No one has been watching the dramatic thaw between China and Taiwan with more interest than the business community, which is hoping that for once politics will make their lives easier, not harder.
One of them is Teng Wen-chung, the Taiwanese chairman of Shanghai-based Earntex Group, who has been surprised by the speedy improvement of ties since pro-China politician Ma Ying-jeou (馬英九) was elected president in Taiwan in March.
“This is a rare and precious opportunity,” said Teng, whose interests in China range from real estate to hotels and education.
He has been doing business in China since 1986, giving him a front-row seat for the arch rivals’ roller-coaster relations. Now, he looks forward to a period of sustained stability.
“In the past, Taiwan businessmen were a bit unsettled about the negative relationship across the Taiwan Straits, but most of them now hold a positive outlook on the future of ties,” he said.
Wu Poh-hsiung (吳伯雄), the head of the Chinese Nationalist Party (KMT), traveled to China last week for the highest-level talks in 60 years. In the middle of this month semi-official negotiations will resume in Beijing after a hiatus of more than a decade.
Among the earliest results could be a decision on direct chartered flights servicing the route between Taiwan and China every week, as well as an opening for Chinese tourists in Taiwan.
Initially, it is mainly airlines, hotels and restaurants that are expected to see their earnings rise as a result of weekly chartered flights. But in the long term, the circle of potential beneficiaries could become much wider.
“It will be a breakthrough for large companies, especially those in need of a lot of research and development and high-tech staff,” said Chen Kuoyuan of the Beijing Taiwan-Funded Enterprises Association, which represents companies with Taiwanese investors doing business in the Chinese capital.
“Taiwan companies will rethink the feasibility of R&D [research and development] centers in cities that direct flights can reach ... Senior engineers and R&D professionals in Taiwan will also be more willing to work in China.” Chen said. “It will probably enhance the competitive strength of companies from the two sides as they will be able to work more closely when dealing in the global market.”
The direct flights will help cut operating costs and increase flexibility for companies on both sides of the Taiwan Straits, said Wang Jianmin (王健民), a Beijing-based Taiwan researcher at the Chinese Academy of Social Sciences.
“The industrial layout of Taiwanese companies was a bit distorted as they had to pour all their investment into China ... because there was no direct flight link,” he said.
“In the future, it will be possible for them to set up research and development centers in Taiwan while having a manufacturing base in China, for example.”
The positive effects could also be felt indirectly on Taiwan, said Bentham Hung, Taipei-based managing director of Mega Wealth International Management Consultant Co.
“To a number of foreign investors, the war risk factor had been there and needed to be weighed while considering launching investment projects here,” he said. “I’m not saying such risks have gone, but now they are greatly reduced.”
Over the longer term, some Taiwan entrepreneurs expect an arrangement similar to the Closer Economic Partnership Arrangement that China already has with Hong Kong and Macau.
Finance could be an area of increased cooperation.
A likely scenario is for Taiwan banks and financial enterprises to start operations in China, either in the form of branches or joint ventures.
On the other hand, Chinese companies could invest in Taiwan’s property and service sectors.
But the bottom line is, business ties have prospered despite the long freeze in politics.
Since 1991, approved Taiwan investment in China has increased by a factor of nearly 60, standing at US$9.97 billion last year — tensions notwithstanding.
“Politics can be used as a tool to interfere with economic affairs but it definitely cannot stop the development of individual companies,” said Chen of the Beijing Taiwan-Funded Enterprises Association.
“It is an irresistible trend. It is now easier for companies to see where tomorrow will go,” he said.
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