ad info


Asiaweek TIMEASIA.com CNN.com
 > magazine
 home
 intelligence
 web features
 magazine archive
 technology
 newsmap
 customer service
 subscribe
 TIMEASIA.COM
 CNN.COM
  east asia
  southeast asia
  south asia
  central asia
  australasia
 BUSINESS
 SPORTS
 SHOWBIZ
 ASIA WEATHER
 ASIA TRAVEL

Other News
TIME.com
TIME Europe
FORTUNE.com
FORTUNE China
MONEY.com
Asiaweek Services
Contact Asiaweek
About Asiaweek
Media Kit
Get up to 3 months of Asiaweek free when you subscribe online!


SEPTEMBER 1 , 2000 VOL. 26 NO. 34 | SEARCH ASIAWEEK

It's Business as Usual
Taiwan's China investments are growing
By ALLEN T. CHENG Taipei

ALSO:
The 100-Day Itch:
Why Chen Shui-bian's honeymoon as president is over, and what he mu st do to restore credibility
'Let's Meet, not Holler': So says the DPP chief about China
Politics of Compromise: Will Chen break promises?

In mid-August, a group of mainland Chinese business executives made such a stink at a Chicago hardware fair that most attendants were left perplexed and appalled. After seeing Taiwan's red-and-blue flag hang among many others in the exhibit hall, the Chinese delegation tore down their exhibits, slammed their merchandise on the floor, stomped on them and stormed out of the American Hardware Manufacturers Association event. All that was left in their empty booths were typed statements issued by Chinese government officials: "The erroneous decision by the show organizers runs counter to the United States government's 'one-China' policy and offers Taiwan authorities a stage to create two Chinas."

In Taipei, officials are shrugging off the incident. In fact, they are continuing with their plans to accelerate business with China. In September, 28 of the island's top bankers will visit the mainland to explore the possibility of opening branch offices there. The government has drafted laws that will liberalize restrictions once preventing Taiwan banks from entering the mainland, even though some 40,000 Taiwan enterprises now operate factories in China. Beijing may be kung fu-fighting, but Taipei is responding with tai chi.

The Chen administration is reversing the years of the "go slow, no haste" policy of previous president Lee Teng-hui, who feared that Taiwan would become an economic hostage of China if it grew too dependent on the mainland for business. Despite Lee's efforts, Taiwan companies have parked more than $40 billion in China, roughly 40% of its total foreign investment. China is now Taiwan's third-largest trading partner, buying 17% of Taiwan's exports and sourcing 4% of the island's imports. "Trade benefits both sides," says Lin Yi-fa, deputy minister of economic affairs. "It helps improve cross-strait relations." Ministry officials are currently even discussing lifting some restrictions that have prevented Taiwan companies from setting up high-tech manufacturing operations or building infrastructure projects in China.

Chen may have been an "independence" activist, but it's clear that he realizes it is almost impossible for the island to sever ties with China. Instead, the approach is to move even closer to the mainland and gain the trust of Beijing's leaders in order to create the maximum room for Taiwan's long-term survival. On top of lifting certain investment restrictions, Taiwan's Ministry of Education has gone one step further. It recently approved the establishment of Taiwan curriculum schools in China, allowing the formation of long-term Taiwan communities on the mainland. Within months of the announcement, Taiwan business groups in Guangdong and Shanghai have already begun building schools that eventually will allow more Taiwan expatriates to relocate their entire families to China.

But it's not all smooth sailing for Taiwan companies in China. The tale of Evergreen Marine, a giant shipping company, is cautionary. After Chen came to power in May, mainland officials threatened to shut down Evergreen's mainland operations. Customs officers deliberately held up thousands of Evergreen's containers by "throwing a book of regulations" at the company, checking that every item shipped carried the proper documents. Evergreen container ships were not only unable to pick their cargo on time but the company's thousands of mainland-based Taiwan customers were unable to ship on time, causing havoc throughout supply chains worldwide.

Such was the price Evergreen had to pay for chairman Chang Yung-fa's membership in Chen's "national advisory council," a group of about a dozen Taiwan tycoons who endorsed his candidacy. From the end of March through end of May, mainland officials made life difficult for those tycoons with mainland investments. When Stan Shih, chairman of top computer company Acer, visited China, he found that officials who normally rushed to invite him to private banquets shunned him instead. Shortly afterward, "inspectors" descended upon Acer's factories in Guangdong and Shanghai searching for "irregularities." Only after months of apologizing, lobbying and pledges of further investments on the mainland did officials stop the harassment. "Business is now back to normal," Yuanta Securities analyst Eric Lai says of Acer. "Plans for a new plant in [China] will continue." Working in Shih's favor, as far as Beijing is concerned, is that he has distanced himself from Chen. "He deliberately doesn't go to Chen's events," says Lai. "[The tycoons] will just have to be more careful about getting involved in politics in Taiwan."

