Taipei, Taiwan — Facing slackening demand from mainland China, enterprising Taiwanese machinery makers are aggressively pushing into Southeast Asia, while trade leaders are already counseling them to look farther afield.
“The biggest issue facing the Taiwanese plastic and rubber machinery industry is that the export market is overly concentrated in China and ASEAN [Association of Southeast Asian Nations],” said C.C. Wang, president of the Taiwan Association of Machinery Industry (TAMI), at Taipei Plas.
While 20 percent of Taiwan's exports go to mainland China and another 30 percent to Southeast Asia, primarily Vietnam and Indonesia, Wang is bullish on opportunities in India, the Middle East, Eastern Europe, Russia and Latin America. Taiwanese firms need to “work together as a whole to engage in trade shows and marketing efforts in developing these potential emerging markets,” he said.
Adding urgency to that appeal are steep declines in exports to mainland China, Taiwan's top market. In the first five months of 2016, plastics and rubber machinery exports to China slid 13.7 percent and exports to Hong Kong were down 45.5 percent, said TAMI Chairman Alex Ko. Cross-straits sales have faced increased competition from mainland China's homegrown equipment makers and rising labor costs for processors.
Tainan-based Chuan Lih Fa Machinery Works Co. Ltd., which ships 500 injection molding machines a year, already has a sales and service office in Vietnam and sales agents in Mexico, Brazil, Argentina and Peru. “South America is a very big market for us,” said sales manager Candice Wang.
Sixty-seven percent of Chuan Li Fa's sales are outside Greater China, while 24 percent are to Taiwan and another 9 percent to mainland China. Most of the Chinese products come from its factory in Zhongshan, Guangdong province. The company maintains an extensive sales and service network on the mainland.
Smaller companies without a cross-straits footprint are disadvantaged, though. “We don't sell in China. It's a market that's still price oriented,” said Leonardo Lee, sales manager at extruder maker Queen's Machinery Group.
New Taipei City-based Queen's, founded in 1973, has been exporting to Latin America for more than two decades, but its biggest markets are in Southeast Asia, especially Indonesia.
Hong Kong-based Chen Hsong Group plans to open a factory in India next year to assemble machines using parts made in the company's China factories, although electric components will be locally sourced to meet voltage requirements, said Aaron Chao, manager of international sales at local subsidiary Chen Hsong Machinery Taiwan Co. Ltd.
One key is to adapt to local demand. Chen Hsong Taiwan machines optimized for making athletic shoes are especially popular in Vietnam and Indonesia, Chao said.
Joining the march into India is Taoyuan-based robot specialist We Technology Automation Co. Ltd., which opened a sales and service office in Ahmedabad last year. We Technology also is pushing into mainland China: next year, the company plans to open a factory in Suzhou. “China is a big, promising market for our robots,” said marketing manager Teresa Wang.
Since peaking at $1.35 billion in 2012, Taiwan's plastics and rubber machinery exports fell to just $1.12 billion last year. Leading growth areas are Vietnam, the United States and India.
Sometimes, export destinations can be deceptive. At Taoyuan-based injection equipment maker Multiplas Enginery Co. Ltd., many machines purchased by Japanese and U.S. multinationals are destined for Mexican subsidiaries, said Vice President David Chang.
The rising costs of doing business in China is pushing many processors to relocate to Vietnam, said Alan Chen of auxiliary equipment maker Shini Technologies Inc., which has its eyes on the emerging markets of Burma and Cambodia. “At this stage, they're still new. But I think they have potential,” said Chen, director of Shini's corporate technologies center.
The big prize is Germany, both a leading manufacturer of plastics machinery and the home of such stalwart brands as Arburg GmbH. Shini is already edging into the market with sales of testing equipment and temperature control units to Daimler AG, Chen said.