Local manufacturers face huge pressure on mainland


CNA

TAIPEI–Facing soaring operating costs in mainland China, Taiwan’s old economy manufacturers on the mainland are facing a stark choice: either upgrade through better management and product differentiation or consider moving or closing down.

Huang Mei-chin, the head of a Taiwanese business association in Lianyungang in northeastern Jiangsu province, said Tuesday that the Taiwanese companies operating there are mostly makers of non-high-tech goods who chose the third-tier city for its low land costs and abundant manpower.

With labor costs rising quickly in China, however, Taiwanese companies operating in Lianyungang are being forced to transform their businesses to keep afloat, Huang said, presenting them with a dilemma.

Upgrades require large amounts of capital to invest in equipment and plenty of time to expand capacity and generate high-yield returns, leaving some first-generation operators reluctant to stay in business if their children are not willing to take over their companies.

Under the pressure of surging labor costs, some Taiwanese companies have decided to relocate their operations to Myanmar, according to Huang.

Huang’s company, which manufactures hand-knit products, is not immune from the challenge, and he is considering tapping into the senior care market, one of China’s fastest growing businesses, and hoped Chinese authorities can adopt a more flexible regulatory approach toward medical care and nursing homes for seniors.