Global businesses advocate for local companies to extend their reach to international markets, according to a new report.
Going Global: Taiwanese Firms Shift Strategies Through Cross-Border M&As
Taiwanese companies are stepping up their game in the global arena, leveraging mergers and acquisitions (M&As) to boost their footprint and secure future growth. A new report reveals this trend, noting that economic uncertainties present as much of an opportunity as they do a challenge.
The report, jointly issued by PwC Taiwan and the Taiwan Mergers and Acquisitions and Private Equity Council, highlights the shifting geopolitical landscape as a prime catalyst for strategic expansion. With depressed valuations, the window is open for clever moves.
Although potential players are adopting a more conservative stance amid economic turbulence linked to U.S. tariffs, Taiwanese firms are encouraged to see uncertainty not as a hindrance, but as a chance to seize future success.
Cross-border M&As have become a crucial strategy for Taiwan's corporations, aimed at securing critical technology, new markets, and resilient supply chains, according to the report. This strategy is already evident in the capital flows, with Taiwan's M&A transactions surging 81% to an all-time high of US$16.22 billion in 2020, despite a slight decline in the number of deals.
Last year marked a record high for outbound deals by Taiwanese firms, with 46 transactions. Notably, deals of US$50 million or less accounted for a significant portion, indicating a preference for smaller, strategic acquisitions that allow for controlled expansion with lower integration risks.
The geographical footprint of Taiwanese investments has undergone a significant transformation, with a shift away from China and surrounding Asian markets toward more diversity. In 2020, 55.5% of listed Taiwanese companies established operations across key regions such as the U.S., Canada, Europe, Japan, Southeast Asia, South Asia, Australia, and New Zealand. This development suggests that US-China trade disputes and the COVID-19 pandemic have significantly influenced corporate strategies.
Europe, plagued by the Russia-Ukraine conflict, rising interest rates, and tightening environmental regulations, has emerged as an attractive destination for Taiwanese firms seeking to streamline operations by acquiring non-core assets.
While challenges remain in the post-merger integration, especially in cross-border settings, and inbound M&A has softened due to international investors' wariness of the region's geopolitical sensitivities, Taiwanese firms are well-capitalized and increasingly ambitious. They are not just filling the void left by European conglomerates; they're bringing strategic alignment, particularly in sectors such as semiconductors, medical technology, and consumer electronics.
Key Trends and Focus Areas
- Global Expansion: Taiwanese companies are significantly increasing their investments and acquisitions abroad, reflecting a growing strategic expansion in the global M&A landscape.
- Industry Focus: There is a notable interest in sectors like semiconductors, AI, biotech, and clean energy. Taiwan's participation in the SelectUSA Investment Summit highlights these industries as key areas for investment.
- ESG and Green Energy: Companies are also focusing on environmental, social, and governance (ESG) considerations, with a growing demand for green energy.
Regions of Investment
- United States: Taiwan is rapidly expanding its investments in the U.S., driven by the "Taiwan Plus One" strategy, which aims to diversify Taiwan's industries globally, particularly with the U.S. The U.S. has become a top destination for Taiwanese investments, surpassing China over the past decade.
- Europe: Taiwanese companies have also been active in Europe, with notable deals such as the acquisition of Behr-Hella Thermocontrol GmbH, a German supplier of automotive climate control systems.
In summary, Taiwanese companies are consistently expanding their investments worldwide, with a particular emphasis on high-tech and sustainable sectors. The U.S. and Europe are the primary regions of focus, reflecting the companies' intention to diversify and sustain their growth in the face of a rapidly changing global economy.
- With the increasing adoption of strategic expansion, Taiwanese firms are keenly focused on acquiring critical technology through cross-border M&As.
- Amid the growing trend of global expansion, sectors like semiconductors, AI, biotech, and clean energy, along with ESG and green energy considerations, are drawing significant interest from Taiwanese companies.
