Taiwanese firms look to set up headquarters abroad to avoid Chinese attack

China asserts territorial claims over Taiwan and has issued threats of annexation if Taipei resists reunification indefinitely

Several large Taiwanese manufacturers are planning to set up a second headquarters overseas to ensure smooth operations in the event of a Chinese attack on their country, according to a report in Financial Times (FT).

Rauniei Kuo, a partner and head of the family office business at KPMG in Taiwan, said, “We have clients who are looking into or planning for setting up a second headquarters.” Kuo further said that the groups are “in manufacturing [and] currently looking for a location for a second headquarters in Southeast Asia, just in case an emergency happens in Taiwan, to give them an alternative command system abroad that they can immediately activate”.

According to sources, the companies that are exploring options for setting up a second headquarters abroad include Lite-On and Qisda, which make electronic components and devices for consumer, telecoms, automotive and medical applications.

China asserts territorial claims over Taiwan and issues threats of annexation if Taipei resists reunification indefinitely. While Taiwanese experts view the likelihood of a Chinese attack in the near future as low, heightened pressure from Beijing and the utilisation of military intimidation tactics have prompted numerous foreign companies and customers of Taiwanese entities to commence contingency preparations.

Due to rising expenses in China, the ongoing trade tensions between the US and China, as well as consumer desires to mitigate risks associated with reliance on Chinese manufacturing, companies like Foxconn and Pegatron, key suppliers for Apple, are opting to broaden their presence in regions such as Southeast Asia, India, Mexico, the United States, and Europe. This shift signifies a departure from China, where they concentrated much of their production capacity.

According to the FT report, the country head of a global consultancy in Taiwan said that many companies were still focused on geographically diversifying production, and other changes, such as building contingency structures would follow. “But discussions about back-up headquarters have started at the top in the largest groups,” he said.

He further said that he is asking clients to at least replicate some headquarter functions in a second location. “You have to ask yourselves, if a conflict forces us to cease operations in Taiwan for six months or a year, can we survive? You don’t need investor relations there, but you can’t survive without finance, payroll and receivables,” he said.

The chief financial officer of one company said his group was looking at putting a second headquarters in Singapore because the group was expanding production in two south-east Asian countries.

Topco, a chemicals and parts supplier for semiconductor plants, has put together a 10-year plan for setting up additional units in various regions and for hiring and training mid-level executives to be rotated through different countries.

Charles Lee, co-chief executive of the company, said, “These mid-level managers will be senior executives 10 years from now.”