Japan's machine tool companies to invest in Taiwan optimistic about the Chinese market

Recently, Kurashiki Machinery Co., Ltd. held a completion ceremony for the construction of a new factory. Many Taiwanese machine tool companies, including Shanghai S&T, are supply chain suppliers in Kurashiki. After volume production in January 2012, Kurashiki will account for 8% of the global supply chain. According to officials from the Ministry of Economic Affairs of Taiwan, Kurashiki Machinery is a manufacturer of high-end machine tools, and is particularly famous for its professional machine tools such as aerospace and wind power, as well as CNC horizontal boring and milling machines.

In 2010, after China’s Taiwan and the mainland signed the ECFA, some of the machine tool projects exported to the mainland could enjoy zero-tariff treatment, causing the Japanese machine tool makers to invest in Taiwan. In November last year, Kurashiki Machinery decided to set up the first overseas production base in Taiwan's Zhongke Third-phase Houli Industrial Park. Although the investment amount is only NT$264 million, it is not possible to exclude additional investment. Officials of the Ministry of Economic Affairs stated that Kurashiki Machinery is very optimistic about the Chinese mainland market and hopes to use Taiwan as a production base.

Under the influence of Japan's 311 earthquake and the soaring Japanese yen, Japanese businessmen have sought overseas backup bases to diversify risks. In particular, Taiwan and the mainland have signed and completed the ECFA, which is more advantageous than other regions. It is expected that the export value of Taiwan's machine tools will be increased in 2011. With over US$4 billion, it is expected to squeeze Italy for the first time and become the world’s top three machine tool export regions, second only to Japan and Germany.

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