Search China Travel News:

According to the prediction in Reports on China's Mainland Economic Trend in 2005 released by Taiwan-based information website Investment China, the cross straits economic and trade cooperation will face a new high tide of investment, but this time there will be some structural adjustment in investment.

The ten-year-old Investment China magazine will turn into an informational website from Jan 31, 2005. 28 experts and scholars across the straits were invited last year for talks and later they compiled this report.

Investment still in full swing

Chen Desheng, director with the Fourth Institute under the Center for International Studies, National Chengchi University in Taiwan, noted that Taiwan's foreign investment in the first eight months in 2004 stood around 5.775 billion US dollars, of which Chinese mainland yielded 70 percent according to the information from Taiwan Investment Assessment Association. That is to say, out from Taiwan's every ten dollars investment Chinese mainland received seven of them. However, the percentage had been 48 percent from 1991 to 2004. To put it plainly, Chinese mainland took nearly half of Taiwan's total investment. Therefore, Chen held that the current trend wouldn't undergo huge structural change in the foreseeable future.

According to Li Daocheng, senior figure of media circle in Taiwan, the year of 2005 will still be a height for Taiwan businesspeople to invest in the Chinese mainland and particularly the development of service industry is worth mentioning. Currently the vertical conformity of Taiwan investment in the Chinese mainland goes fairly well. The opportunity for future development of Taiwan businesses in the Chinese mainland lies in the transformation. Many enterprises formerly engaging in the industries of original equipment manufacture (OEM) and original design manufacture (ODM) such as ASUSTek Computer, Inc and TSMC Ltd. have made preparation for the transformation in the Chinese mainland. They plan to gradually develop their own brands and hope to be independent of OEM and ODM. However, the development of one's own brands also has weakness, for instance, the brand DBTEL. Although the Taiwan-based electronics producer enjoys popularity in Chinese mainland, when facing the strong competition of sales ability from both homemade and foreign brands, it still has to do its business cautiously.

Service industry to play the leading role

Cai Hongming, vice secretary of Taiwan Industrial Association, says that the cross-strait economic and trade relations keep on developing, but the structure has been changed. In the past, Taiwan mainly exported machinery equipment and auto parts to the Chinese mainland. But now the percentage for auto parts has dropped and after that optical instruments and parts became the main item for exportation. It is said that the current trend has something to do with the flourish of digital camera markets in the Chinese mainland and the purchase of machinery equipment by Taiwan and foreign businesspeople will also be more and more localized. The "Investment Assessment Association under Taiwan Economic Department" has passed an investment bill, denoting that the percentage for new factory owners engaging in new distribution is relatively low, and in most cases, the business people added their investment. Therefore, the manufacturing industry is relatively stable and it takes the service industry as its focus for future development. It is estimated that more and more Taiwan people in finance and security will go for business in the Chinese mainland.

Lin Zujia, professor in the economics department under National Chengchi University in Taiwan, noted that among all the service industries in mainland, sectors such as telecommunication and finance were the first choice for foreign investors. However, under the unfavorable situation, opportunities for most of Taiwan businesspeople are quite limited unless they turned to form a strategic alliance. But Taiwan businesspeople enjoyed advantages in terms of goods circulation. Additionally, Taiwan businesspeople will also find the place of their own in industries concerning language and culture such as hospitals, law, publishing, accounting, education as well as management consultation. Lin added that the wave of manufacturing industry investment in Chinese mainland by Taiwan businesspersons has nearly come to an end and the small-and-medium-sized enterprises in service industry are likely to be the main force in the next round of investment. The third batch of Taiwan businesspeople engaged in small-and-medium-sized enterprises to invest in Chinese mainland has just chanced to enjoy the policy of opening-up of the service industry market in Chinese mainland.

Taiwan businessmen must be mainland-minded

Chen Bin, a Taiwan business writer living in Shanghai, said if Taiwan businesspeople want to make money in the mainland market they have to be imbued with the thinking of the Chinese mainland. Having observed the operation of Taiwan businesses in the Chinese mainland for over ten years and the experience of Taiwan businesspeople who made profits, Chen summed up his findings:


Taiwan businesspeople easily made money by their experiences in Taiwan before 1995, and they often engaged in Taiwan beef noodle or Taiwan-style snacks and refreshments, etc.


Since 1995 to China's entry into the WTO at the end of 2001, Taiwan businesspeople, with an aim of making more money, offered fancy commodities and services so as to meet the requirements of new and uniqueness of consumers in the Chinese mainland.


After 2001, those Taiwan businesspeople who could keep pace with the trend of tax system, laborers and anti-dumpling negotiations and handle them properly could make money.

Therefore, Chen held that the Taiwan businesspeople, who want to tap for the Chinese mainland market and seek for profits must be imbued with the thinking of the Chinese mainland. From the year of 2005 on, those who could not adapt to the idea of the Chinese mainland will be even harder to make a living in there.

Luo Shihe, president of Parents Association of School for Children of Taiwan Businesspeople in East China, said that the investment advantage of Taiwan businesspeople was gradually declining. Although inland cities often invite outside investment, the falling advantage of Taiwan businesspeople on the first stage in terms of manufacturing industry has made the invitation more and more difficult. Additionally, with the rising of the competitiveness from home enterprises, Taiwan businesspeople must ponder over the key competitiveness for their own industries. Knowledge economy, service economy and industries involving more science and technology will be the main objectives for Taiwan businesspeople to take in the next step.

Xie Jinhe, executive of Wealth Culture Institution believed that the enterprises in the Chinese mainland learned quickly. Local "Wenzhou Group" has gradually accepted the laptop computers, personal computers as well as mobile phones markets from Taiwan. It is very startling that many Taiwan businesspeople suffered huge losses and Taiwan enterprises retreated in defeat again and again after a price war with their mainland competitors. Therefore, Xie held that the future Taiwan businesspeople must break away from the former idea of production with low cost and instead adopt a production pattern of a high added value and gross profits and take the Chinese mainland as a vast market. During the transforming process, they also should create their own brands and increase the rate of margin. Only under such circumstances could Taiwan businesspeople make full use of the market. If they fail to carry out the transformation for production pattern, they will be faced with a very big impact in Chinese mainland in future.

Delivering a speech at the cocktail party in celebration of the creation of Investment China informational website, Xiao Wanchang, chainman of the Chung Hua Institution for Economic Research in Taiwan, said that the cross-strait relations is vital for the development of Taiwan's economy and a large-scale Asian trade bloc is currently taking shape. The two sides should adopt measures to promote closer economic operation structure so as not to marginalize the Taiwan's economy and bring the cross-strait economic and trade relations back into the track, added Xiao.