Links impasse hinders int’l purchasing center initiative

Michelle Hsu, The China Post

Minister of Economic Affairs Lin Hsin-i yesterday admitted that Taiwan may gradually lose its advantages for developing itself as an international purchasing center in the Asia-Pacific region if the three-links issue can’t be properly dealt with.

At present, the government in Taiwan still follows a policy to ban three direct links of transportation, business and mail with mainland China. One foreign buyer after another has complained to the government, saying that the policy added prohibitive extra costs in developing cross-strait business.

With its manufacturing strength for IT (information technology) products, Taiwan traditionally served as a primary location for international buyers. Compaq, Dell, IBM and HP each maintained an annual procurement of billions worth of IT products from the island over the past few years.

The increasing mainland investments by Taiwan’s IT companies, however, has more or less shattered the island’s position as a purchasing center for international buyers, particularly taking into consideration the inconvenience associated with the government’s current cross-strait economic policy. After meeting with the international purchasing officers (IPO) on Thursday, the MOEA said yesterday that it will host another similar meeting with participants from the China External Trade Development Council (CETRA) in a bid to be more effective in working out solutions to foreign buyers’ problems with purchasing products from the island.

During Thursday’s meeting, some foreign representatives complained that their offices in Taiwan are experiencing shrinking business while the ones in the mainland are expanding their business rapidly.

“If the situation continues, the Taiwan offices of the multinational corporations may be soon replaced by their mainland offices as the purchasing centers for the Greater China area,” some foreign representatives warned.

Representative from Dell, which purchased US$4.5 billion worth IT products from Taiwan, said that Taiwan could hardly become an operations center in the Asia Pacific region without direct business links with the mainland.

Under Taiwan’s current mainland policies, any cross-strait shipment could not directly reach the port of either side without going through a third port. Such procedures waste valuable time and cause extra shipping costs.

Last year, foreign companies purchased around US$35.6 billion, over NT$1 trillion, worth IT products from Taiwan. The MOEA originally predicted a 20 percent growth in their procurements for this year, but it admitted yesterday that this target may be hard to reach due to the slowing global economy and the weakening manufacturing industry on the island.