Transcript Economic Phase

Cross Strait Relations and Cooperation Opportunities
between Taiwan and Korea
Dr. Yuan, Hao-Lin
Professor and Direct of Graduate Institute
of National Policy and Public Affairs,
National Chung Hsing University
Development of Cross Strait Relations
Stage 1: (1950s)
Military Confrontation
Stage 2: (1960s-1970s)
Cold War Stalemate
Stage 3: (1980s)
Openness and Engagement
Stage 4: (1990s)
Economic Interdependence but Political Independence
Stage 5: (2000-2008)
One China Principle vs. Taiwan Independence
Stage 6: (2008~)
Comprehensive Engagement
Why Taiwanese Businessmen go to China?
Demand Side: China
(pull effect)
Supply Side: Taiwan
(push effect)
Political Phase
Economic Phase
Social Phase
Scale of Market,
Cheap Labor,
Lack of
Environmental
Conscious,
Attractive
Investment
Policies
Why Taiwanese Businessmen go to China?
Supply Side: Taiwan (push effect)
Political Phase:
Retreat of State Capacity and Autonomy
Inconsistence of Government Policy
Confrontation between Political Parties
Debates on Ideology Issues (Such as Unification or Independence)
Economic Phase:
Lack of Labor Forces
Rise of Land Price
Rise of Labor’s payment
Insufficient of Basic Infrastructures
Social Phase:
Increase of Social Movement
Increase of Crime Rate
Awareness of Environmental Conscious
Why Taiwanese Businessmen go to China?
Demand Side: China (pull effect)
Scale of Market
Cheap Labor
Lack of Environmental Conscious
Attractive Investment Policies
Top 10 Motivations to Invest in China
Cheap Labor and Full of Labor Forces
Culture Similarities
Cheap Land and Easy Access to Factory Site
Request by Foreign Importers
Diversify Operating Risk of Parent Company
Dispose Used or Idle Equipment
Attractive Investment Inducement Policies
Strive for Massive Domestic Market
Obtain MFN, GSP and Quotas
Easy Access to Natural Resources
Waves of Taiwanese Business in China
Wave I (1990s)
Wave II (2000-08)
Wave III (2008~)
From harmony to
tension (esp. after
1995 crisis)
Terminate any
government-to government Dialogue
and Contact
Rapprochement and
establish closer
relations
ROC’s Governmental Not aggressive but
Policy
conditional open
Tend to close links
with China
Moving toward
comprehensive
engagement
Major Types
Traditional and labor
intensive industries
Information
technology, capital
intensive and service
industries
Information
technology, capital
intensive and service
industries
Scale of Firms
Small and medium
Small, Medium and
large
Small, Medium and
large
Major Investment
Area
The Pearl River Delta The Young Tze River
Delta
Cross Strait
Relations
The Young Tze River
Delta
Trends of Taiwanese Business in China
Region:
From South China to North China Areas
From Offshore to Inertial Areas
Sector:
From Labor Intensive to Capital Intensive
From Traditional to Information and Service Sectors
Size:
From Small to Medium and Large
Major Investment Areas
珠江三角洲
The Pearl River Delta (Fukien and Canton Provinces)
長江三角洲
The Young Tze River Delta (Great Shanghai Areas)
渤海灣區
The BoHai Rim (Peking and Tientsin)
STATISTICS ON APPROVED
INDIRECT MAINLAND INVESTMENT
Year
Case
Amount
1991~1997
20,362
11,208,037
1998
641
1,519,209
1999
488
1,252,780
2000
840
2,607,142
2001
1,186
2,784,147
2002
1,490
3,858,757
2003
1,837
4,594,985
2004
2,004
6,940,663
2005
1297
6,006,953
2006
1,090
7,642,335
2007
996
9,970,545
（unit）：（US$1,000）
1991~2007.12
36,538
64,869,065.71 Sources: Investment Commission, MOEA
Top 10 Investment Cities and Provinces
(1962~2008)
Area
Case
Percentage
Amount
Percentage
Jiangsu Province
5,710
15.47%
22,693,442.97
32.44%
Guangdong Province
11,963
32.41%
17,205,661.59
24.59%
Shanghai
5,104
13.83%
10,655,750.37
15.23%
Fukien Province
5,249
14.22%
5,178,371.01
7.40%
Chekiang Province
1,920
5.20%
4,842,891.40
6.92%
Tientsin
872
2.36%
1,305,228.11
1.87%
Shantung Province
912
2.47%
1,283,601.03
1.83%
Peking
1,110
3.01%
1,230,261.67
1.76%
Hubei Province
514
1.39%
684,028.14
0.98%
Chongqing
183
0.50%
641,222.78
0.92%
（unit）：（US$1,000）
Sources: Investment Commission, MOEA
Top 10 Investment Industries
(1962~2008)
（unit）：（US$1,000）
Case
Percentage
Amount
Percentage
Electronic Parts and
Components Manufacturing
2,135
5.78%
11,408,180.15
16.31%
Computers, Electronic and
Optical Products
Manufacturing
2,619
7.10%
10,849,605.69
15.51%
Electrical Equipment
Manufacturing
2,914
7.89%
6,348,517.56
9.07%
2,499
6.77%
4,498,624.11
6.43%
2,249
6.09%
3,523,660.77
5.04%
769
2.08%
3,048,364.22
4.36%
Machinery and Equipment
Manufacturing
1,883
5.10%
3,005,065.66
4.30%
Non-metallic Mineral Products
Manufacturing
1,510
4.09%
2,967,507.57
4.24%
Wholesale and Retail Trade
2,025
5.49%
2,373,197.30
3.39%
Manufacturing Not Elsewhere
Classified
2,505
6.79%
1,920,443.69
2.75%
Industries
Fabricated Metal Products
Manufacturing
Plastic Products Manufacturing
Chemical Material
Manufacturing
Sources: Investment Commission, MOEA
The Concept of Distance Advantage
Culture Distance
Economic Distance
Geographic Distance
Administrative Distance
Changes in Investment Environment in China
Increase Regulations on Employment
Terminate Preferential Treatments for Foreign Investments
Increase Operational Costs (especially after the rise of oil prices)
Increase Environmental Regulations
Rise of Labor Costs
More Competitions among Foreign and Chinese Investors
Prospect of Cross Strait Relations
Continuous Enlarge the Scale and Scope of Economic Links
Economic Issues First and Political Issues Last
Comprehensive Engagement
Form a Regional Economic Regime
Prospect of Taiwanese Businessmen in China
Seriously Consider to Move Back to Taiwan
Seriously Consider to Move Out to Southeast Asia Countries
Expand Investment Scale and Scope
Consolidate Closer Link with Local Community
Cautiously Search for Their Own Blue Ocean
Thank You for Your Listening
and
Have A Good Time