For Fubon Financial Holding Co (富邦金控), Taiwan’s second-largest publicly listed financial group, a gamble on the booming Chinese market is worth taking, even though it comes laden with political risks.
Financial services are sensitive areas for regulators anywhere in the world, but perhaps nowhere more so than in the relationship between China and Taiwan.
“We have to be careful, but on the other hand, there is huge potential,” Fubon Financial’s president Victor Kung (龔天行) said in an interview.
“People who heeded the risk too much and therefore decided not to go to China — they must be regretting it now,” he added.
The company moved with lightning speed after Ma Ying-jeou (馬英九) was elected president in 2008, heralding a period of detente in cross-strait relations.
As early as December 2008, Fubon acquired a 20 percent stake in Xiamen City Commercial Bank (廈門商銀), a Chinese lender located in Fujian Province, home to billions of US dollars of Taiwanese investment.
“Fujian Province is a very good area for Taiwanese financial institutions to really focus on, mainly because the ancestors of most Taiwanese came from that province,” Kung said. “We speak the same dialect. The food is very much the same. Culture-wise, we’re closest to Fujian Province. Taiwanese people feel very comfortable in Xiamen and other parts of Fujian.”
Fubon is part of a broader trend of bold Taiwanese companies putting their money in China. Last year, the nation’s enterprises invested US$13.3 billion in China, up nearly 120 percent from a year earlier.
In November last year, Fubon opened up a fully-owned property and casualty insurance firm, also in Xiamen. Then in July this year, it set up an asset management company in Beijing with a local partner.
It has also sent an application to Chinese regulators for a life insurance venture with the Nanjing City Government, meaning securities is now the only financial industry the company has yet to enter in China.
At the moment, Fubon’s -revenues from China are “negligible,” Kung says, but the ambition is that it could make up a much larger share in 10 to 20 years.
The plan is not just to cater to Taiwan investors in China — “the low-hanging fruit,” according to Kung — but to also start servicing Chinese clients in a major way.
That all depends on whether Taiwan and China can expand on commitments made in the Economic Cooperation Framework Agreement (ECFA), signed in June last year.
The pact has opened the way for the lowering of tariffs and broadened access to each other’s markets, and sets the stage for further negotiations on reducing barriers in areas such as finance.
“We’d like to see [the] ECFA moving faster, but like anything cross-strait, the beginning is always more difficult,” Kung said.
High on Fubon’s wishlist is permission to increase its stake in the Xiamen bank from the current level of 20 percent.
That is the maximum allowed for single foreign investors in Chinese banks, and what Fubon is really aiming for is “semi-national” treatment on a par with local competitors, Kung said.
Fubon’s activities in China are “daring,” but so far it has not made a wrong move, according to Mars Hsu (徐振家), a Taipei-based analyst for Grand Cathay Securities (大華證券).
“It is true Fubon has been very aggressive, but as of now, its major investments seem to be on the right track,” he said.
While Fubon has been busily mopping up opportunities in China, cross-strait ties can shift markedly, and any change in the political temperature could quickly impact the company.
“It takes political negotiations of regulators from the two sides to agree on how to supervise the other side’s operations,” Kung said.
In addition, whenever politics becomes part of the equation, everything becomes more complicated. Relations were less friendly between 2000 and 2008, under former president Chen Shui-bian (陳水扁) of the Democratic Progressive Party (DPP).
The DPP is contesting elections in January next year raising the prospect of a change in the diplomatic tide if its candidate, DPP Chairperson Tsai Ing-wen (蔡英文), wins.
However, Kung is sanguine.
“If there should be a change of regime, at least initially there would be a shock, and that shock would maybe slow things down a little bit,” he said. “But at the end of the day, I think the closer cross-strait relationship is an irreversible trend. I do not think either side wants to see a return to hostilities. It’s just impossible to imagine.”
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
CUSTOMERS’ BURDEN: TSMC already has operations in the US and is a foundry, so any tariff increase would mostly affect US customers, not the company, the minister said Taiwanese manufacturers are “not afraid” of US tariffs, but are concerned about being affected more heavily than regional economic competitors Japan and South Korea, Minister of Economic Affairs J.W. Kuo (郭智輝) said. “Taiwan has many advantages that other countries do not have, the most notable of which is its semiconductor ecosystem,” Kuo said. The US “must rely on Taiwan” to boost its microchip manufacturing capacities, Kuo said in an interview ahead of his one-year anniversary in office tomorrow. Taiwan has submitted a position paper under Section 232 of the US Trade Expansion Act to explain the “complementary relationship” between Taiwan and the US
RSS