Hungary among the top investment targets of Taiwanese companies in Europe!

Hungary is among the top investment targets of Taiwanese companies in Europe despite the Orbán administration’s China-friendly policies. Is this a unique Hungarian success story attracting Chinese and Taiwanese working capital in that small Central-European country? Below is the answer based on the analysis of portfolio.hu.

Hungary is in the second place in Europe

According to a report about the EU-Taiwan relationship published last year, the Netherlands has the highest volume of Taiwanese direct investments (49 pc). However, the second place belongs to Hungary (18.8 pc). The data surprised many in the old continent because Hungary’s government has strong ties with China. Despite receiving a lot of criticism from the west because of the constantly developing Budapest-Beijing relationship, seemingly, that does not harm the Taipei-Budapest economic ties – portfolio.hu reported.

Tensions between China and Taiwan have been rising for years. Officially, the island state, which is 2.5 times smaller than Hungary, is not independent but belongs to China. De facto, Taiwan has its legislation and economic system as well as military. True, only 14 countries have established diplomatic ties with the island state. On the other hand, Taiwan is fully absorbed in the global economy. For example, it is the world’s biggest chip and semiconductor manufacturer. Interestingly, China has 55 pc of the country’s direct investments followed by the British Virgin Islands (13.5pc), the USA (6.3pc) and the EU (2.1pc).

Read also: Hungary and other V4 countries are in the top 12 investment destinations of the world!

The Central European region has been a popular investment target for Taiwan since 1990

Hungary, Poland and the Czech Republic were among the most popular investment options following 1990 for East Asian companies. The second wave of investors came after their EU accession, and many East Asian firms bought up assets in the region after the 2008 global financial crisis. Interestingly, the Chinese and Taiwanese multinational companies arrived together in Hungary after 2000. Meanwhile, smaller firms chose the Czech Republic and Poland.

But why is the Central European region so attractive to them? Firstly, there is a well-trained labour force in those countries. Secondly, wages are lower than the EU average. Thirdly, Taiwanese companies want to get access to the EU markets. Moreover, the EU membership provides institutional stability. Finally, there are a lot of strategic agreements with the governments and tax exemptions.

Read also: Majority of Hungarians against Russia sanctions? – survey

Strategic agreements

In Hungary, the Orbán administration tripled the financial support of the multinational companies. They especially aim to attract car manufacturers and electronic firms. Taiwanese companies receive almost the same benefits as the Chinese ones – a businessman said. The difference is that there are no strategic agreements, and the Hungarian foreign minister does not attend the inauguration of developments. That is because they do not want to jeopardize the country’s relationship with China. To sum up, Hungary maintains an unfriendly political attitude toward Taiwan but the opposite is true when it comes to the economy.

Smaller companies tend to choose the Czech Republic because Prague has better political ties with Taipei. The Taiwanese media reports about the events in Czechia quite frequently, depicting the country as an attractive destination for the locals. However, big companies do not follow emotions, only crude financial interests. And in that regard, it seems Hungary is unbeatable.