VIETNAM: Riot-hit Taiwan firms eye Africa investment instead
More than 200 Taiwan-owned businesses suffered losses in Vietnam's anti-Chinese riots
A major Taiwan clothing and textile company has decided to build a factory in Africa rather than Vietnam because of the increased political risks on foreign investment in the southeast Asia country, highlighted by the recent riots, just-style has been told.
More than 200 Taiwan-owned businesses suffered losses in Vietnam's anti-Chinese riots on 13-14 May, among them major Taiwanese apparel makers Makalot Industrial Co and Eclat Textile Co. Also impacted were textile firms Far Eastern New Century Corp and the Formosa Plastics Group's (FPG) Formosa Chemical and Fibre Corp.
Although all major Taiwanese textile firms with production facilities in Vietnam have since announced they are not considering withdrawing capital from the country, the developments appear to affect Taiwanese expansion plans.
"One of the big Taiwanese textile companies has just decided to build a factory in Africa instead of Vietnam as a reaction to the increased political risks in Vietnam," Justin Huang, secretary general of the Taiwan Textile Federation, told just-style.
"I cannot reveal the company name, but we are talking about a major plant with a projected turnover of US$500m, with an announcement on it to come by year's end."
Meanwhile, Taiwan's textile businesses that have suffered losses in the riots will quickly restore operations in Vietnam, facilitated by prompt insurance payments, Huang noted.
A high-ranking Taiwanese government delegation led by vice minister of economic affairs Shen Jong-chin has today (21 May) started talks in Vietnam in order to push the Vietnamese government to repay the affected insurance companies and grant tax concessions to the riot-affected Taiwanese firms.
A bilateral investment agreement was signed last year, but this alone will not sufficiently compensate Taiwan's riot-hit textile businesses in Vietnam, according to Huang.
A just-style analysis of the anti-Chinese protests last week suggested that for buyers and foreign investors who have been piling into Vietnam's textile, clothing and footwear industries, the unrest may prove to be a wake-up call. Click on the following link to read: Vietnam unrest a wake-up call for buyers and investors.
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