Taipei: To meet post-Covid consumer demand, Taiwanese tech companies are expected to expand their operations into global markets unimaginable earlier this year as domestic talent becomes scarce and east-west supply chains disrupt. has more impact.

According to reports, the large Southeast Asian country has joined countries such as Australia, India, Japan and the United States as destinations for Taiwanese tech-intensive companies to manufacture products or provide services to local customers.

Taiwanese investors are still looking elsewhere for their expansion plans rather than packing up shop in mainland China, which has traditionally been their preferred destination due to its low costs and large market.

Also Read: Services exports to scale up USD 300 bn target for this fiscal, says Goyal

After moving some of their business online during the peak of COVID-19, many corporate clients in new markets are seeking assistance in digitizing a larger part of their operations.

Rupert Hammond-Chambers, president of the US-Taiwan Business Council, said Taiwanese businesses are "likely to expand their existing footprints outside China, including in the US, Vietnam, Singapore and Japan." All [countries] are probably going to benefit greatly from Taiwan's investment in FDI.

In the West, there is "growing pressure" to "seriously introduce alternative supply locations", referring to regions outside mainland China.

The push is also motivated by Taiwan's government policy, which includes funding priorities and restrictions on certain types of business activity on the Chinese mainland.

With assembly lines in Australia, India, Indonesia, Thailand, the Philippines and Taiwan in addition to its home market of Taiwan, Acer, the sixth-largest PC brand by market share, frequently collaborates with original design manufacturers.

However, the company's website refers to mainland China as its "primary production base". According to an Acer spokeswoman, the expansion is aimed at "increasing sales and increasing flexibility to meet local production needs, such as government tenders."

Gogolook, an 11-year-old Taiwanese company that makes anti-scam smartphone apps, is growing its 150-person workforce overseas, including in Malaysia and Hong Kong, as CEO Jeff Kuo said due to a declining supply of Taiwanese software engineers. There is a possibility of expansion of the markets there.

According to him the birth rate has become less than the death rate. This is a very serious structural issue. Taiwanese engineers change jobs frequently because it is easier for them to find employment elsewhere, he continued, despite the fact that much of the company's work can be accomplished remotely, including offshore.

In 2017, Taiwan's population decreased by 110,674 individuals as a result of historically low birth rates and highest levels of death. As a result, the government's National Development Council set a target of hiring 400,000 more foreign workers in September.

To ensure he can find clients and funding in other parts of the world, Kuo's company has branched out from the Chinese mainland, which he claimed is believed to be the source of some scams targeting his apps. We do.

In the third quarter of 2022, Taipei-based software-as-a-service provider Appier sees revenue from the US, Europe and the Middle East grow more than sevenfold year-over-year, and total revenue to account for 13% of the company's net profit .
Yu Chih-han, co-founder and CEO of Appier, made a direct reference to the pandemic.

Also Read:  Rising demand for power is anticipated as a result of China's economic recovery

As businesses rapidly transform to accommodate changing consumer trends, Yu said the biggest change they are seeing is their adaptation to the post-Covid environment.

To make up for lost time during the last two years of lockdowns and restrictions, he said, "this includes 'revenge' trends in travel, shopping, entertainment and food." "Marketers are demanding higher efficiency in the post-Covid environment."

Gogoro, a 12-year-old maker of electric motor scooters and batteries, is planning to expand to India, Singapore and the Philippines, according to a company spokesperson. All three countries already have partnerships with Gogoro.

Chip manufacturing is one of the oldest and most active industries in Taiwan. 30 to 40 percent of Taiwan's exports are in the technology sector.

Taiwan Semiconductor Manufacturing (TSMC), the largest contract chip maker in the world and an important Apple supplier, is investing $12 billion in building its first US facility in Arizona.

According to Rajeev Biswas, chief economist for Asia-Pacific for S&P Global Market Intelligence, the facility will encourage other Taiwanese companies, such as Sunlight Chemical and Taiwan Puritic Corporation, to start production in Arizona as part of the semiconductor supply chain. is encouraging.

Fellow United Microelectronics, a Taiwanese chip manufacturer, claimed that it approved a plan to construct a new factory next to an existing one in Singapore last year. It will debut the following year with a 30,000 wafer monthly capacity.

Foxconn Technology, a Taiwan-based assembler, is investing in India to produce iPhones for the expanding Indian consumer electronics market.

Younger Taiwanese businesses can expand more quickly in Southeast Asian nations like Indonesia, Malaysia, Thailand, and Vietnam than in bigger, more competitive markets, according to John Allen Ku, director of Startup Island Taiwan, a government-backed brand for start-up businesses.

Because that market is expanding, Ku said, "You can create your economy of scale earlier and be a big player first." "So, a lot of businesses are making significant local investments there,"

Due to the similar talent shortages they both experience, Southeast Asian businesses are comparatively willing to hire people abroad. The seven-year-old Taipei start-up CakeResume, which connects millions of resumes with employers, benefits from this. 

One of its main sources of resumes is Vietnam, followed by Indonesia. Crossing borders to find talent is a "very important trend," according to CakeResume CEO Trantor Liu.

Due to the abundance of workers and consumers in both Vietnam and India, some of Taiwan's 14,000 machinery companies have made investments there, according to a statement from the Taiwan Association of Machinery Industry to the Post. Taiwan exported machinery worth $34.81 billion in total last year.

According to analysts, US policy is driving some Taiwanese businesses offshore and away from the Chinese mainland. In October, Washington issued an order requiring US businesses to stop providing chips, equipment for making chips, and related updates to Chinese businesses.

According to Jay Yang, deputy director general of the Market Intelligence & Consulting Institute in Taipei, "a lot of Taiwanese manufacturers have relocated their factories to Southeast Asia or India." 

"Many businesses have completed their surveys in India and are prepared to launch. They must relocate since American policy. You have to move out of China to somewhere else.”

According to the machinery association, manufacturers are "gradually adding" exports to the US while reducing shipments to mainland China. 

The US now provides "preferential policies" to Taiwanese manufacturers, while the mainland's coronavirus controls and restrictions in its tech sector have turned into a deterrent, it was also stated in the report.

However, no one anticipates an outright departure for Taiwanese multinational corporations that already rely on mainland China for manufacturing or sales. 

Since the 1980s, some Chinese factory owners have been producing goods there. Any shift away from the mainland will need time to "fully mature," according to Hammond-Chambers.

Vice-Premier Liu of China Despite its 40-year record slow growth in 2022, he claimed at the World Economic Forum in Davos, Switzerland, that mainland China's economy is recovering more quickly than anticipated. Liu also vowed that China would not revert to a planned-economy model and would continue to be open to foreign business.

According to Hammond-Chambers, "China's strengths are not easily replicated, including its infrastructure, workforce, and integration into current markets." 

Also Read:  Is China's era of rapid growth truly over?

China will continue to be the top destination for foreign direct investment, whether it comes from third-party locations there or direct investments.