Taiwanese businesses not optimistic about China market prospects

台商不看好大陸市場前景

Report says businesses wary of geopolitics, rise in commodity prices


TAIPEI (Taiwan News) — Taiwan’s Chinese National Federation of Industries (CNFI) reported that nearly 60% of Taiwanese businesses held a “not optimistic” view of the Chinese market, per CNA.

The CNFI released its latest report on Taiwanese investment trends in China, which covered Taiwanese businesses' attitudes towards China and factors such as geopolitics.

The report said that 61.3% of the surveyed Taiwanese businesses in 2022 experienced a decline in operating profits in 2022, with 40.5% reporting a slight decline and 20.8% a significant decline. Additionally, in 2023, nearly 60% of Taiwanese businesses held a negative outlook about the year's business conditions, with 50% expressing “not very optimistic” views and 9.5% saying “not optimistic at all.” Only 30.3% reported “optimistic” and 1.1% reported “very optimistic.”

The CNFI said that with the escalation of geopolitical conflicts, based on risk management, European and American customers tend to place orders with suppliers outside China, a strategy known as China Plus One. Consequently, Taiwanese businesses operating in China naturally experience an impact on their order intake.

The CNFI also said some Taiwanese businesses believed that geopolitical conflicts have driven up raw material prices, leading to erosion of operating profits. Additionally, over 70% of Taiwanese businesses reported that operations are affected by factors such as interest rate hikes in Europe and the U.S. and sluggish demand, facing declines in both orders and profits.

Regarding future operational planning, the report said 67.9% of Taiwanese businesses said their investment scale will remain unchanged over the next three to five years. Approximately 21.5% of businesses plan to reduce investment, while about 10.6% plan to increase their investment scale.

Founded in 1942 as the “Chinese National Association of Industries,” the CNFI is one of Taiwan’s most influential industrial associations, advising the government and providing a platform for businesses to communicate.