Tech firms from Taiwan plan on joining departure from China during this trade disputes

Tech firms Taiwan

A 25 percent tariff will largely wipe out cost advantages of Taiwanese tech firms on the mainland, accelerating their exodus from China and lead to as many three million job losses, a Citibank study predicted on Thursday.

“Taiwan firms’ exports account for at least 10 percent of total Chinese exports, and 37 Taiwanese firms operating in China are in the top 100 exporters’ list to US,” the report said, adding that because of rapidly rising wages and other costs, labor-intensive industries have already moved out of China.

Citibank was recently judged by FinanceAsia as the best international bank in Taiwan.

The Trump administration has imposed 25 percent tariffs on US$250 billion of Chinese exports since the trade war started more than a year ago.

According to a research report by China International Capital Corp (CICC), mainland-listed companies that make computers and electronics products will be the second most affected by the additional 15 percent tariffs that were imposed in May.

The tariffs on their exports to the US will account for 18.7 percent of their total profit in 2018, CICC said.

An outbound investment survey by Taiwan’s Ministry of Economic Affairs found that 95 percent of the employees hired by Taiwanese companies in China were in the manufacturing industry, with the share of ICT – electronic components, devices, optical products, and personal computers – at 59 percent.

“Assuming 30 to 50 percent of them leave China, we estimate 1.77 million to 2.95 million job losses could take place over a couple of years,” the Citibank report said.

Citibank’s estimates matched a poll conducted by accounting firm PwC in March. The study showed that about 40 percent of Taiwanese firms planned to adjust their supply chain.