In a bid to attract foreign investment for the Financial Supervisory Commission's (FSC) planned foreign currency-denominated stock exchange, Chairman Kong Jaw-sheng (龔照勝) led a delegation to an investor forum in New York on Oct. 13-14. Delegation members included government financial regulators and executives from the nation's leading companies.
But the FSC's move to find ways for companies with 30 percent Chinese capitalization to be listed on the international boarse has created divisions between it and the Mainland Affairs Council.
At the same time, the Taisheng Furniture Co -- Asia's largest wood furniture manufacturer and a Taiwanese firm that could potentially be be listed on the Taiwan Stock Exchange -- recently applied for its initial public offering (IPO) in Hong Kong. According to market sources, Taisheng Furniture raised around US$500 million in capital.
This clearly indicates that Taiwanese companies in China have lost patience with Taiwan's stock market, and Taisheng's action is a slap in the face to Taiwan's ambitions.
In the past, Taiwanese businesspeople in general would initially invest their own capital to establish a business in China and to manage working capital. Very few China-based Taiwanese businesses could finance their efforts with the aid of a loan from Taiwanese or Chinese banks.
Today, the scale of Taiwanese businesses is markedly different. After a decade of effort, Taiwanese companies based in China are today generally very successful and profitable. They boast operating scales generally 10 times larger than before, and much faster business expansion.
In fact, these successful Taiwanese businesspeople hope to list on Taiwan's exchange in order to conveniently gather capital from local financiers to further their expansion in China, boost awareness of their companies, and settle down in Taiwan by establishing their headquarters here.
For Taiwanese businesspeople in China, Taiwan is the best place to list their companies because they know the environment, and Taiwan's exchange offers the advantages of high liquidity and high price-earnings ratios. Although Taiwan is their priority, it is not the only choice. They can also apply to list in Hong Kong, Singapore, China or even the US.
Therefore, whether Taiwan can use its relative advantages to attract the capital of these businesspeople to set up and register their businesses in Taiwan becomes important. Otherwise, these businesspeople may be forced to register elsewhere.
Virtually all China-based Taiwanese businesspeople believe that listing their companies in Taiwan would create a win-win situation for them. And, only in this way will the government be able to attract them to return to Taiwan, and thus have the right to regulate them.
Over the past decade, more than 20 Taiwanese businesses have become Hong Kong-listed companies. Some widely known ones include Yue Yuen Industrial, Master Kong, Natural Beauty, Solomon Systech, Chia Hsin Cement Group, AKuP International Holding, Foxconn Electronics and others. About 40 Taiwan-owned enterprises have expressed intentions to apply for an IPO in Hong Kong, including, Taiwan Broadband Communications, Ultra Chip and Hsu Fu Chi Food Products Co. Some Taiwanese companies -- such as Uni-President Enterprises Corp, Giant Manufacturing Co, Hocheng Corp, Roma Ceramic Co and Want Want Group -- are also reportedly considering a Hong Kong listing.