Economy & Business
Business outlook for 2021
ECCT directors give their insights on the business and economic trends to watch in the year ahead
By Duncan Levine
Taiwan has weathered the coronavirus pandemic relatively well so far. The local economy was a relative outperformer in 2020 compared to most countries globally thanks to the government’s early and effective response as well as the fact that many sectors of the economy benefitted from the stay at home and work from anywhere trends necessitated by the pandemic. Taiwan’s exports rose by almost 5% and economic growth for 2020 is expected to top 2.5%, making Taiwan a relative outlier globally as much of the western world experienced a severe slump.
Looking ahead, how the pandemic develops and the global response to it will continue to be a dominating theme in 2021 along with other geopolitical and environmental factors, technological and demographic trends that will have an impact on the world of business, both globally and in Taiwan.
We asked ECCT directors to give their insights on what to expect for the economy in the year ahead. The following is how they responded based on their professional expertise and industry experience (published in the order in which they were received).
Matthias Schepers, Group Managing Director, Audi Volkswagen Taiwan
I expect the automotive market in Taiwan to remain stable. We have seen a strong trend in the market towards SUVs and, with planned model introductions in this segment by all market participants, the trend will continue. The import car market which has gained momentum over the past years, will continue to perform favourably and the yet relatively small but dynamic market for Battery Electric Vehicles will continue to grow as well. I expect the charging infrastructure investments of local operators to further accelerate and more BEV products to arrive in Taiwan throughout 2021 by various OEMs. It remains to be seen how the production situation at European manufacturing sites will be affected by the ongoing pandemic but, as long as production can be secured, automotive players in Taiwan can be cautiously optimistic for 2021.
Jan Hollmann, Managing Director, Robert Bosch Taiwan
At Bosch, on the global level, we expect growth in the automotive and mechanical engineering markets to continue to be restrained in 2021. It will be a long time before these sectors can get back to the pre-crisis levels seen in 2017 and 2019, respectively, especially since setbacks cannot be ruled out. For this reason, we will be very cautious in our planning for 2021, especially when it comes to containing costs. Given overcapacity and the fundamental changes taking place in powertrain technology, the next few years will not be easy for mobility solutions, but the company sees ample opportunities in fields including electric mobility in all its various forms, automated driving, and electronics. And we continue to see the internal combustion engine as part of the technology mix needed to achieve ambitious climate targets. In addition, renewable synthetic fuels are expected to unlock additional possibilities for combustion engines in the process. Here in Taiwan, we are cautiously optimistic with regards to 2021 based on the positive momentum gained in 2020, despite the uncertain global market environment. This is based on continuous growth in the mobility (mainly 2-wheelers and eBikes) and the consumer goods business sectors as well as on a recovery of the machinery sector (for industrial technology).
Markus Wild, Managing Director, EnBW Asia Pacific
While we are expecting the third round Zonal Development rules and timeline to be released, we understand that Taiwan has inevitably been affected by the Covid-19 crisis causing delays. On top of the delayed offshore wind progress, a battle between developers competing for the same sites has increased the uncertainty for offshore wind project planning in general. However, on a global scale we see an acceleration of offshore wind expansion despite the Covid-19 crisis, especially in the Asia Pacific region.
Erdal Elver, President & CEO, Siemens Limited Taiwan
The accelerated transformation to a digital and green economy will continue in 2021 and beyond. The pandemic brought us, today, the digital future imagined three or five years from now. Taiwan has benefited from this transformation thanks to its successful management of the crisis and its key role in the global technology supply chain. As companies remain focused on future connectivity, IoT, edge and cloud computing, Taiwan is well-positioned to act as a leading player in the ecosystem. Domestically, growth in the electric car market and challenges in green energy procurement are examples of how Taiwan is jump-starting the transformation of a digitalised, decentralised, and decarbonised infrastructure, a transformation which will take place at the grid-edge. In the future, industrial companies will need to act in platforms and ecosystems so that all partners involved (developers, partners, users, integrators, …) contribute their strengths and thus create and enhance the value of these ecosystems.
Olivier Blachier, President, Air Liquide Far Eastern
2021 is still uncertain and quite different from one part of the world to the next. The health crisis will continue to push us, as every major crisis does, to act and change things in our business and way of doing things, such as using the digital technologies more extensively. Furthermore, climate change and energy remain key topics for many countries which have rolled out their economic plans to focus on the global hydrogen economy. Hydrogen is becoming part of the world strategy and it will play a very significant role in the future. It may represent about 20% of the energy consumed in the world by 2050 with the approximate value of US$2.5 trillion. As a corporate citizen, our responsibility is to think how to invent the future together with our customers for a cleaner and better world!
Bart Linssen, Managing Director, Enercon Taiwan
Events in the US shows us how much democracy and democratic values are under attack. The world is increasingly polarised, and autocrats anywhere have ample platforms to stir sentiments. Our preoccupation with Covid-19 has dampened the impact on related news but when the epidemic gets managed by mid-2021, China’s confidence and the US’s political instability may come together, resulting in events that will shake the markets.
Travelling will pick up dramatically in the middle of 2021 as soon as a vaccination allows us to move freely, but people will stay closer to home. Globally Covid-19 will be with us for at least for two years to come.
Taiwan’s way out of Covid-19 will be through vaccines as well. Predicted to be available in March 2021, it will take well until end of 2021 before enough people get vaccinated to lift all restrictions.
The implementation of the electricity act and requirement of 10% renewable energy for industry will finally increase investment in cheap onshore wind.
Frederic Chevallier, Managing Director, Kuehne + Nagel
Supply chain disruption should start to slowly improve in the second quarter of 2021, but it will not achieve the pre-Covid-19 level before 2022. Taiwanese exporters and importers will continue to be challenged by equipment and space availability as carriers are prioritising higher revenue lanes such as China/US-EU.
Another challenge for Taiwanese exporters will be the weak US dollar that should remain for most of 2021. It will affect their competitiveness but at the same time, it will offer them an opportunity to automate production and improve productivity.
The development of demand in Europe and US will be of great interest. The first half of 2021 should see a slower economy in Europe and US. There is a good chance that we observe a rebound of the US economy in second half but the same may not happen in Europe before 2022. It will be highly influenced by the monetary policies and the continuity of the various subventions.
Some key Taiwanese sectors such as bicycles, healthcare and the high-tech industry will continue to see strong development of exports from Taiwan. The environmental industry and the automation industry should boost imports into Taiwan.
Irene Feng, Managing Director, Fresenius Medical Care Group
The Covid-19 pandemic tragedy has affected the world dramatically and led to many new norms which we must learn to adapt to. From the healthcare enhancement perspective, the pandemic reminds us of the importance of going back to the fundamentals in leading a healthy lifestyle by eating well, staying physically active and maintaining good mental health, which can help us to live with the new norms and also prevent the onset of related chronic diseases. Digital wearable devices, big data for prediction models and AI in healthcare will become indispensable for human society.