More and more Taiwanese companies are leaving China and investing in the Indian subcontinent. India offers a huge market, cheap labour and tax breaks. The two countries fear China’s rise.
Taipei (AsiaNews/Agencies) – Taiwan is betting on India to reduce its economic dependence on China and defend itself against the latter’s expansionist aims.
A growing number of Taiwanese companies are abandoning the mainland and investing in the Indian subcontinent, where there they have access to another huge market, cheap labour, tax breaks, stable inflation at around 3 per cent and falling property prices.
The rapprochement between Taipei and Delhi began four years ago. This got a boost with the coronavirus crisis, which in its early stages led to the disruption of the global supply chain, in which the Chinese manufacturing industry plays a primary role.
Aside from the Taiwanese manufacturers’ willingness to diversify investment markets, Taiwanese companies are moving away from China to offset the negative effects of a possible economic “decoupling” between Beijing and Washington.
For years, thousands of Taiwanese companies, particularly in electronics and machinery, have moved production to China. They are now turning to other markets because of growing labour costs in China, and tariffs imposed by the Trump administration on Chinese products exported to the United States.
At present, some 140 Taiwanese companies operate in India, and the trend is upward. One of them is Foxconn, which assembles components for the production of Apple devices in China.
In 2018, Taiwanese investment in India grew to US$ 360.5 million. Investment in China dropped to US$ 4.2 billion in 2019, which was the fourth consecutive annual decline. Between 2014 and 2019, trade between Taiwan and the Indian giant increased by 14 per cent, reaching US$ 5.7 billion.
The two countries are united by fear of China’s rise. In recent times, India has increasingly distanced itself from Beijing. Over the past month, after recent military clashes on the Himalayan border, Delhi has banned the use of 100 Chinese mobile applications, including the popular TikTok.
Relations between Taipei and Beijing have equally deteriorated since 2016, when Tsai Ing-wen was elected president. For China, which considers the island a rebel province, Tsai is a dangerous pro-independence leader.
Against this backdrop, the Taiwanese government took steps to encourage its businesses to leave China. According to Foreign Policy, Taiwanese companies in China have committed themselves to “reshoring” operations worth US$ 33 billion.
Of these, US$ 6.8 billion have already been reinvested in 2019, while about US$ 11.1 billion are expected to be invested this year.