Taiwan and China both need each other: Taiwan the mainland's plentiful supply of inexpensive labor and its potentially huge market, China the investment. Sheen Ching-jing, chairman of Taiwan conglomerate Core Pacific Group, says he believes that Chen — once an ardent anti-China maverick — may end up leading Taiwan closer to the mainland. "I was in Beijing having drinks with top officials of the Ministry of Foreign Trade just before the election," says Sheen, who has known Chen for years. "They asked if Chen would declare independence. I said he wouldn't. I said Chen only used 'independence' as a weapon against the Kuomintang. I told them not to be anxious. The key is to first build more economic ties. In today's era, any good leader must focus on economics, and that includes China's leaders." Money talks best.

Write to Asiaweek at mail@web.asiaweek.com

This edition's table of contents | Asiaweek.com Home

AsiaNow


Quick Scroll: More stories from Asiaweek, TIME and CNN

   LATEST HEADLINES:

WASHINGTON
U.S. secretary of state says China should be 'tolerant'

MANILA
Philippine government denies Estrada's claim to presidency

ALLAHABAD
Faith, madness, magic mix at sacred Hindu festival

COLOMBO
Land mine explosion kills 11 Sri Lankan soldiers

TOKYO
Japan claims StarLink found in U.S. corn sample

BANGKOK
Thai party announces first coalition partner



TIME:

COVER: President Joseph Estrada gives in to the chanting crowds on the streets of Manila and agrees to make room for his Vice President

THAILAND: Twin teenage warriors turn themselves in to Bangkok officials

CHINA: Despite official vilification, hip Chinese dig Lamaist culture

PHOTO ESSAY: Estrada Calls Snap Election

WEB-ONLY INTERVIEW: Jimmy Lai on feeling lucky -- and why he's committed to the island state



ASIAWEEK:

COVER: The DoCoMo generation - Japan's leading mobile phone company goes global

Bandwidth Boom: Racing to wire - how underseas cable systems may yet fall short

TAIWAN: Party intrigues add to Chen Shui-bian's woes

JAPAN: Japan's ruling party crushes a rebel at a cost

SINGAPORE: Singaporeans need to have more babies. But success breeds selfishness


Launch CNN's Desktop Ticker and get the latest news, delivered right on your desktop!

Today on CNN
 Search
  ASIAWEEK'S LATEST
Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?


  THIS EDITION

COVER: Taiwan: The first 100 days
How has Chen fared in his first 100 days?
Interview: DPP chairman and Kaohsiung mayor Frank Hsieh
DPP:The struggle between the party's two souls
Cross-strait: It's business as usual between Taipei and Beijing

THE NATIONS
Indonesia: President Wahid's new cabinet — stacked with his
own people — promises renewed battles with parliament

Philippines: Money, guns and lives — the crisis continues in Jolo

Koreas: After an emotional reunion, Koreans hope for more

China: Succession and other issues are on the table at Beidaihe

Newsmakers: Lee Kuan Yew tells it how it is

Viewpoint: Hugs, smiles only start Korea's peace process

SPECIAL REPORT
ASEAN: As the grouping loses clout and cohesion, a broader

BUSINESS
Dogfight: An airline free-for-all in Indonesia's skies

Interview: The IMF's Stanley Fischer on Asia's recovery and America's slowdown

Investing: What U.S. political uncertainty means for Asia

Business Buzz: ZIRP: RIP

TECHNOLOGY
Profits: A Chinese tech company must change its focus

Baang: South Korea's edgy computer cafes

Language: Computer scientists borrow from mother nature

Cutting Edge: Compaq unpacks its new Net devices

ARTS AND SCIENCES
People: Indonesian singer Anggun's driving ambition

EDITORIALS
Malaysia: Tensions over Anwar make reform imperative

Migrants: Hong Kong's mainlanders deserve just treatment

Letters & Comment: India — great and poor

STATISTICS
The Bottom Line: Asiaweek's ranking of world economies


Back to the top   © 2000 Asiaweek. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines.