Struggling Mainland Chinese Buyers Hamper Taiwan's Machine Tool Exports

Taipei, June 26, 2012 (CENS)--Although Taiwan's machine-tool makers have received NT$1 billion (US$34 million at US$1: NT$29) worth of orders from mainland Chinese manufacturers, they are forced to stop or delay 20-30% of the deliveries because of financial problems plaguing many of these buyers.

Taiwan's equipment suppliers pointed out that many of these buyers ordering CNC lathes, CNC grinders, and machining centers are still saddled with capital shortage in spite of the mainland's recent interest cuts. Fearing that they would not be able to receive bank-guaranteed letters of warranty from the buyers before delivery, they have chosen not to fill the orders.

Executives of Tongtai Machine & Tool Co., Ltd., a leading machine-tool maker in Taiwan, pointed out that although the mainland is a very important market, the company prefers to fill the orders after receiving letters of warranty. They noted that Taiwanese PCB makers operating in the mainland are the company's major buyers of drilling machines, but they usually ask for delivering after securing orders from PCB buyers so that they have enough cash for the payments.

Roundtop Machinery Industries Co., Ltd. and Kao Fong Machinery Co., Ltd. have asked their mainland Chinese buyers to pay 10-20% of their orders before making delivery.

Kao Fong executives pointed out that although having received NT$140 million (US$4.8 million) worth of orders from the mainland, the company usually asks the buyers short of bank deposits to offer bank-warranted money orders to the company's branch in the mainland before filling the orders.

AWEA Mechantronic Co., Ltd. executives pointed out that the company does not demand their European and American customers to offer down payments for their orders, contrast to the company's demand for a 10-20% advance payments from their mainland Chinese buyers. The company has received NT$300 million (US$10 million) worth of orders so far this month, but the order value outnumbers the value of actual deliveries.