Cathay United to Migrate Business Operations to Southeast Asia

In the midst of geopolitical tensions, one of Taiwan's largest lenders is shifting its business and hiring focus to Southeast Asia, as its corporate clients in high-tech and textile manufacturing seek to diversify supply chains away from China.

Cathay United Bank Co increased hiring in Vietnam by 75% between 2020 and last year, according to Benny Miao, the head of Southeast Asia for Taiwan's second-largest lender by assets, which is a subsidiary of Cathay Financial Group Holding Co.

Miao said in an interview that the lender's expansion plans have "literally switched positions" with China, naming Vietnam, Indonesia, and Cambodia as priority countries.

“We’re looking at where else our customers are going,” he said. “That’s a large component of what’s going to determine what we want to do and how big of an investment we’re going to make in each of these relative markets.”

The moves come as suppliers in Asia are under pressure to diversify production lines away from China — the “world factory” home to the majority of manufacturing capacity for everything from sneakers to smartphones.

The shift emerged during the 2018 trade war between the United States and China, and it has accelerated in the aftermath of COVID-19 and increased geopolitical wrangling.

"Economically speaking, China is still a market," Miao said. "However, more and more attention is now being directed elsewhere."

Taiwanese firms, which have traditionally been among the largest investors in China, have also begun to withdraw due to increased competition and rising labour costs. Recently, manufacturers have been leaving because their customers have requested diversification away from China, which is hastening the shift, according to Miao.