Dell criticizes Taiwan for lack of links with China

In a sign that Taiwan's political standoff with China is starting to alienate its corporate customers, Dell Computer has criticized the reluctance of the authorities on Taiwan to establish direct trade and transportation ties with the China.

Max Fang, Dell's senior representative in Taipei, told senior economic and trade officials last week, "How can you expect to be an Asia-Pacific procurement center if you are isolated from the biggest market in the region?"

President Chen Shui-bian (陳水扁) has been under increasing pressure from industrialists to establish direct links with China. But this is the first time that a foreign company has joined in the call.

Dell, based in Austin, Texas, is no ordinary foreign company. It is the largest buyer of laptop computers from Taiwan's suppliers, ordering 3.5 million to 4 million machines this year.

Taiwan has built its economy over the last two decades by becoming the subcontractor of choice for the global computer industry. Companies there make 53 percent of the world's laptops and 25 percent of desktop PCs. Most are sold under American brand names like Compaq, Gateway and Dell.

"Dell is just looking for the best way to do business," said Horace Tsiang, the head of First International Computer (大眾電腦), a PC maker in Taipei. "They've been the price leader; they want to stay the price leader."

As if to underline its point, Dell moved its top procurement executive to Hong Kong earlier this year. The executive, Robert Shanks, said he wanted to be closer to plants in China, most of them owned by Taiwan companies, that manufacture Dell desktop and laptop computers.

"The lack of a direct flight between Taipei and Shanghai is a big disadvantage," said Shanks, who scouted Taipei before settling in Hong Kong. "They will lose out over time if they don't change the situation."

The political gulf between Taipei and Beijing means that travelers from Taiwan to China must go through Hong Kong. That turns a 90-minute hop into an all-day trip. Similarly, components made in factories in China must be routed through Hong Kong, on their way to Taiwan.

Officials in Taipei acknowledge that direct trade and transportation links with China are inevitable. The question is when, and the answer depends on political rather than economic calculations.

China is eager for such links, expecting that this will stimulate its economy and accelerate the integration of Taiwan and China.

But the Chinese leaders, who call Taiwan a renegade province, insist that Chen recognize a single China, governed in Beijing.

When Chen in January authorized trade and transportation between China and two outlying islands, Beijing dismissed this as an empty gesture. Chen is reluctant to make a grander gesture to Beijing, feeling that the communist officials have scarcely acknowledged his existence.

"If the PRC is willing to talk to us, the links can happen," said John Deng (登振中), vice chairman of the Mainland Affairs Council. "If they stick to their current position, they won't happen."

For the last few months, Deng has been making the rounds of Taiwan and foreign technology companies, listening to their concerns about relations across the Taiwan Strait. Friday, he had lunch with Fang of Dell.

"Dell is our customer and we treasure that relationship," Deng said. "But on the issue of direct links, I think we recognize that there are some things we can control, and other things we cannot control."