cens logo

Relatively Cheaper Yen and Won Hurt Taiwan's Q1 Machinery Exports

Apr 24, 2015 | By Ken Liu

Compiled by KEN LIU

Devalued yen and won are hurting Taiwan's machine-tool export competitiveness. (a machine tool trade fair in Taipei shown)Devalued yen and won are hurting Taiwan's machine-tool export competitiveness. (a machine tool trade fair in Taipei shown)

In the first quarter, Taiwan's machinery exports rose a moderate 4 percent, contrasting machine-tool exports' drop of 2 percent from the same period of last year mostly due to the continual impact of the relatively steeper devaluation of South Korean won and Japanese yen, according to the Taiwan Association of Machinery Industry (TAMI).

Revealing the harsh truth beleaguering the machinery sector with hands tied, the newly-elected TAMI Chairman B.X. Ke says the industry is watching closely if exports keep falling in April, and emphasizes that further undermining of Taiwan's machinery export competitiveness by relatively cheaper currencies of major rivals would spell disaster.

Likely echoing sentiment of many other sectors in Taiwan that rely on export revenue, Ke urges the government to allow the NT-dollar-to-greenback rate to fall to 33-to-1 to strengthen the island's machinery makers' competitiveness on global markets.

Ke says the NT-dollar traded at 31.58:1 U.S. dollar on average in the first three months of this year, down 4.36 percent from the same period of 2013, and has been trading around 31.2:1 in April. Since 2007 the NT-dollar has devalued 4.3 percent against the greenback, compared to the South Korean won's 15.2 percent and Japanese yen's 35 percent, he notes.

Without pointing out the precise mechanisms, whether artificial or due to market forces, Ke says that the NT-dollar-to-greenback ratio has fluctuated along different gradients relative to that of the yen and won, hence resulting in Taiwan's total exports dropping 8.9 percent year on year in the first quarter.

The TAMI data shows that Taiwan shipped US$4.87 billion of machinery overall in Jan.-Mar., increasing 4 percent from the same period of last year, but, when denominated in NT-dollar, up 8.8 percent year on year to NT$154.1 billion.

Such lukewarm growth has given forecasters a wake-up call as the industry had originally predicted optimistically a 10 percent increase for the whole year, which was based on the strong growth in the first two months. In the first two months, Taiwan shipped US$3.13 billion of machinery, rising 9.5 percent year on year, but as high as 14.9 percent to total NT$98.9 billion.

On monthly basis, Taiwan's exports dropped year-on-year 1.3 percent in March from a strong 25.7 percent surge in January and a moderate 3.1 percent growth in February, with the revenue being NT$56.7 billion (US$1.82 billion) in January, NT$42.2 billion (US$1.36 billion) in February and NT$54.9 billion (US$1.77 billion).

Ke points out that China was Taiwan's largest export destination for machinery in the first quarter, with purchase of US$1.35 billion, or 27.8 percent, of Taiwan-made machines to register a 14.9 percent year on year increase. The U.S. imported US$810 million, or 16.6 percent, of Taiwan-built machines, to be the No.2 buyer, albeit with the imports down 2 percent from the previous year. Japan purchased US$294 million, or 6 percent, of Taiwan-built machines, for a 7.9 percent decrease year on year to be the No.3 importer.

Taiwan exported machine tools totaling US$798 million in the first quarter to mark a 16.1 percent increase in January, US$208 million for a 10 percent decrease in February and US$302 million for a 9.8 percent contraction year on year.

China was also Taiwan's top export destination for machine tools in the first quarter, importing US$239 million, or 30 percent, of Taiwan-made machine tools for a 3.6 percent decrease year on year. The United States came in second to absorb US$89.17 million, or 11.2 percent, of Taiwan-built machine tools to mark a 1.7 percent growth year on year. Turkey was the No.3 buyer, importing US$50.62 million, or 6.3 percent, of Taiwan-made machine tools to register a 19.6 percent surge.

The chairman points out that the approximately 40 percent of devaluation of the Japanese yen is undermining international buyers' interest in buying Taiwan's machine tools, to make competition more complicated for the island's manufacturers. 

Without pointing out the political marginalization of Taiwan by China and hence other nations, he is also worried about the South Korea-European Union free trade agreement (FTA), which took effect July 1, 2011, as well as the South Korea-American agreement, which became effective March 15, 2012. Both agreements facilitate expansion of South Korean machine-tool makers' market shares globally to sideline or compromise competitiveness of Taiwan-made machines.

The finalization of the Sino-South Korean FTA in late 2014 is predicted to enable South Korean machine-tool makers to encroach on the market share of Taiwanese competitors in China, via more advantageous trade terms as lower duties.

