More German businesses say cross-strait tension poses business challenges in Taiwan

Peng Chen, DIGITIMES Asia, Taipei 0

Axel Limberg, GTO’s chief representative (R). Credit: DIGITIMES

The German Trade Office Taipei (GTO) released the results of its Business Confidence Survey 2022/2023 on February 9. The report showed while the economic condition remains the major factor for business challenges, 54% of the participants said the cross-strait relation is also a concern.

Axel Limberg, GTO's chief representative and executive director, said the bilateral trade between German and Taiwan exceeded US$23 billion in 2022. It was a record number and an increase of US$2.3 billion from 2021.

The survey showed over 81% of German companies fulfilled and achieved their business targets last year despite challenges like COVID-19 or supply chain disruptions.

However, companies with high revenues declined. Those who earned more than NT$1 billion (US$33.18 million) decreased by 5.8 percentage points from 2021. Businesses that generated between NT$ 250 million and NT$ 1 billion decreased by seven percentage points.

Over two-thirds of the survey participants said global supply chain disruptions impacted their local business operations. Aditya Ramkrishna, vice president and head of digital industries for Siemens Taiwan, used PLC module as an example. He said about a year ago, the delivery could take eight to 10 months, while it usually takes a week. He added that the situation is getting back to normal now.

According to the report, more than 60% of the companies said global or domestic economic growth could bring business challenges to them. About 54% named the cross-strait relation a vital factor to cause challenges, a steep increase of almost 10 percentage points from 2021. Other factors included the absence of FTA and investment protection agreements and attracting and retaining qualified staff.

When asked about the effects of cross-strait tensions on business operations, 29% of the companies said there were no effects, while 28% said they saw negative effects.

Most German companies held a reserved prediction of Taiwan's economic development. The survey showed 52.2% of participants had estimated the economy will remain the same in 2023 compared with 2022.

GTO conducted the survey between December 9, 2022 and January 10, 2023. About 36% of the 251 eligible respondents participated in the review.

During the event for the survey announcement, John Lee, managing director of Merck Group in Taiwan, said the electronics industry will grow in the next few years, although it will experience headwinds in 2023.

He said the wafer shipment in the first quarter of this year will be slightly better than in the second and third quarters. The industry hoped to see some upswing in the fourth quarter.

Lee also said the electronics industry will likely see 6% growth in the market from 2021 to 2026. The increasing adoption and development of IoT, digitalization, AI and 5G/Connectivity will drive the change.

As for the display industry, one of the most important segments in Taiwan's electronics industry, Lee said area growth is expected in 2023 while the unit growth will probably be flat. It is mostly because the trend is using large displays now, no matter for smartphones or TVs. He said the panel size increase will create momentum for the industry.