One-third Taiwan firms in China face closure: report

Taiwan’s intelligence chief on Thursday yesterday warned that one in every three Taiwanese companies based on the mainland  in China are facing closure this year due to rapidly falling decreasing profits, media reports said.

Another 30 per cent of Taiwanese firms are also “struggling” on the mainland, in China, Tsai Der-sheng, head of the National Security Bureau, told a parliamentary session without giving details, the United Evening News reported.

“There is both risk and opportunity to invest in China.

“However, we cannot deny the benefits of economic exchanges between Taiwan and China despite the growing risks,” he was quoted by Taiwanese news radio BCC as saying.

The bureau’s officials were not immediately available for comment.

Taiwanese firms are have been facing rising labour costs on the mainland in China since 2008 under new rules requiring fewer working hours and higher pay, according to a report by the bureau cited by the media.

“This year is particularly grave for Taiwanese businesses amid rising wages and growing production costs in China due to new government rules.

“Also the general investment climate is worsening under global economic problems,” said William Chao, secretary-general of Dongguan Taiwanese Businessmen Investment Association. in southern China.

Taiwan and China split in 1949 at the end of a civil war, and Beijing has refused to renounce its the use of force to take the self-ruled island if necessary.

Despite lingering tensions, Taiwan has been a major investor on the mainland in China in recent years, providing more than US$100 billion in financing.

That’s according to some estimates, as well as crucial technological know-how.

Last year, the island’s authorities approved 575 mainland-bound China-bound investment cases totalling US$13.1 billion, officials said.

Ties between the two sides have improved markedly since the Beijing-friendly Ma Ying-jeou took power in Taiwan in 2008, leading to the signing of 18 deals to boost trade and civil exchanges.