First, China’s domestic economic risks. These include a sharp decline in foreign investment, high youth unemployment, weak consumer momentum, a sluggish real estate market, and overcapacity resulting from extensive state subsidies. Fierce domestic competition, deflationary pressures, and persistently low prices have further eroded profit margins, affecting the profitability of Taiwanese businesses in mainland China.
Second, China’s external economic risks. The United States continues its tariff war and its technological containment measures against China, and financial warfare may follow in the future. Meanwhile, Chinese products are being dumped on global markets, prompting trade retaliation from various countries, with Taiwanese businesspeople operating in mainland China suffering collateral impacts.
Third, political risks. The Chinese Communist Party (CCP) military aircraft and vessels continue to harass Taiwan, and targeted military exercises have become routine, drawing increasing international concern over the potential for conflict in the Taiwan Strait. In addition, citing national security and the so-called “punishing Taiwan independence,” the CCP has introduced a series of national-security-related laws, intensified legal warfare through “long-arm jurisdiction” and “transnational repression” targeting Taiwan, and encouraged its public reporting mechanisms. These measures expose Taiwanese businesses to the risks of property loss and restrictions on personal freedom.
https://www.mac.gov.tw/en/News_Content.aspx?n=A921DFB2651FF92F&sms=37838322A6DA5E79&s=82119DC0F9B9699A
Choices in the Face of Risk
In the past, Taiwanese businesses were able to navigate both sides of the Taiwan Strait with relative ease, but now find themselves caught between competing pressures. Scholars and experts have proposed three feasible paths for your reference.
First, export-oriented Taiwanese businesses may adopt a “China Plus One” strategy, pursue global diversification, and diversify risk, such as by expanding into ASEAN markets, Mexico, or reinvesting in Taiwan.
Second, Taiwanese businesses primarily focused on China’s domestic market may pursue local transformation and deeper engagement, striving to integrate into local supply chains. However, they must be mindful of the risks of domestic competition.
Third, Taiwanese businesses operating in low-margin and high-risk industries are advised to secure returns and gradually adjust or scale back investments.
No matter which path Taiwanese businesses ultimately decide to take, the MOEA, the MAC, and the SEF together form a solid triangle of service and support for Taiwanese businesses, and will do everything in our capacity to assist you.
https://www.mac.gov.tw/en/News_Content.aspx?n=A921DFB2651FF92F&sms=37838322A6DA5E79&s=82119DC0F9B9699A
Businesses in China face three major #risks, says the #Taiwanese agency for #China affairs — domestic economic risks, external economic risks, political risks.
Export-oriented Taiwanese businesses should diversify; low-margin, high-risk sectors advised to secure returns and scale back investments.