Taiwan Seeks Compensation as Vietnam Factories Restart
Taiwan’s foreign minister urged Vietnam to compensate companies hurt by this week’s violent anti-China riots even as waning protests prompted several manufacturers to restart production in the country.
“We’re asking that the Vietnamese government protect the personal safety and property of Taiwanese people, punish perpetrators and compensate losses,” David Lin, Taiwan’s minister of foreign affairs, said at a briefing in Taipei yesterday. Vietnam’s representative to Taiwan, Bui Trong Van, said at the same conference the country would “handle properly” the issue of compensation.
Attacks on foreign-owned factories following China’s placement of an oil rig in disputed waters off the Vietnamese coast left two people dead and at least 129 injured, halting production lines and causing Chinese workers to flee the country. The resumption of operations by companies including Formosa Chemicals & Fibre Corp. (1326) and China Steel Corp. (2002) have eased some fears that the riots would crimp global supply chains and hurt the Southeast Asian nation’s economic growth.
“Shares of Taiwan companies affected by the rioting may rebound as production resumes, but they may be under pressure by end of June as investors watch the impact on second-quarter earnings,” said Simon Liu, a Taipei-based vice president of Yuanta Securities Investment Trust Co., which manages about NT$300 billion ($9.9 billion) of assets, including shares of Formosa Chemicals & Fibre and China Steel. “It looks like the conflict between China and Vietnam won’t resolve any time soon. You don’t know if frictions will pop up now and then.”
Shares of Formosa Chemicals & Fibre slipped 0.6 percent to NT$71 yesterday. China Steel fell 0.4 percent to NT$25.15.
The two companies are among several Taiwanese manufacturers that restarted factories even as some Vietnamese activists said they planned to organize more protests tomorrow. Rallies could also be held May 19, which is the birth anniversary of the nation’s founder Ho Chi Minh.
Formosa Chemicals & Fibre President F.Y. Hong said in a telephone interview that the company had restarted textile plants that were shut May 14 after being invaded by protesters. Hong said he expected Vietnamese operations for the Taipei, Taiwan-based company would return to normal by month-end.
Yue Yuen Industrial Holdings Ltd. (551), a supplier to Nike Inc. and Adidas AG, said it had restarted production in its Vietnam factories, which account for about a third of its total output. Cheng Shin Rubber Industry Co., Eclat Textile Co., footwear manufacturer Feng Tay Enterprise Co. and garment maker Makalot Industrial Co. also said they had resumed operations.
‘Back to Normal’
“Everything is back to normal,” said Jerry Shum, a Hong Kong-based spokesman for Yue Yuen. “We’ve been given strong indications from the Vietnamese government that they will see that order is restored in due course.”
Vietnam’s dong had the biggest weekly decline since June amid the escalating tensions with China. The currency fell 0.31 percent to 21,165 per dollar yesterday, the most since the five days to June 28, according to prices from banks compiled by Bloomberg.
Even as some firms resumed operations, parts maker Haitian International Holdings Ltd. said it had halted manufacture in its Vietnam factory from May 14. Hon Hai Precision Industry Co. (2317), the iPhone assembler which is the biggest unit of Foxconn Technology Group, said it would suspend operations for three days “out of concern for workers’ safety.”
Vietnam has “urgently” ordered industrial parks, economic zones and provincial governments to take action to protect investors and the property of foreign-invested companies, Planning and Investment Minister Bui Quang Vinh said in a statement yesterday, adding that losses caused by violent protesters is “unfortunate.”
The minister blamed the violence on a few “extremists” and said about 300 participants would be prosecuted. The government would take “drastic actions to quickly stabilize the situation, and protect foreign companies’ property and help businesses resume normal operations in Vietnam,” he said.
China “strongly urges” Vietnam to take action to deal with the aftermath of the riots, Assistant Foreign Minister Liu Jianchao told Vietnamese officials after talks in Hanoi yesterday, China’s Ministry of Foreign Affairs said in statement posted on its website today.
Vietnam’s Deputy Foreign Minister Pham Quang Vinh expressed regret for the loss of lives and property of Chinese nationals and said the country will continue to make “all-out efforts” to protect the safety of Chinese nationals and organizations and stop all violence, according to the statement.
“What we want to see now is how the government will manage to control the damage,” Le Dang Doanh, an economist and former government adviser, said in a phone interview in Hanoi. “The damages here include losses to foreign companies, which had to shut down, and the country’s loss in terms of its reputation.”
To contact the editors responsible for this story: Frank Longid at firstname.lastname@example.org Brendan Scott, Greg Ahlstrand