Special Feafure

Is Requiring Extra Overseas Plants
on Taiwanese Fastener Owners
Truly Necessary?
First and Foremost is to Pinpoint Impact Range
and Gain Buyers’ Confidence

Are You Tensed up About theTaiwan Strait Tension?

In our interaction with fastener associations,business owners and global exhibitors, we observedthat a number of overseas buyers are worried about one
thing: "If there is a war in the Taiwan Strait, will thesupply chain of Taiwan fasteners be cut off?". Thesebuyers are beginning to hope for Taiwanese owners toestablish factories in Southeast Asia or other regions(which forms the concept dubbed as "Taiwan +1",
where the plus mark denotes “extra” and “+1” denotes“an extra location”). They expect Taiwanese owners
to build production lines in other countries to avoid
broken supply chains. The Russian-Ukrainian war
has lasted for more than 500 days, leading to global
inflation, rising interest rates, soaring prices and public
inconvenience. The Global Misery Index pushed
up by this war has been deeply felt by everyone. If
China starts a war against Taiwan, the index willundoubtedly exceed that of the Russian-Ukrainianwar by several times, and it will lead to global chaos.
Undeniably, the tension between Taiwan and China islargely influenced by the rivalry and friction between
the United States and China, which indirectly leads tothe need for Taiwan to make policy choices. China's
military and political moves have undisputably added
up to the heating up of the "+1" trend. Nevertheless, itis worth clarifying whether this trend affects Taiwan
fastener industry. Therefore, this article will share ourexperiences and a few points for thought through thefollowing different perspectives.

Taiwan Has No Intention andPrerequisites to Provoke China
Taiwan has never wanted a war, nor will it initiate one.
Taiwan's status quo is influenced by geopolitics and historicalburdens. The people of Taiwan know in their hearts that they
do not want to go to war to achieve some kind of goals.

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Fastener World no.202/2023 惠達雜誌

Taiwan has had a very close relationship with China. Over the past 30years, Taiwan has invested more than US$200 billion in China, and morethan 10,000 Taiwanese companies have set up factories in China. There are
more than 100 Taiwanese fastener companies operating in China. According
to Taiwan’s Ministry of Finance, Taiwan's exports in 2021 reached a record
high of about US$446.4 billion, of which 42% (US$187.4 billion) wereexported to China, and the trade surplus for Taiwan was nearly US$60
billion, which shows quite a large China's economic contribution to Taiwan.
There are more than 500,000 Taiwanese people working in China
and more than 10,000 Chinese people working and studying in Taiwan.
According to Taiwanese government’s statistics, there are more than
100,000 registerations of intermarriage between Taiwanese and Chinese
people, so a war would only result in the separation of family and bitterness
on both sides of the Taiwan Strait. There is complicated sentiment
between Taiwan and China, and the economic development they havebuilt together has been very successful, so Taiwan will not make up
a reason to go to war. Leaders on both sides of the Taiwan Strait shouldhave the wisdom to choose a way of life that is mutually acceptable andallows for coexistence, rather than destroy decades of development on thespur of the moment.

The Price of War is HighIf China were to attack Taiwan, it would first have to face the world's
largest maritime war in history. The Taiwan Strait separating the two sides
is 77 to 140 kilometers wide, and for those with a military background,
it is not difficult to understand the difficulty of such a landing operation.
According to official figures, Taiwan currently has 700,000 reservists whocan respond immediately in the event of a war. Taiwan has also acquired
many fine weapons through the supply of semiconductors and procurementof military weapons, and it is believed that Taiwan has enough power todefend itself. As a saying goes, the winner takes the throne as the king (ahero in history) and the loser rots in the river of history. Many overseas
experts have warned of the risks and consequences of a cross-strait
war. In the event of a war, Taiwan and China's respective economies
would be destroyed, and it would take decades to rebuild. Who canafford such a heavy burden?

Special Feafure
Fig. 1. Taiwan’s Global Fastener Export Value in the Past 20 Years
Global Export Value (USD)

6,000,000,000
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000

2002
2003
2004
2005
2006
2007
2008
2009
20
1020
1120
12
20
13
20
14
20
15
20
16
20
1720
18
20
19
20
20
20
Q1 21-320
220Fig. 2. Taiwan’s Global Fastener Export Volume in the Past 20 Years
1,800,000,000
1,600,000,000
Global Export Volume (KG)

1,400,000,000
1,200,000,000
1,000,000,000
800,000,000600,000,000400,000,000200,000,000
2005
2006
2007200820092010201120122013201420152016201720182019202020
Q1 21-3202204

0320202002

0

If There is a War Across the Taiwan Strait,
Will it Affect the Development of Fastener
Industry?
Which Part of Taiwan Fasteners isReplaceable and Which Part is Not?

