I know this is old news already but its worth a mention. Earlier this week a number of news sources said Hon Hai planned to invest in an international shipping hub in the Southern Taiwanese city of Kaohsiung. According to the China Economic News (CENS):
Following its plan to set up operations in the Kaohsiung Software Park, Hon Hai Group has planned to establish a transshipment center for its Asian operation in Kaohsiung Harbor, which may further develop into the group`s global logistics and operation center in the future.
The projected transshipment center will handle finished and semi-finished products from its factories in Vietnam and China`s Guangdong province, in addition to undertaking some simple processing works before transporting those goods to final destinations. Currently, Hon Hai transships those goods mainly via Hong Kong or Singapore.
Kaohsiung harbor officials revealed that Hon Hai has requested to lease a new plot of 38.8 hectares entirely, originally the site of a factory of Tang Erng Iron Works, being acquired by the harbor authorities for use as the free-trade harbor area.
The plan follows the group`s previous pledge with the Ministry of Economic Affairs for establishing an R&D center staffed with 520 engineers inside the Kaohsiung Software Park by mid-2009.
This is good news for the Kaohsiung port and comes hot on the heels of Maersk announcing they would slash their shipping capacity from the port by half. According to a Reuters report earlier this month:
A.P. Moller-Maersk plans to slash about half its container handling capacity in Taiwan's Kaohsiung, Asia's No. 6 port, the latest blow to a harbour that has been losing ground steadily to South Korea and China.
The Kaohsiung Harbour Bureau confirmed on Wednesday a newspaper report that Maersk (MAERSKb.CO: Quote, Profile, Research), Kaohsiung's largest foreign operator, intends to give up berths 118 and 119, two of the four it operates in the harbour, when their leases expire in October.
The move by the operator of the world's largest container shipping fleet is expected to further hurt Kaohsiung's declining position as one of Asia's top ports.
The 143-year-old harbour has been losing ground to fast growing rivals across the Strait in China, with the global container shipping industry under pressure from a slowing world economy and rising fuel prices.
But the bureau hopes to convince Maersk to at least move some of its capacity to a berth adjacent to the two berths that will remain following Maersk's departure, arguing that will help the company cut costs.
"We are in talks to have them move to berth 75 and relocate the existing operator, South Korea's Hyundai, to 118 and 119," said Huang Kuo Ying, deputy director general of the Kaohsiung Harbour Bureau.
Kaohsiung will definitely benefit from Hon Hai's investment in both the science park and the port. One wonders however how politically motivated the move was? While I am glad to see investment in Taiwan and glad to see tech companies making an effort to keep Taiwan competitive in all areas of economic activity, I am saddened to think this decision may not entirely be based on good business principles but more political motivation. Yesterday Terry Gou Tai Ming, the chairman of Hon Hai, got engaged in Taipei and his guests included the new president Ma Ying Jeou and many KMT legislators. Honorary Chairman Lien Chan of the ruling Kuomintang will also be the host at the wedding (see China Post article).
One wonders if the Democratic People's Party (DPP) won the election, if Hon Hai would have pledged the same level of investment! Once again, this is not a political blog so we stop here! At least Kaohsiung will reap some benefits.
China Economic News: Hon Hai Plans to Set UP a Transshipment Center in Kaohsiung
Reuters: Maersk to slash Taiwan port ops, focus on China
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