The closure of a large plant by Foxconn, a Taiwan-based company that supplies critical equipment to companies such as Apple (including its iPhone and iPad product range), Sony and Nintendo, is unlikely to affect operations of companies from that country in China, said a senior Taiwan Government official on Thursday.
Speaking to The Hindu on the sidelines of an industrial exposition of Taiwanese companies here, Shih-Chao Cho, Vice Minister, Ministry of Economic Affairs, Taiwan, said “a single incident” of the kind that happened recently in Taiyuan in Shanxi province in Northern China is unlikely to affect its operations in China. “After all, Foxconn employs more than one million workers in China, spread over more than a dozen facilities,” he observed.
Mr. Cho said Foxconn, which has operations in several countries, including Brazil, Europe, Japan, Malaysia and India (in Chennai), is “capable of adjusting output at these locations to manage the shutdown at the Taiyuan plant.” He said the company’s operations in Taiwan were unlikely to be affected. “It does research and development and design activities in Taiwan,” he said.
Mr. Cho, however, admitted that the global economic slowdown does “cause some worry.” “A hard landing for the Chinese economy would affect us also,” he said. He pointed out that nearly 30 per cent of all exports from Taiwan to China were “intermediate goods, which are reprocessed for re-export from China.,” he said. And, China’s exports are affected because of the crisis in Europe. “After all, Europe is China’s biggest trading partner,” he observed.
Taiwanese investors, Mr. Cho said, were “seriously considering relocating operations from China to other emerging markets because of the fear of a slowdown of the Chinese economy,” Mr. Cho said. While exports from Taiwan to developed country markets fell 6.4 per cent during the first half of 2012, exports to emerging increased 12 per cent, he pointed out. Companies in Taiwan were keen on diversifying exports in order to protect themselves from the uncertainties of the global economy, he said. Mr. Cho said the New Delhi-based Indian Council for Research on International Economic Relations (ICRIER) was preparing a feasibility report for an Indo-Taiwan Free Trade Agreement, which is “likely to be ready by December 2012.”
