Taiwanese Firms Face "Eight Shortages" in China: Survey

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Warmer relations between the Chinese regime and Taiwan in recent years has led to Taiwanese manufacturers flocking to the Mainland. Many are lured by the lower cost of labor and materials and a looser regulatory environment. But a recent Taiwanese survey says investment conditions are changing, and Taiwan's manufacturers have to deal with new shortages.

China—the world's manufacturing hub. For investors in neighboring Taiwan, the Mainland has been a lucrative place to put their money, because of its high labor pool and lower costs. But according to a report released by a Taiwanese manufacturer association, the face of investment in China is changing.

The Taiwan Electrical and Electronic Manufacturers Association, or TEEMA, surveyed firms on China's investment environment, and released its finding earlier this month. It says China is now facing "eight shortages" which will affect Taiwanese manufacturers.

Amongst these, power and water supplies.

[Lu Hung-te, Business Management Professor at Chungyuan University]:
"If the power is on for three days, and stops for two, then on for another four days but stops for three, this will spell the end for you. So one issue is how to guarantee adequate power supply. Also, China faces more than power shortages, now there are water shortages. Many dams have been turned into hydropower plants."

TEEMA's "2011 Survey of Investment Environment and Risks in Mainland China" also identified higher labor costs, lack of business confidence, and poor work ethic. This means Taiwanese businesses need to either reduce their production, or relocate to stay profitable.

Professor Lu Hung-te, who headed the survey, says under current conditions it's more risky to do business in China.