Taiwan diplomat: avoid replicating China experiences in India

Amid the global supply chain relocation, Taiwan's investments are increasingly gaining attention in India. Ben Wang, former director-general of the Taipei Economic and Cultural Center in Chennai and current representative of the Taipei Economic and Cultural Office in Papua New Guinea, recommends Taiwan-based firms avoid using experiences in China or Vietnam in managing their facilities in India, and capitalize on the opportunity when Chinese investments are largely restricted in India.

Wang told DIGITIMES Asia in an exclusive interview that India's interest in Taiwan is growing due to Taiwan's outstanding performance during the pandemic, its dominance in semiconductor manufacturing, its key providers for EV components, and Taiwan's role in electronics manufacturing as companies embraced WFH. India may benefit significantly if Taiwan's investments in India generate a lot of jobs.

Difficulties with retaining talents

Taiwan's investments in India have been relatively small compared with that of Japan and South Korea. According to Wang, many Taiwanese investments failed before, leading to cautiousness from Taiwan-based companies toward India. Taiwanese companies had difficulties retaining talent as expats sent to India might find little leisure and entertainment at Indian facilities.

According to data from the Investment Commission of the Ministry of Economic Affairs of Taiwan, approved outward investments from Taiwan to India totaled US$1,222 million between 1952 and November 2022, though increasing rapidly, still far less than most major Southeast Asian economies, such as Vietnam, Singapore, and Malaysia.

Furthermore, Wang said the biggest challenge for Taiwan-based companies in India is their limited understanding of local cultures, such as caste and religion, and their attempts to apply their experiences in China or Vietnam to India.

Wang believes that India's time has come as the world is looking for the next world factory after China, especially when global inflation lingers. India's low labor cost and large population, a two-billion-people market if other South Asian countries are included, represent enormous opportunities for Taiwanese companies looking for diversified production and emerging market.

Taiwanese companies to fill the void left by China

Besides, the souring relationship between China and India provides an opportunity for Taiwanese companies, as India has restricted investments and business travels from neighboring China, allowing Taiwanese companies to fill the void when Chinese investments are absent.

Wang recommended Chennai as one of the best locations for investments, as mobile and automobile ecosystems are in place, in addition to a port required for electric vehicles that have to be shipped through sea routes.

Meanwhile, thanks to local engineers and fabless design houses, Bangalore and Hyderabad are also options worthy of investment for manufacturing PCs and mobile devices, which could be shipped by air. Still, Chennai may be a better place than Bangalore to invest in India for Taiwan-based companies, Wang said.

There are difficulties as well as opportunities ahead for Taiwan-based companies investing in India. According to Wang, Taiwanese firms may not rely on past experiences in China and Vietnam for managing their factories in India and should actively keep in touch with government officials and local communities.

'Taiwan towns', where entertainment facilities, such as gyms, malls, and theaters are offered besides production lines, are necessary for companies to retain expats sent from Taiwan. Companies from Taiwan in India must work together instead of competing for limited resources such as the labor force, and the supply chains, Wang said.

Taiwan-based companies have to choose their Indian partners carefully when investing in India. Big conglomerates such as Tata and Mahindra may help thanks to their understanding of the local market, while Taiwanese firms may also collaborate with Japanese counterparts as they have begun investing in India 40 years ago.

Local governments in India are wooing investments in electronics manufacturing and electric vehicles - a situation that companies from Taiwan could use as bargaining chips when investing in India. According to Wang, neighboring cities in different states, such as Sri City in Andhra Pradesh and Chennai in Tamil Nadu, or Bangalore in Karnataka and Hosur in Tamil Nadu, are willing to offer better deals than their counterparts to attract Taiwanese investments.

Source: Investment Commission of MOEA of Taiwan, December 2022

Credit: DIGITIMES Asia

Ben Wang studied finance, computer science, and cross-cultural studies at Feng China Univerisity, the University of Detroit, and Fu Jen Catholic University, respectively. He served as a diplomat since the 1990s, and was appointed as minister of the Embassy of the Republic of China in 2019 before becoming the director-general of the Taipei Economic and Cultural Center in Chennai in 2020 and representative of the Taipei Economic and Cultural Office in Papua New Guinea in 2022.