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Taiwan manufacturers set up more R&D centers

TAIPEI, Taiwan -- About 45 percent of local firms that receive foreign orders had research and development (R&D) centers in 2013, a record high in four years, according to the Ministry of Economic Affairs' (MOEA) latest statistics.

The MOEA's report shows that 45.1 percent of firms have R&D centers, up 7.4 percentage points from the previous year. Up to 98 percent of these firms set up R&D centers in Taiwan.

The MOEA found that companies that specialize in manufacturing for either local or overseas markets are most likely to set up R&D centers, compared to companies that only focus on trade. The MOEA's report was based on a survey of 2,636 local companies.

In addition, firms with a higher number of employees are more likely to set up R&D centers. The report shows that about 70 percent of firms with R&D centers have more than 200 people on staff.

More Manufacturing Firms Moving Overseas

Taking orders in Taiwan while carrying out production overseas has become the norm for many Taiwanese companies. The MOEA said 51.1 percent of local firms operated this way in 2013, up 0.6 percentage points from the previous year.

The report shows that 48.5 percent of firms manufactured products in Taiwan in 2013, down from 49.6 percent in 2010, and 47.1 percent of firms manufactured in mainland China and Hong Kong in 2013, up from 43.8 percent in 2010.

Fewer firms manufactured in ASEAN-6 and western nations, comprising 1.4 percent and 1.3 percent respectively.

Data shows that most ICT (information and communication technology) products, electrical products, precision instruments and electronics products are produced overseas, mostly in mainland China. Chemical products, plastic products, rubber products, metal products and machinery are mostly produced in Taiwan (80 percent or more).

Lower Costs Remain Attractive

The main reason for moving production overseas is lower costs. The survey shows that 55.1 percent of firms outsourced in pursuit of lower costs, 54.6 percent outsourced in order to meet customer demands, while 31.1 percent outsourced for easier access to raw materials.

However, the allure of lower costs is declining quickly. As high as 73.2 percent of firms produced goods overseas in 2010 for lower costs, which was 18.1 percentage points higher than last year's figure.

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