The global fastener production and sales market size is US$85billion (20 million tons of fasteners produced), of which Taiwan's
size is about US$5 billion (1.5 million tons). Compared to Taiwan'ssemiconductors which take up 90% of global market share,
Taiwan's share of fasteners in the global market is relatively small.
Taiwan's fasteners fall in the middle of the price range on
average, and in the event of a war, it would not be difficult
to find other countries to buy the same level of products
as Taiwan. However, it is necessary to point out that, although
Taiwan fasteners can be replaced in terms of price, Taiwan’s R&D
capability, production management, credibility, its supply chain
which is the most complete in the world, as well as high valueadded products and service satisfaction, are Taiwan's unique andirreplaceable features.

150Fastener World no.202/2023 惠達雜誌Fasteners are Not a Critical Tactical AssetFasteners are not an extremely critical and tacticalmaterial like semiconductors. If a war breaks out, thepossibility of Taiwanese fastener factories being attacked
is not high. Taiwan already has experience in establishing acomplete supply chain; in addition, many Taiwanese fastenercompanies have set up bases overseas which have the ability tosupply goods, so even if there is a war, they can quickly resume
production of fasteners. On the whole, if there is a war, it won’t
amount to a nuclear level of destruction on Taiwanese fasteners,
and it is less likely to cause a major global panic and a major
shortage of goods.

Taiwan's Fastener Trend Line Remains
Unaffected
Taiwan's political ground, economic development and social
security is very stable. For the past three years this had neverbeen affected by war concerns and COVID. Even in the past 20years, Taiwan's fastener exports have shown a 20-degree
upward trend line (see Figure 1 and 2), which will only besubject to the global economic climate, but not to politicaland war factors.

Special Feafure
Will Adding Overseas Locations
Necessarily Translate to Lower
Price Offer?
It is undeniable that some of the Taiwaneseowners has cooperated with buyers' requests bygoing to Vietnam, Thailand, Indonesia, Malaysia
and other places to build factories in order todiversify the risk. However, Taiwan fastenerindustry mostly consists of small and medium-sizedenterprises (SMEs) which don’t have a high levelof manpower, material resources and capital. The
global fastener market climate lately is not as good
as expected, and this comes with the upcoming
carbon tax and costs for environmental protection,
so going overseas to set up factories would mean
a lot of pressure. In fact, as far as the current
situation, the cost of setting up productionlines in other countries is no less than the costof production in Taiwan, which may obstruct
Taiwanese owners from providing buyers with
better prices and service satisfaction.
Considering all the above factors, there is nolonger any requisite for direct friction between
Taiwan and China. Taiwan has nothing to gain
by starting a war, and furthermore China as theworld's largest market is very much in line with
Taiwan's economic development needs.

In the Face of Asia-Pacific Tensions, We Need Everyone
on Board to Have More Confidence in Taiwanese
Fasteners
After clarifying the scope of impact of Taiwan Strait tensions on Taiwan'sfastener industry, we believe that buyers don't necessarily need to askTaiwanese owners to keep up with the "+1" trend because, as alreadymentioned, doing so won't necessarily lead to better pricing for buyers. Thatsaid, it is not unreasonable for buyers to be concerned, and this underscores themany ways in which Taiwanese companies must make buyers feel more confident
in the safety, stability and strength of Taiwan's fastener supply. As a medium forcommunication, Fastener World Magazine takes the responsibility to analyze
the scope of impact for suppliers and buyers, hoping to open up more room forcommunication.
We believe buyers who have visited Taiwan would be aware that there is no war
atmosphere in Taiwan. What's more, the New Taiwan Dollar and the US Dollar havebecome two of the world's most appreciated currencies. The price of land in Taiwan
has tripled, and there has been no surge of emigration. In addition, on July 11 theU.S. Department of State maintained Taiwan's Travel Alert Risk at the safest level.
Fastener World would like to urge global buyers that Taiwan fasteners are one of themost resilient, endurable and reboundable industries in the world, and we have citedFigures 1 and 2 as evidence of this. Taiwan is stepping out into the world in a waythat it never could before, and because of this, we need buyers around theworld to see the strengths of Taiwan fasteners and have more confidence inthem, so that all of us can together continue to create mutual benefits for Taiwan andthe rest of the world.
Article by Dean Tseng, Fastener World
Copyright owned by Fastener World惠達雜誌 Fastener World no.202/2023

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