Thu, Nov 13, 2003 - Page 8 News List

Taiwan as a hub for regional integration

By Chang Ming-chung 張明宗

In recent times China has been working on forging an organization promoting regional cooperation with ASEAN, Japan and South Korea. Some critics have pointed out that Taiwan might be marginalized as it is still preoccupied with political infighting.

A slang Chinese expression points out that it is hard to be successful when trying to foster cooperation. The Asia-Pacific region has become closely integrated, as demonstrated by the fact that intra-regional trade volumes have soared in recent years. Taiwan has been playing a vital role in this integration process. It would not be undeserved if Taiwan became known as a center for Asia-Pacific integration.

Taiwan has not made any particular effort to attain this goal; it simply followed the right path. Taiwanese are more practical and place more emphasis on fields of specialization based on the principle of comparative advantage. This has led Taiwan and its neighbors to forge a complementary relationship.

Some argue that a portion of Chinese products are competitive but a great majority of these same products are manufactured by Taiwanese companies. Also, many Chinese companies commission Taiwanese manufacturers to oversee production and do not engage in export trade. So, Tai-wan and China are complementary as well.

The countries that are more competitive with Taiwan might be the other three "Asian Tigers" but the degree of conflict is not as large as we might imagine.

South Korea, for example, specializes in mass production and brand management. Taiwan focuses on a small quantity of diversified and fashionable products as well as original equipment manufacturing (OEM) operations. In the semiconductor industry, South Korea specializes in DRAM chips while Taiwan empha-sizes wafer OEM and integrated-chip design.

Taiwan is well known for OEM, making the nation a hub for linking upstream and downstream factories. It therefore complements advanced countries. Moreover, to reduce OEM costs, Taiwanese businesspeople set up shop in China and Southeast Asia, boosting their manufacturing industries and integrating them within the global trade network.

Compared with Taiwan, South Korea is less willing to play second fiddle. Hong Kong and Singapore lack independent manufacturing capabilities that Tai-wan and South Korea possess. Therefore, Taiwan is the real center for Asia-Pacific integration.

From a political perspective, Taiwan also enjoys some unique advantages.

First, it is one of the few countries in the region that does not have an anti-US or anti-Japan complex. This explains why the US afforded President Chen Shui-bian (陳水扁) an unprecedented level of treatment during his transit stop in New York, although rumors have spread that the US is dissatisfied with Chen's plans to hold referendums and introduce a new constitution.

Second, because Taiwan never invaded Southeast Asia, it will not be snubbed like countries with an imperial track record.

Third, because Taiwan is being constantly browbeaten by China, other countries will not take precautions against Taiwan.

Two other features are conducive to making Taiwan an Asia-Pacific integration center: the large number of ethnic Chinese in Southeast Asia, many of whom studied in Taiwan, and the many Southeast Asian laborers here.

In the face of China's efforts to form new alliances, Taiwan could fortify its advantages by opening up more of its markets to countries in the Asia-Pacific region.

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