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August 28, 2018 02:00 AM

At Taipei Plas, guarded reactions to China-US trade war

Kent Miller
Correspondent
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    Kent Miller
    Larry Wei, president of Fong Kee International Machinery Co. Ltd., speaks at Taipei Plas.

    Taipei, Taiwan — On the floor at the recent Taipei Plas trade show, the mood regarding the U.S.-China trade war was definitely mixed.

    In the short term, the outlook is good, executives say. Last month, Fong Kee International Machinery Co. Ltd. sold three machines worth a total of $1.6 million to U.S. customers, President Larry Wei said in an interview at his company's booth at Taipei's Nangang Exhibition Center.

    Tooling and mold makers see positives, too. "The trade war offers us a good opportunity to get into the U.S. market," said Eric Li of mold maker CNN Plastic System Co. Ltd., in what was a typical response at the fair.

    But some machinery executives with hard experience trying to sell to skeptical U.S. buyers aren't quite as ebullient.

    Kent Miller

    Eric Li of with Taiwanese mold maker CNN Plastic System Co. Ltd.

    Machine makers interviewed on the floor at the Aug. 15-19 show said they were well aware that when production engineers are pondering big-ticket purchases, price is not nearly as important as service, support and the assurance of a solid long-term relationship.

    They said they know big Chinese machine makers have done the arduous work of setting up local sales teams, support staff and technical centers. That level of goodwill won't vanish overnight.

    Tainan-based injection molding press maker Fu Chun Shin Machinery Manufacture Co. Ltd. and its crosstown rival Chuan Lih Fa Machinery Works Co. Ltd. are both big by Taiwanese standards.

    Both companies have factories on the mainland and Taiwan. But for now, neither is putting a huge priority on the U.S. market.

    "It's a chance for some Taiwanese plastics machine makers. But not us," said sales specialist Jeff Guo at Chuan Lih Fa, which sells some 500 machines a year.

    Meanwhile, Fu Chun Shin is also focusing on Europe, where its distributor is busy building a continentwide sales and support network.

    Deputy Sales Manager Hank Wu says the tariff hammer will fall hardest on smaller Chinese manufacturers. Mainland competitors with a global reach have the flexibility to move assembly offshore, he pointed out.

    "Big companies like Haitian already have production in other countries," he said.

    Even with the tariffs, some Taiwanese companies say they still won't be able to compete on price.

    Kent Miller

    Sandy Kuo, vice general manager of Jumbo Steel Co. Ltd.

    "Our machines are three times more expensive than Chinese machines," said Sandy Kuo, vice general manager at Taichung-based Jumbo Steel Machinery Co. Ltd., a 33-year-old maker of straw making machines.

    Jumbo's machines are in the U.S. supply chain for brands like Starbucks and McDonald's. For straw makers with those kind of big corporate accounts, reliability always beats price, Kuo said.

    There's also a generational split. Veterans who've weathered macroeconomic shocks of the past few decades — the eurozone debt crises of recent years, the Great Recession of 2008, the 1997-98 Asian financial crises, even Black Monday in 1987 — are more guarded in their outlook.

    Many of these veterans sit on the board of the Taiwan Association of Machinery Industry.

    "[In] the long term, we think that [the trade dispute] might affect the willingness to invest," said Alan Wang, who chairs TAMI's Plastic & Rubber Machinery Committee.

    Even outright competitors are split on their prognoses.

    "The trade war is good for us, because it makes their [China's] products so expensive," says Ray Wu, US office director for Taoyuan-based Hi-More Robot Co. Ltd.

    But smallish robot-maker Tenso Machinery Ind. Co. Ltd., with annual sales of about $7 million, is worried about knock-on effects.

    "We sell a lot to car companies in China. The trade war could hurt their production," said Marketing Manager Ivan Chen.

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