- POSTED: 20 Jun 2014 21:37
- UPDATED: 20 Jun 2014 21:40
Taiwan fears it will lose more of its flat panel display market share to its rivals, especially after Seoul and Beijing complete their free trade deal at the end of the year.
TAIPEI: Taiwan's flat panel display exports to China have lagged behind South Korea for the fifth consecutive year.
The island fears it will lose more market share to its rivals, especially after Seoul and Beijing complete their free trade deal at the end of the year.
Taiwan was once the world's biggest flat panel display supplier to the greater China market.
Between 2003 and 2008, Taiwan held more than 35 per cent of the Hong Kong-China market.
But while Taiwan sat on its laurels, China and South Korea started cranking out flat panels.
By 2009, South Korea took control of the China market, edging out Taiwan with almost 33 per cent of market share.
And as Taiwan continued to lose market share, China started to gain as well.
As of 2013, China's market share was on par with Taiwan's 27.4 per cent.
There are fears that China will surpass Taiwan's flat panel display market, not just in Taiwan, but globally.
Masson Li, vice president of Taishi Holdings Research Department, said: "China has been providing subsidies to its flat panel industry and this will continue until the end of 2016.
“So what we see is China's global output has shot up to 14 per cent last year from 4 per cent in 2001. We expect the figure to rise to 25 per cent by the end of 2015. Taiwan's global output, on the contrary, is forecast to fall from 32 per cent last year to 28 per cent in 2015."
Analysts said China learnt from the best.
Leon Lee, vice president of E-invest Security Investment Consultant Co, said: "China has been recruiting a lot of Taiwanese talents from the industry in recent years. If you're paid NT$1 million in Taiwan, China would also offer you one million, except it would be in RMB. That's five times what you make here."
Things are looking even worse for Taiwan, as China and South Korea are likely to seal a free trade deal later this year.
This will offset any advantage Taiwan has enjoyed under its Economic Cooperation Framework Agreement with the mainland.
Analysts warn that as much as 70 per cent of Taiwan's exports that overlap with South Korea will suffer.
Analysts said Taiwan's best option now may be a regional trade pact, like the Regional Comprehensive Economic Partnership (RCEP) or the Trans Pacific Partnership (TPP).
But even that has its challenges.
Li said: "We have little chance of joining the RCEP because China is in charge. Unless the mainland lets us join, it would be very difficult. So we should expedite our participation into the TPP, otherwise all industries would be forced to move out of the island."
Until then, Taiwan's trying to stake its ground by moving up the value chain.
It is moving towards higher quality products in a bid to stay competitive in a cut-throat market.