For Some Companies, Taiwan is Already a Regional Hub

Bechtel is the U.S.’s largest private construction firm. In its more than 120 years of operation, the company’s projects have included the Hoover Dam, the Channel Tunnel, and construction of over 30% of global Liquified Natural Gas capacity.

While Bechtel has had a presence in China for many years, the company closed its Shanghai regional headquarters in 2014. Local competition toughened as Chinese construction companies played catch-up and it became more difficult for outsiders to win government contracts. The company has re-opened a new regional office this year in Taiwan, which will be the hub for all of Bechtel’s operations in the Asia-Pacific region.

“Across Southeast and East Asia, Taiwan has the best medium-term prospects for us as a company,” says Richard Freer, Bechtel’s Regional President for Asia Pacific.

Bechtel has operated on the island since 1979 through a subsidiary, Pacific Engineers and Constructors Limited, and has specialized in fossil and nuclear power, transportation communications, petroleum and environmental services. It has been involved in the construction of the Kuosheng and Maanshan Nuclear Power Plants, the Taipei Railway Station, and the Taipei Mass Rapid Transit System.

“The energy market here is especially interesting,” adds Freer. “Irrespective of what happens in the January elections, we will see a transition from coal to gas.” Such a shift is expected to open up new business opportunities for Bechtel in Taiwan. 

“Gas will play an increasingly large role in Taiwan’s energy mix and is going to be a big issue for the whole region,” Freer says. “Our experience in this sector can help customers across Asia-Pacific develop new and more sustainable energy supplies.”

Bechtel has also engaged extensively in the decommissioning of nuclear power plants, Freer points out, something that is important as Taiwan looks to go nuclear-free by 2025. Taiwan’s oldest nuclear reactor at Chinshan has already begun the decommissioning process, while under existing policy two more nuclear power plants across the island are scheduled to be shut down in the coming years.

Meanwhile, the government has sought to expand Taiwan’s renewable energies from about 2% to 20% of its energy portfolio by 2025. Freer notes that Bechtel can support this initiative, too. “We are also active in Taiwan in wind and solar power generation,” he says.

Freer commends Taiwan’s government procurement process for being open and transparent, something that is not always the case elsewhere in the region. “We feel that the market is open to companies like Bechtel, that the contracting environment is good, and that there’s a business environment here that we can effectively compete in,” he says.

Another selling point for Taiwan, Freer observes, is its abundance of engineering talent.  Aside from a few expat employees, PECL’s 500-strong workforce consists of local Taiwanese.

Furthermore, Taiwan’s position in the center of Asia makes it an attractive center of operations in the region. The connectivity provided by Taiwan’s two major airlines makes managing the rest of the company’s regional business interests much easier.

Finally, a big plus for Bechtel is that Taiwan tends to adopt a broader social outlook compared to most of its regional neighbors. “As a company we champion diversity and the liberal social laws here create a good environment for us to do business,” he says.

Another major U.S. company that has made Taiwan its regional hub is Corning, a producer of sophisticated glass and ceramics products, as well as related technologies.

Corning began doing business in Taiwan in 1971. As the island’s Liquid Crystal Display industry developed, the company decided to move its LCD glass production closer to its customers, most of which were Taiwanese panel makers. In 2000, it founded a subsidiary, Corning Display Technologies Taiwan, and began investing in manufacturing facilities in Taiwan’s budding science parks.

In 2012, Corning settled on Taiwan as the base from which to manage its display technology business. From there, it continued to provide the market with advanced LCD substrates – specialty glass used for thin-film transistor panels.

Corning operates various other business units in Taiwan, as well as two research and technologies center. Around 80% of its Taiwan-made glass products are intended for use in large LCD TVs, while the other 20% are used in various ICT products, including smartphones. The company’s executives note that it has provided glass for Apple’s smartphones since the very beginning of their production.

Daniel Tseng, president of Corning Display Technologies Taiwan, says Taiwan’s friendly environment and low operating and living costs makes it a natural choice for expatriates. He also emphasizes the rich pool of talent in Taiwan and the high level of government support.

“Our customers in Taiwan all make high-end products, and Corning offers them high-end glass,” Tseng says.

Corning’s executives champion Taiwan’s strong intellectual property protection regime. Tseng notes that it is difficult for competitors in other countries to uncover the company’s trade secrets.

“The key secret is in the manufacturing process,” Tseng says. “Even if they know the composition of the glass, they are still unable to replicate it.” Corning therefore has been appreciative of Taiwan’s efforts to strengthen and enforce its laws to protect trade secrets.  

However, Tseng pointed out that China is offering increasingly plush tax breaks and subsidies to this industry, making it more competitive and squeezing out other regional players. “We would encourage Taiwan’s government to strengthen and create Taiwan’s advantages in order to attract more foreign investment,” he says.

Among other prominent multinationals that have based their regional headquarters in Taiwan are Versum, a 2016 spin-off of the electronic materials business of Air Products, and Synopsys, a supplier of equipment and software for the semiconductor industry. Versum, which serves the semiconductor and display industries, has since been acquired by Merck of Germany.

Taiwan is an important market for both companies because of the presence here of many of their major customers.