan to train local engineers and perform the needed jobs.
What does this mean for Global supply?
Vietnam like most of Southeast Asia is a work in progress, as few firms, even those owned by Taiwanese, have yet developed the depth of skills now provided by their counterparts in the Peoples Republic of China.
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