The drug pandemic has caused great hardship for Taiwanese companies operating in China, most of which have not been able to keep pace with Beijing’s purported full economic recovery.
This is one of the findings of a recent survey of Taiwanese enterprises in China conducted by the Taipei-based National Federation of Industries (FHKI). The survey found that more than 80 percent of Taiwanese business owners said their companies’ revenues had fallen sharply this year.
The survey was conducted between July 7 and August 25. There were 157 companies surveyed, most of which were small and medium-sized enterprises. They generally cited the loss of overseas orders caused by the epidemic and disruptions in personnel movement and logistics as the biggest obstacles posed by the pandemic.
Nearly half of the companies surveyed said their manufacturing capacity utilization remained stuck at 70 percent, and 7 percent said their operations had not recovered since the outbreak.
The survey’s findings are quite different from many of the recent announcements by Beijing of a strong economic rebound.
Traditional industries were more severely affected by the pandemic, according to FICCI. Ninety percent of them have downsized their operations, and 70 percent of companies in the telecommunications and electronics industries have shrunk.
According to the survey, nearly 60% of Taiwanese companies responded to the outbreak by “shrinking production lines and postponing investment plans. Others have responded by “working at home” and “taking unpaid vacations” and “reducing wages.
The majority of respondents believe that the impact of the pandemic will continue for another six months or so, and 66% believe that the investment environment on the mainland will be “not optimistic” or “extremely pessimistic” later this year. Nearly 80 percent of the companies surveyed said they would not increase their investment in China in the next two years.
It is clear that investment from Taiwan companies in China may return to Taiwan,” said FICCI.
FICCI also urged the Taiwan government to launch the Relief 3.0 program as soon as possible to help companies in the manufacturing sector that have been affected by the epidemic. The Taiwan government launched two bailout programs in March and May of this year to reduce the financial impact of the epidemic on businesses and workers. The two programs have a total budget of 210 billion New Taiwan Dollars (approximately US$7.1 billion).
The Bailout 3.0 program is pending approval by Taiwan’s Legislative Yuan.
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