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Taiwan's Machinery Exports Down in Jan.-June, 2015

Jul 27, 2015 | By Ken Liu

Taiwan's machinery exports decrease YoY in the first half of 2015.Taiwan's machinery exports decrease YoY in the first half of 2015.
In the first six months of this year, Taiwan exported US$10.12 billion of machinery, including US$1.64 billion of machine tools, both of which representing year-to-year decreases, with the total export inching down 0.4 percent and the machine-tool export sinking 9.1 percent.

President J.C. Wang of the Taiwan Association of Machinery Industry (TAMI), which represents around 3,000 Taiwanese machinery manufacturers, ascribes such declines mostly to the relatively stronger NT-dollar-to-greenback ratio to the weaker Japanese yen, South Korean won and euro; the Free Trade Agreements (FTA) the South Korean government has signed with major economies like America, mainland China and the European Union; and the increasing encroachment on Taiwanese market shares by mainland Chinese manufacturers of low-end, mid-range machinery.

He points out that the average NT-dollar-to- U.S.-dollar exchange rate was 31.22-to-1 in the first half of this year, down around 4.3 percent since 2007, versus the depreciation of the South Korean won at 15.2 percent, Japanese yen around 50 percent and euro 26 percent.

Denominated in NT-dollar, Taiwan's machinery exports as a whole totaled NT$316 billion (US$10.19 billion) in the first six months, up 3.0 percent from the same period of last year. The exports were NT$56.7 billion (US$1.82 billion) in January, soaring 25.7 percent year on year; NT$42.2 billion (US$1.36 billion) in February, rising 3.1 percent year on year; NT$54.9 billion (US$1.77 billion) in March, down 1.3 percent from the same month of last year, NT$51.1 billion (US$1.64 billion) in April, slipping 4.6 percent from the comparable month of last year; NT$58.8 billion (US$1.89 billion) in May, a gain of 9 percent from the same month of last year; and NT$51.9 billion (US$1.67 billion), losing 9.8 percent year on year.

China the Top Buyer
Mainland China was Taiwan's top buyer of machinery in the first half of this year, importing US$2.78 billion, or 27.5 percent, of Taiwan-built machines for a 1.8 percent increase year-on-year. The United States came in second to absorb US$1.73 billion, or 17.1 percent, of Taiwan-built machinery to register a 0.1 percent contraction year-on- year. Japan was the No.3 buyer, importing US$671.4 million, or 6 percent, of Taiwan-made machine tools to register a 3.9 percent decrease.

Taiwan shipped US$544 million of machinery to mainland China in January, US$278 million in February, US$523 million in March, US$438 million in April, US$537 million in May, and US$448 million in June, spiking 78.6 percent, plunging 25.0 percent, rising 3.7 percent, decreasing 5.4 percent, increasing 2.4 percent and slumping 20.3 percent year on year, respectively.

The island's worldwide shipments of machine tools were US$287 million in January, US$208 million in February, US$302 million in March, US$269 million in April, US$293 million in May, and US$283 million in June, surging 16.1 percent, sinking 10.0 percent, shedding 9.8 percent, down 15.7 percent, contracting 9.8 percent and declining 19.4 percent year on year, respectively.

Mainland China was also the biggest export destination for Taiwan's machine tools in the first six months this year, absorbing US$488.75 million, or 29.7 percent, of such Taiwan-made machine to register an 18.9 percent decrease year on year. The U.S. came in next, buying US$190.30 million, or 11.6 percent, of the machines to post a 0.5 percent contraction year on year. Turkey was the No.3 buyer, importing 97.68 million, or 5.9 percent, of the machines for a 5.6 percent increase year on year.

Such Taiwanese exports registered a 26.1 percent decrease to Thailand, a 12.6 percent slump to Germany, a 45.6 percent surge to Vietnam, a 0.5 percent rise to Holland, a 14.8 percent increase to Japan, a 2.4 percent drop to Malaysia, a 11.0 percent increase to India, an 8.9 percent decline to Russia, a 17.2 percent fall to South Korea, a 16.4 percent decrease to Italy, a 24.0 percent slump to Indonesia, a negative growth of 17.6 percent to England, and a 35.2 percent loss to Brazil.

The top-16 export destinations of Taiwan's machine tools together accounted for 82 percent of such Taiwanese exports in the first half of this year.

TAMI's statistics show Taiwan's machinery exports in the first six months of this year also had dropped, contracting 10.1 percent year on year to US$10.33 billion. Denominated in NT-dollar, the export revenue was NT$256.8 billion (US$8.28 billion), down 10.0 percent from the same period of last year.

The island imported NT$56.5 billion (US$1.82 billion) of machinery in January, NT$40.7 billion (US$1.31 billion) in February, NT$55.2 billion (US$1.78 billion) in March, NT$52.8 billion (US$1.70 billion) in April, NT$51.5 billion (US$1.61 billion) in May, and NT$65.8 billion (US$2.12 billion in June, rising 13.0 percent, decreasing 18.0 percent, plunging 26.4 percent, declining 14.0 percent, growing 4.8 percent, and gaining 6.1 percent year on year, respectively.

Japan, the United States and mainland China were the top machinery suppliers to Taiwan in the first half of this year. Japan supplied US$3.32 billion, or 32.2 percent, of Taiwan's imports, declining 11.9 percent year on year. The U.S. shipped US$2.09 billion, or 20.3 percent, decreasing 13.5 percent year on year. Mainland China supplied US$1.38 billion, or 13.4 percent, climbing 3.2 percent year on year.

Wang points out that although Taiwan and mainland China in 2013 had began pushing the talks on a traded goods agreement under the Economic Cooperation Framework Agreement (ECFA) that the two sides signed in 2008, the two sides have failed to complete the talks on the agreement that was intended to slash tariffs on traded goods including machinery by the end of 2014 as scheduled.

Compared with Taiwan mired in stalled negotiations, South Korea has shipped tariff-free machinery to the European Union countries and the United States since July 1, 2011 and March 15, 2012, respectively, thanks to the Free Trade Agreement (FTA) it had signed with the EU and the U.S. South Korea's machinery, machine tools in particular. It will also soon roll into mainland China as the two economies have signed such agreement in June this year.

Leveraging Advantages
South Korean manufacturers, he adds, are leveraging the relatively cheaper won and the FTA to outdo Taiwanese manufacturers. In the meantime, Japanese machine makers are tapping the steeply devalued yen, traded at above 120:1 to the greenback recently, to sell machines at relatively low prices on the global market, having received over 100 billion yen (US$815.06 million) of orders in each of the past 21 consecutive months through June. Further exasperating the scenario are the mainland Chinese manufacturers without sophisticated technologies who are encroaching on Taiwanese manufacturers' market shares of low-end, mid-range machine-tools, to become intensifying threat.

Wang suggests that to cope with the volatile global economy and daunting competition, Taiwan's machinery makers should integrate more smart, automatic and customized features into machines, as well as strengthen ability in receiving and filling urgent orders and short-term orders. The Taiwan government, he adds, should accelerate Taiwan's integration into the global economy so that the island's machines can viably compete against those from Japan and South Korea. 

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