With US-China trade war weighing heavily on them, Taiwanese companies in China consider moving out of mainland

Southbound Policy

The Taiwanese government has launched its so-called “new Southbound policy” which, essentially, focuses on cooperation with Southeast and South Asia. The policy is designed to reduce dependence on China and tap the huge economic and trade potential inherent in the ASEAN region, particularly Malaysia, Indonesia, Singapore, Thailand and Vietnam, as well as India.

“With the rapid restructuring of the global supply chain, South Asia and the ASEAN have undergone incredible growth in recent years. Taiwan’s economy already has close links with the two regions. The ASEAN community is today the second largest export and investment destination for Taiwan,” the TAITRA President observed. The strategy adopted by many Taiwanese companies is to “operate from within the market”, a euphemism employed to suggest that Taiwan would have unimpeded access to a market if it sets up a manufacturing operation inside that market rather than merely export to it.

Commenting on the impact of the US-China trade tensions on Taiwan’s business, Yeh said that in the short-term, Taiwan’s companies may have to relocate their production operations, “but they could also benefit from new orders for electronics and machinery, for example, as a result of the shifting market”.

“In the mid- to long run, it would still be necessary for them to expand to other potential markets outside the US and China. Given their flexibility and resilience, Taiwanese companies are better equipped to work with interested partners, including from the ASEAN region, to develop markets outside the USA and China,” he said.