Business climate in China getting riskier: council

By Chung Li-hua and William Hetherington  /  Staff reporter, with staff writer

Mon, Sep 10, 2018 - Page 3

The business environment in China is getting riskier for Taiwanese, the Mainland Affairs Council said, citing reports of fraud, unexpected tax audits and arbitrary land taxes.

Beijing and local governments in China have been unexpectedly revoking tax discounts and other incentives for Taiwanese, the council said, adding that some Taiwanese businesses have been ordered to pay as much as 200 million yuan (US$29.22 million) in back taxes and interest.

The council has published a list of 23 risks Taiwanese businesspeople operating in China face, the majority of which are related to government interference in investments and operations.

Beijing has been increasingly aggressive in its demands for Taiwanese operating in China to be outspoken about supporting its “one China” principle, the council said.

China’s Taiwan Affairs Office (TAO) has said numerous times that it “supports increased investment in ‘the mainland’ by Taiwanese, but also hopes Taiwanese will take greater responsibility in supporting the [so-called] ‘1992 consensus’ and opposing Taiwanese independence,” it said, citing the TAO.

The “1992 consensus” refers to a tacit understanding between the Chinese Nationalist Party (KMT) and Beijing that both sides of the Taiwan Strait acknowledge there is “one China,” with each side having its own interpretation of what “China” means. Former Mainland Affairs Council chairman Su Chi (蘇起) said in 2006 that he had made up the term in 2000.

About half of the disputes handled through the Cross-Strait Bilateral Investment Protection and Promotion Agreement are related to land rights, with the Chinese authorities often expropriating land for road construction or other public works, the council said.

Some Taiwanese businesspeople have been denied access to land they were formally promised, while others have been given only a portion of the land they were owed, and later had their business’ land expropriated by local governments, the council said.

Discounts for Taiwanese companies also frequently and unpredictably change in China, the council said, citing the Chinese National Energy Administration’s announcement in May that it would end subsidies for solar panel manufacturers.

The announcement had a major effect on Taiwanese factories that produce panels in China, including Nanke Changjing, which was forced to suspend its operations, the council said.

There are also many businesses that were forced to quit the Chinese market due to rising rent and labor costs, undercutting and counterfeiting by Chinese companies, and Beijing’s support for Chinese firms, it said.

A Taiwanese businessman who established a factory to produce robots in Dongguan fell victim to tunneling by his investors and was forced to file a lawsuit, it said.

Another who had established a health consultancy business and had signed a contract with a hospital had the contract canceled by the hospital’s management, forcing him to seek legal action, it added.