Taiwan's Government Procurement System Under Scrutiny for 'Origin Washing'

Taiwan's government procurement system faces scrutiny over its potential to become a breeding ground for 'origin washing,' particularly when policies aim to establish non-Chinese supply chains while prioritizing the lowest bid. The author expresses concern that the market may focus on circumventing rules to qualify products as 'Made in Taiwan' rather than genuinely shifting away from Chinese dependencies.

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I fear that the policy wants a non-Chinese supply chain, but the market is only researching how to get products highly dependent on the Chinese supply chain across the threshold to become Taiwanese-made.

The core issue lies in the tension between policy goals and market realities. While the government seeks to diversify supply chains, competitive government tenders often favor the lowest price. This creates an incentive for some companies to engage in 'origin washing', manipulating product origin through minimal processing, relabeling, or transshipment to meet procurement requirements, especially when the price difference is marginal. The article points out that Taiwan's procurement law does have provisions, like the 'most advantageous tender' and clauses to reject bids deemed unreasonably low, but these are not always effectively applied.

Several international examples underscore this problem. The article recounts a case where the Taiwanese Navy procured radar generators specified as European/Japanese with no Chinese components, yet a supplier delivered Chinese-made machines after transshipping them through Singapore and falsifying documents. Similarly, in the U.S., companies like Aventura Technologies and Wellco were found to have supplied Chinese-made goods, including surveillance cameras and military boots, to the U.S. government by misrepresenting their origin, sometimes even pre-applying 'Made in USA' labels in Chinese factories.

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The law itself knows that some things being cheap is suspicious, but why do many cases still go to the lowest price?

These cases demonstrate a pattern where companies exploit loopholes in origin rules. The U.S. Department of Commerce's recent investigation into solar panel imports from Southeast Asian countries, questioning their 'birthplace' beyond simple export country, signals a move towards stricter scrutiny. Taiwan's own regulations on 'substantial transformation', requiring changes in tariff codes, value-added percentages, or significant manufacturing processes, aim to prevent such practices. However, the article suggests that the allure of winning bids by meeting superficial criteria, rather than genuine supply chain shifts, remains a persistent challenge.

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The best product design is a label that is easy to tear off.