In What Way Would This Newsletter Help You?

With the escalating trade war between China and the U.S. having been continuously headlined by global media agencies since the second half of 2018 and left businesspersons all around the world anxious and disturbed, the inaugural issue of Hi-More Newsletter is set to help readers to take more reasonable steps with more practical points of view in these uncertain times.

Second Round of Tariff War

Few would question that the war trade between the U.S. and China has entered an intensifying stage for now. As part of its countermeasure to China’s unfair trade practices, the U.S. decided to levy duties of 10% on US$200 billion of goods from China starting September, 2018, and then has further raised the tariffs to 25% since May 10. To counter, China announced a move to impose duties ranging 10-25% on imports from the U.S. beginning on June 1. 

The list of imports subject to U.S.’s punitive duties includes such industrial products as machinery, motorcycle and bicycle parts, telecom equipment, PCs, as well as consumer goods as seafood, leather goods, apparel, footwear and plastic products. In the meantime, China imposes its additional tariffs on U.S.’s chemical products, vegetables, whiskey, soybeans and so forth. 

The good news to global enterprises involved in the trade turbulence is that U.S. President Trump Donald has considered a temporary cease-fire and promised to hold off on his plan of new 25% duties on imports worth US$300 billion from China after a meeting with China’s Xi Jinping during the 2019 G20 summit. However, the tariff war in every way has cast shadow to economic outlooks in many countries around the world, including Taiwan.

Whammy or Windfalls?

Considering the escalation of the trade war between the U.S. and China, some market observers opine that Taiwan, whose export-driven economy depends heavily on trade with the two said countries, has been caught in crossfire for sure. For example, Bloomberg’s reports indicate that 1.6% of Taiwan’s GDP, which is bundled with exports to China, will likely be dampened, while Deutsche Bank points out Hong Kong and Taiwan as the main victims and projects their GDP for this year to decline 3.9 and 3 percentage points, respectively, as a consequence of the China-U.S. tariff war

On the flipside, nevertheless, the abovementioned economic woes have brought Taiwan windfalls in the form of growing homebound investments by Taiwanese manufacturing companies operating in China. For example, a couple of bicycle makers have shifted part of their production of high-end products back to Taiwan. Meanwhile, Taiwanese electronics makers have also mused about ramping up production at home in response to the 25% tariff imposed by U.S. on imports from China.   

 

To the abovementioned question,
the answer may have been right in front of them:

Southeast Asia.

Southeast Asia: Sanctuary from Trade War

來源：2018全球投資國家排名，CEOWORLD

Benefiting from the trade war between China and the U.S., the Southeast Asian countries are expected to witness brightening economic prospects in the short term, to provide shelter to Taiwanese traditional manufacturers with hopes of sparing themselves the trade turmoil. However, their attempt at immigrating to the emerging regional markets for long-term survival will likely disappoint them in the end, in case they simply rush to relocate production there without considering market assessment and resource limitations. 

Vic Chen, president of Hi-More, a high-profile robotic arm manufacturer, is one of Taiwanese corporate managers and directors who have actively explored Southeast Asia over the past few years, and provides his insights into proper business deployments in the regional market.

Looking with favor at Vietnam and Indonesia, Chen opines market potential there is actually enormous. He emphasizes Vietnam is particularly the best investment option to Taiwanese traditional manufacturers who would like to move production out of China, partly because of Vietnam’s geographical proximity to China, and partly because of the comparatively well-developed light industries, such as textile and footwear, in the southeast Asian country. In addition, the president stresses, the continued promotion of Mandarin language learning there leads to a relatively friendly business environment to Taiwanese entrepreneurs.  

In light of the intensifying China-U.S. tariff war resulting in migration of traditional manufacturers already with operation in China, 

"Vietnam is the optimal destination among other Southeast Asian countries for them,"

stated HI-MORE president Vic Chen. 

As to Indonesia, Chen points out that the nation boasts the highest GDP among the 10 ASEAN founding members, to say nothing of its largest population and biggest number of Muslims. All these distinctive characteristics combine to make it a potentially lucrative market for consumer products, including food packaging materials, motorcycles and automobiles, stresses the president, who adds that Indonesia is very likely to emerge as one of world’s major manufacturing bases in the near future.