Ke urges the Taiwan government to accelerate the talks with China to include the island's machine-tool sector in the Cross-Strait Agreement on Trade in Goods, which is based on the Economic Cooperation Framework Agreement (ECFA) signed bilaterally in 2010, to counter South Korea's trade agreements.

Another threat looming is from mainland Chinese manufacturers that wrest shares from Taiwanese manufacturers of low-end, mid-range machine-tool markets. Such phenomenon is inevitable as mainland Chinese operators gradually learn via cooperation with and working for Taiwanese makers, to slowly gain capacity to duplicate technologies to set up their own business. The same process happens in Taiwan among all kinds of businesses.

Taiwan's Exports of Machinery and Machine Tools in Q1, ‘15
Category
Machinery
Machine Tool
Export revenue
US$4.87bn
US$798M
YoY change (%)
+4.0%
-2.0%
Top 3 export destinations by percentage of Taiwan's total exports
Mainland China (27.8%)
U.S. (16.6%)
Japan (6.0%)
Mainland China (30.0%)
U.S. (11.2%)
Turkey (6.3%)
Note
TAMI originally forecasted 10% increase year on year each for the island's machinery and machine-tool exports in 2015.
Source: TAMI


Industry In-Focus

Foxconn Engages European Auto Parts Talks for Tier 1 and EV Market Entry </h2>

Foxconn Engages European Auto Parts Talks for Tier 1 and EV Market Entry

Oct 20, 2020

Foxconn is looking to explore cooperation with European tier 1 auto parts suppliers in developing 3D auto-use curved glass covers. The electronics manufacturer is also reportedly engaging in talks with European auto firms to make curved, one-piece system consoles and dashboards. In a bid to diversify its product line, Foxconn's plans to enter the lucrative auto parts industry began with provid...


China's Strong Auto Market to Buoy Taiwan's Related Industries</h2>

China's Strong Auto Market to Buoy Taiwan's Related Industries

Oct 19, 2020

Taiwan's auto parts market has seen positive impacts as the Chinese automotive market continues to grow in its sixth consecutive month. Hotai Motors and Yulon Nissan Motor are the two significant firms enjoying the leverage. The island's related industries are benefiting from the strong performance of China's automotive market. Industry members say as long as competitive Taiwanese firms mainta...


Foundry Supply in a Pickle Amid Surging Demand Due to Pandemic and Restrictions</h2>

Foundry Supply in a Pickle Amid Surging Demand Due to Pandemic and Restrictions

Oct 19, 2020

Industry experts expect to see challenging times ahead for production in the foundry sector, forecasting that the current situation will not let up in the short-term and warns of unbalanced supply-demand next year. During the pre-pandemic era, IC design firms say clients usually made urgent orders to avoid having to manage inventory. Yet, considering limited foundry production volume, clients ...



Industry Reports

Foxconn Engages European Auto Parts Talks for Tier 1 and EV Market Entry </h2>

Foxconn Engages European Auto Parts Talks for Tier 1 and EV Market Entry

Oct 20, 2020

Foxconn is looking to explore cooperation with European tier 1 auto parts suppliers in developing 3D auto-use curved glass covers. The electronics manufacturer is also reportedly engaging in talks with European auto firms to make curved, one-piece system consoles and dashboards. In a bid to diversify its product line, Foxconn's plans to enter the lucrative auto parts industry began with provid...


(File cabinets, photo courtesy of Chyn Fuh Enterprise Co., Ltd.)

Taiwan's Furniture Industry Amid the COVID-19 Pandemic

Oct 16, 2020

The COVID-19 pandemic has deeply affected global and Taiwan's political and economic landscapes. Unlike some industries, the furniture sector did not escape unscathed, facing a squeeze from management and costs. While Taiwan continues to implement a stable, successful outbreak response, the industry has also misjudged the economic downturn duration. The furniture industry has yet to fully recover...


2020 Energy Vision Summit for Green Energy to Kick off in Nov.</h2>

2020 Energy Vision Summit for Green Energy to Kick off in Nov.

Oct 14, 2020

The Taiwanese government has pledged to lead the effort in further developing the sustainable green economy, which is among the sectors highlighted in the Tsai administration's "5+2 Innovative Industries Initiative." Economic Daily News is hosting the "2020 Energy Vision Summit - Green Energy 2.0" on November 11. As one of the government's core policies, improving the island's energy self-suff...



Supplier News

(Electric Vehicle-Photo courtesy of CENS)

Microtest: Precise, Reliable, and Always Improving

Oct 16, 2020

Eyes Stake in 5G Industry with Impedance Analyzer 6632 With greater demand for electronics and manufacturers' need for more precise and diverse applications than before, testing equipment that ensures the reliability, safety, and quality of parts are in hot demand. Founded in 1993, Microtest Corp. is a professional maker and developer of high precision and automatic testing and measurement ins...


