Sun, Jan 26, 2014 - Page 3 News List

INTERVIEW: China influencing Taiwan via firms: expert

Wu Jieh-min, a researcher at Academia Sinica’s Institute of Sociology, has said in the past that he has applied the concept of “cross-strait political and commercial alliances” to denote the increasing buildup of political and business links across the Strait, and to warn of transactions involving the trade of political power for financial gain. In a recent interview with Tzou Jiing-wen, a staff reporter with the ‘Liberty Times’ (the sister paper of the ‘Taipei Times’), Wu said that the Chinese Communist Party is using these alliances to leverage its influence on Taiwan’s internal politics

In 1999, it became involved in the management of Universal Scientific Industrial Co with an initial purchase of 21 percent of that company’s shares. The company later became Universal Global Scientific Industries (USI). Starting in 2000, this company started to set up manufacturing plants in China’s Shanghai, Suzhou and Shandong Province, as well as Weihai and Kunshan in Guangdong Province.

In 2003, it established Universal Scientific Industrial (Shanghai) Co in Shanghai. ASE Group’s global operations generated an overall revenue of US$6.4 billion in 2012, while its annual revenue in Taiwan was US$2.4 billion.

Although ASE Group looks like a typical transnational conglomerate, it is not.

A number of years ago, ASE Group manipulated the delisting of Universal Scientific Industrial Co from the Taiwan Stock Exchange and then it made the listing of Universal Scientific Industrial (Shanghai) Co, USI (SH) on the Shanghai Stock Exchange. Subsequently, it used USI (SH) company to set up USI in Taiwan to buy up the production lines of Universal Scientific Industrial Co. Utilizing the company’s reorganization to make big profits in stock market’s equity financing. Through years of such market manipulation tactics, the production capacities of its plants in Taiwan were gradually relocated abroad. This resulted in sacrificing the rights of Taiwanese workers, as many of them were let go.

Another issue worth closer examination is that USI (SH) stocks in China are traded in the “A Share” market. For foreign companies to get approved for listing in the “A Share” market, most of them need to become joint ventures between Chinese and foreign capitals. In reality, USI (SH) is almost a company with “pure foreign” capital, but it is able to package itself as a joint venture of Chinese and foreign capital. Thus the question should be asked: Does ASE Group enjoy special political and business privileges in China?

LT: These companies have their own management styles. Can you categorize some of their common characteristics?

Wu: These cross-strait conglomerates have certain general patterns of behavior and attributes. First, they are active in the political and business networking circles of China and Taiwan. Thus, essentially they are closely connected to political power structures, in transactions of political power and capital.

Second, they have set up operations and institutions in both China and Taiwan, for their convenient maneuvering of capital, goods, and labor, while side-stepping any government regulations that are disadvantageous to their business operations.

Third, they exploit the loopholes in the special provisions for normalizing the systems integration in the developing cross-strait relations, as they engage in “rent-seeking” activities.

Article 10 in the Act Governing the Relations Between the People of the Taiwan Area and the People of the Mainland Area (兩岸人民關係條例) has opened a backdoor, to allow a large number of Chinese workers to enter Taiwan to engage in “activities.” Thereafter, numerous provisions and complementary measures were put down, which gave government administrators tremendous decisionmaking power. Recently, President Ma Ying-jeou’s (馬英九) administration integrated these provisions and measures together into the Act on Permission for Entrance of People of the Mainland Area into the Taiwan Area (大陸地區人民進入臺灣地區許可辦法), which loosened up the regulations even more. What problems has it created? It is leading to a double-track system for foreign workers.

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