I saw this news item about factory closings in Taiwan a few days ago. From the article:
Statistics compiled by the Ministry of Economics Ministry show that in the first 10 months of this year, 2,419 factories closed down — a 60 percent increase over the same period of 2006.
These factories are closing because (1) the businesses they are in are unable to compete with factories in China, Vietnam, Thailand and (2) some of the bosses are closing up shop to move their operations to China.
I don’t know how many of these factories fall into the second category, but I do know that Taiwan’s economy, like the economies of several other developed nations, continues to transform itself from a manufacturing-oriented economy to a high-tech and services oriented economy.
If you’re thinking of sourcing in greater China, my advice is this: Some items are better sourced in Taiwan; some are better sourced in China. You’d do well to check with a consultant before you embark on a sourcing mission to either place. There are several factors to consider, and potential advantages and disadvantages to both places.
The Lingua Franca 
I myself am into China sourcing business based in Hong Kong. but my business is not doing well. I’m forced to get out and look for a daytime job to sustain myself. It’s nothing new to hear factories are being closed down in Taiwan or elsewhere because of more competitive China, Vietnam, …etc. In fact, even factories in China itself are being closed down because of increasingly strict regulations recently enacted by the Chinese govt against those “polluting factories” and increased labor cost in those cities like Shenzhen, Guangzhou, …etc. Many factories in those areas are either closed or migrated to other lower cost provinces. Honestly speaking, it’s increasingly expensive to source from China right now. One reason is that labor costs, material costs, appreciated RMB (chinese currency), and strict regulations by Chinese authorities have caused increased production costs and thus unit prices. Another reason is that many Westerners are fearful of quality problems they may get afterwards. … Plus, US economy is weakening and is slowly forcing factories out of business because of lack of orders.