(Photo courtesy of Ho Shuan Enterprise Co., Ltd.)

Ho Shuan is Your Choice for Educational Furniture and More

Oct 16, 2020

Insisting that its customers are always a top priority, Ho Shuan Enterprise Co., Ltd.'s R&D team provides the best educational furniture and peripherals, computer tables, and desks to meet all customer requirements. Established in 1986, Ho Shuan has experienced recent sluggish local market performance, but eventually rebounded and came back better than ever. Despite difficulties, the firm neve...

HO SHUAN ENTERPRISE CO., LTD.


(S16-M01 Short Swivel-Handle Cabinet, photo courtesy of Chyn Fuh Enterprise)

Chyn Fuh: A Quality OA Metal Furniture Maker

Oct 16, 2020

Chyn Fuh Enterprise, founded in 1993, entered the market with the sole aim of offering other OA metal furniture options for customers. Since its inception, Chyn Fuh has focused on designing and producing OA metal furniture, providing various office use products, including file cabinets, storage cabinets, office desks, and different assistive metal products. Chyn Fuh partook in many government ...

CHYN FUH ENTERPRISE CO., LTD.



Insiders' Views

Caption: Pictured from front row, third right, Changhua County Government Economic Affairs Department Director Liu Yu-ping, County Magistrate Wang Huei-mei, Secretary Chen Bo-tsun pose in front of the exhibition booth. (Photo provided by CHCIA)

Changhua County Government Shores up Biz-Matching to Global Buyers

Nov 18, 2019

■Yang Feng-Chun In a bid to assist manufacturers in Changhua County to expand their market reach overseas against severe competition in the globalized market, Changhua County Government has been an active player in pushing for a makeover and innovation of its local small and medium-sized enterprises. This is done in hopes of establishing stronger connection with international markets. An ex...


Paul Master offers high-quality chassis and engines parts for passenger cars, trucks, and industrial trucks. (Photo courtesy of Paul Master)

Paul Master Builds Reputation with Auto Chassis and Engine Parts

Nov 18, 2019

Founded in 1980, Paul Master Auto Parts Co. is headquartered in Taiwan, a professional manufacturer of chassis and engines parts for passenger cars, trucks, and industrial trucks including forklifts. General Manager Terry Liang said the company has its own professional design department, which provides customized products and specifications for global buyers, including automobile steering and...

PAUL MASTER AUTO PARTS CO.


Nan Hoang Traffic Instrument Co., Ltd.</h2><p class='subtitle'>Taiwan First brakes Technology Co., Ltd. </p>

Nan Hoang Traffic Instrument Co., Ltd.

Taiwan First brakes Technology Co., Ltd.

Sep 04, 2019

Nan Hoang Traffic Instrument Co., Ltd is one of the major manufacturers of automobile friction materials in Taiwan and globally. Chairman Austin Cheng has implemented the double-arrow strategy this year - own brand of “YangPo” is adopted to focus on global channels while the “NHC brand focuses on improving market shares in global markets, such as Europe, America, Asia, Australia, and the Middle E...



Exhibition Highlights

Gearing up for Post-COVID Recovery, THS Coming Soon in October</h2>

Gearing up for Post-COVID Recovery, THS Coming Soon in October

Oct 07, 2020

As the only hardware and hand tools trade show taking place this year globally, the three-day Taiwan Hardware Show (THS) will soon kick off on 13th October at the Taichung International Exhibition Center. Positive industry outlook for the post COVID-19 era has led to over 370 companies signing up as exhibitors, in a bid to gear up for a long-awaited economic recovery and plan the next strategic m...


Stable Development and Popular Fastener Show in China</h2>

Stable Development and Popular Fastener Show in China

Sep 11, 2020

Driven by market prospects, domestic and international exhibitors actively prepare International Fastener Show China in Shanghai on November 3-5, 2020. Suffering from global epidemic and quarantine nearly half year, exhibitions are hot and popular in mainland China. Thousands of visitors join and visit the exhibitions with inquiries, and are eager to know new technology. Domestic and inter...


2020 Medical Taiwan to Host In-Person and Virtual Events</h2>

2020 Medical Taiwan to Host In-Person and Virtual Events

Sep 10, 2020

2020 Medical Taiwan is slated to kick off on Oct. 15 to Oct 17 at Nangang Exhibition Hall 2. Aside from events at the show, show organizer Taiwan External Trade Development Council (TAITRA) is also hosting the “Medical Taiwan Virtual” online edition at the same time due to travel restrictions impacted by the COVID-19 pandemic. The virtual edition will present 200 exhibitors and over 700 medic...