CommonWealth’s latest Top 2000 CEO Survey, conducted in late 2023, found that over 55 percent of technology and conventional industries experienced negative growth in 2023. In spite of diminished profits, over 80 percent of corporations surveyed indicated that they will raise employee wages for 2024.

Nearly 70 percent remain pessimistic, impact of regional politics

In 2024, 67.6 percent of business owners feel pessimistic about the global economy, surpassing the recent ten-year average of 58 percent.

Looking ahead, 67.6 percent of top business executives expressed pessimism over the global economic outlook for 2024, higher than the average of 58 percent over the last decade.

Regional political risks, such as the Russia-Ukraine conflict and the US-China trade war, constituted the chief concern of 60.3 percent of top business executives. This far exceeded the 41.2 percent whose major fear was the cooling of China’s economy.

“Homeland economics becoming the mainstream will shake up the global supply chain,” remarked Acer CEO Jason Chen during an interview with international media. The biggest challenge in 2024 is the uncertainty brought about by regional politics.

“Homeland economics,” a term coined by The Economist, describes a protectionist ideology adopted recently by rich developed countries in the name of national security, akin to protectionist measures taken by developing countries in the past seeking to safeguard domestic industrial development. This has led to a collapse of worldwide free trade, in The Economist’s estimation.

How big is the impact of regional politics? Nearly 90 percent of top business executives indicated that operations have been impacted by regional politics over the past three years. Among these, 16.5 percent reported a heavy impact.

The screw and nut industry, which has an annual output value of 200 billion dollars, has been disturbed by geopolitics and has started a new wave of migration after the westward march. (Source: Commonwealth)

Fearing war, hope new president will reopen dialogue

Cross-strait relations are an issue that hits home with businesses.

For the first time, CommonWealth asked 2000 company CEOs, “Are you afraid of a war between Taiwan and China within the next five years?” Sixty percent of CEOs indicated this fear, which far exceeded the 46 percent of average citizens polled by CommonWealth in an October 2023 survey, showing that CEOs are more worried about the outbreak of war than the Taiwanese populace.

“In the second half of 2022, the Taiwanese subsidiaries of quite a few foreign companies started planning how to protect their staff members and client information in the event of war, how to activate backup systems, and deploy worldwide production line resources to maintain necessary operations,” relates Jeff Chen, chairman of KPMG Taiwan.

Consequently, asked about reform policies they would most like to see the next president adopt, the top answer among CEOs - at 44.2 percent of respondents - was the reopening of cross-strait dialogue mechanisms.

“I don’t want what comes from China to be fighter planes, but passenger jets,” said Chinese Nationalist Party (KMT) presidential candidate Hou You-yi during a late November forum with nine major commercial and business groups, earning rousing applause from business representatives in the audience.

Third Wednesday Club chairman, Mr. Por-Fong Lin, and Taiwan Electrical and Electronic Manufacturers' Association (TEEMA) chairman, Mr. Richard Tsu-Chin Lee, both stressed that the total value of exports to China - including Hong Kong - accounts for 40 percent of Taiwan’s total exports. Therefore, adjustments in cross-strait relations should be a top priority for Taiwan’s economic development.

In addition to mechanisms of cross-strait dialogue, strengthened economic and trade negotiations and talent shortages were the top priorities that 40 percent of CEOs seek to resolve.

It is worth noting that in the area of investments, 52 percent of CEOs took a favorable view of Taiwan’s investment environment. This marks the lowest such mark since the US-China trade war.

Among these, small- and medium-sized businesses with NT$5 billion or less in revenue are relatively more reliant on the China market. And the majority of conventional industries, which offload inventory slower, are pessimistic.

Consequently, compared with 2023, although the majority of top corporate executives increased investments in Taiwan, the rate of investment has slowed. And the proportion of those whose year-on investment growth was 20 percent and over 30 percent was diminished.

The greatest challenge to the economic and commercial environment in Taiwan, “cross-strait relations volatility,” has been the chief concern of corporate leaders every year since 2016.

“China’s policies used to be favorable towards Taiwan, but now their policies are especially unfriendly to Taiwan,” remarked the president of a conventional industry company with manufacturing in China for two decades.

He gave the example of the PRC Ministry of Commerce ending ECFA this past August, which left the machine manufacturing industry stunned. “If Taiwan is no longer exempt from tariffs, then with five- to 10-percent tariffs on machinery exports to China, that would be the death of Taiwanese manufacturers, whose margins were only five percent to begin with,” he stated bluntly.

Most issues with Taiwan’s commercial environment related to people

It is worth noting that, in this survey, the proportion of those citing volatile cross-strait relations dropped by 12 percentage points over the previous survey. However, labor shortages, rising labor costs, and a dearth of qualified personnel have exacerbated concerns.

Southeast Asia favorite, others prefer other areas

Overseas investments reflect prevalent uncertainty about the global economic climate. Of those surveyed, 59.4 percent of companies had no plans to invest overseas. Among those that do, the proportion of those investing in Southeast Asia was 26.5 percent, the highest in a decade, trailed by North America at 7.5 percent.

Businesses planning to invest in China dropped to less than seven percent for the first time, marking a new low for the survey. This number stood at 40 percent 12 years ago.

For the first time this year, the survey included aspects related to India. In this regard, 4.4 percent of CEOs expressed interest in investing in India, slightly higher than Europe.

After setting up manufacturing, the next challenge is trans-national management. In the survey, the conventional manufacturing, service, and financial industries indicated that their biggest challenge was “difficulty finding qualified personnel locally,” with the exception of high tech manufacturing, for which “incomplete downstream supply chain” is the thorniest issue.

Lack of support for nuclear-free Taiwan by 2025

On the matter of energy, top executives’ opinions were polarized regarding Taiwan’s plan to be nuclear-free by 2025, with 49.5 percent opposing and 26.2 percent supporting the policy.

Worth noting is that 60.8 percent of those in conventional industry said that they do not support the elimination of nuclear power from Taiwan. Their chief concern is shortage of power, followed by increased electricity costs, after which was lack of confidence in renewable energy sources.

Conventional industry is a top victim of power outages. During major power outages in 2021 and 2022, conventional industries in industrial zones in central and southern Taiwan were given lower priority for electricity supply than high-tech industries in technology parks. Without power, production comes to a standstill.

Significantly, 54.7 percent of foreign corporations do not support a nuclear-free Taiwan. The main reason is still concerns about electricity shortages, but 58.6 percent of foreign companies in Taiwan expressed lack of confidence in renewable energy. And foreign corporations are the main participants and promoters of the renewable energy industry in Taiwan.

This also explains why CEOs’ expectations towards the new president saw “keeping nuclear power plants in service” ranked fifth among their top policy priorities, outranking “accelerating the adoption of renewable energy.”

After the excitement and emotions of the presidential election have faded, cross-strait relations, personnel, and energy policy are all issues that those in charge must confront.

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Have you read?

• Ahead of national election, nearly half of voters fear war
• Taiwan’s failed opposition alliance in presidential election

Translated by David Toman
Uploaded by Ian Huang