Taiwan’s multinationals are expanding from Malaysia to Mexico as they tread water in mainland China
- An expansion of mainland operations among Taiwanese firms is ‘not on their radar’, as zero-Covid policy and geopolitical tensions fuel their shift away from China
- But even as they expand operations elsewhere in Asia and even as far as North America, Taiwanese investors still intend to keep their positions on the mainland
Taiwanese multinationals are in a tough spot – it’s simply too risky to expand their operations in mainland China, but it would be impractical to abandon the market entirely.
Instead, those with corporate expansion plans are increasingly picking other countries, from elsewhere in Asia to as far-flung as North America.
Yet, despite being beleaguered by business-crippling coronavirus restrictions on the mainland, coupled with considerable uncertainties in terms of cross-strait tensions and supply-chain disruptions, many Taiwanese multinationals that already have a mainland presence are still unwilling to suffer the potential costs of throwing in the towel.
In fact, this rollback of Taiwanese firms’ investments on the mainland is not a new trend. It started a few years before the pandemic but appears to have picked up this year as uncertainties and difficulties continue to stem from geopolitical feuds and the mainland’s zero-Covid policy.
Today, expansion in China is “not on their radar”, said Kent Chong, a partner with professional services firm PwC in Taipei, who noted how both coronavirus restrictions and “worsening” political relations have served to upend the plans of some Taiwanese firms.
Leaving China – the cost is undoubtedly huge, and it would be a last resort
In the five years before Covid-19 took hold, Taiwanese investments in mainland China saw steady annual declines, from nearly US$11 billion in 2015 to about US$4.2 billion in 2019, official figures show. There was a bump in both 2020 and 2021 as China’s coronavirus-control measures made it a more attractive destination for investments, with about US$5.9 billion in each of those years.