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1000 Taiwan-backed Businesses Reported Affected by Vietnam Protests

A man looks at the damaged building of Taiwanese bicycle factory Tan Than in Di An Town, Binh Duong Province, Vietnam, Wednesday, May 14, 2014.

A man looks at the damaged building of Taiwanese bicycle factory Tan Than in Di An Town, Binh Duong Province, Vietnam, Wednesday, May 14, 2014.

Taiwan’s government is taking steps to protect its citizens as anti-China protests continue to grip Vietnam. Authorities say some 1,000 Taiwanese-backed businesses have been affected by protests over alleged territorial violations by a Chinese oil rig as the Taiwanese workers and businesses are being mistaken by protesters as a proxy for rival China.

Taiwan lodged a formal protest to Vietnam this week over rioting that has burnt, vandalized or looted factories in industrial parks near Ho Chi Minh City.

The government in Taipei says the violence affected 1,000 Taiwan-invested factories, prompting hundreds of investors to flee. The government is planning to increase flights as needed to bring them back to Taiwan.

Taipei is also preparing to demand compensation over damaged property, though it says there’s no way to estimate the amount due. Alexander Huang, professor of strategic studies at Tamkang University in Taiwan, said officials in Taipei have done all they can.

“I think Taiwan has tried almost everything for now, arranging increased flights, going through every possible diplomatic channel, and Taiwan has only limited tools at hand to deal with the issue. We do not want to put the fuel on the fire and further endanger our investors over there. We have certain strengths in negotiating and engaging the Vietnamese government, but we are not a superpower for sure,” said Huang.

Vietnamese targeted Taiwanese as a stand-in for ethnically similar mainland China after a dispute earlier this month about Beijing’s installation of a mammoth oil rig in waters also claimed by Hanoi. Taiwan-backed factories are more numerous than those set up by Chinese investors in the areas where protests grew violent on Tuesday.

If large numbers of Taiwanese businesses leave Vietnam it would likely hurt both countries. At least 3,000 Taiwanese companies operate in Vietnam, making them one of the host country’s largest sources of foreign investment, along with Singapore and South Korea. Many Taiwanese firms operate in industrial zones outside Ho Chi Minh City to produce car parts, furniture and plastic goods.

The total value of trade between Taiwan and Vietnam reached $11.5 billion in 2013, making the Southeast Asian country Taiwan’s 13th largest trading partner. Some of the larger Taiwan-operated factories employ hundreds of local people. Foreign investment from all countries has made up from 3 to 12 percent of Vietnam’s export-driven economy each year since 1990.

Taiwanese have cited Vietnam as a low-cost manufacturing base since 1986 and especially over the past decade as costs rose in China, another favorite offshore base for Taiwan capital. But due to rising land prices, labor unrest and currency volatility in Vietnam since 2008, many of the 40,000 Taiwanese in Vietnam have considered moving to other parts of Asia. Since 2012, Taipei officials have offered incentives for Taiwanese investors to return home and invest in Taiwan.