In an address at the recent National Industrial Development Conference (
We have to face the fact that Taiwan's industrial development has been rough in the past 10 years. At the beginning of the 1990s, the home appliance, toy, shoe, ready-to-wear, umbrella and tennis racket industries were our star industries and among the highest in the world in terms of production value. Textile, plastic, and aquacultural products also became major Taiwanese exports. With only a few exceptions, however, these traditional industries failed to promote development efficiently and have disappeared. Many old factories in central and southern Taiwan also fell into disuse.
Why didn't these previously distinguished companies stay in Taiwan and promote the necessary research and development to upgrade their production technologies to produce goods with a higher added value? If they had to move out, why couldn't they relocate to Thailand, Indonesia or Malaysia, instead of China? Because businesspeople have realized that they can enjoy red carpet treatment simply by "going west." Since labor costs in China are only one tenth of those in Taiwan, and the Chinese also speak Mandarin and eat similar food, migrating to China from Taiwan is just as convenient as moving to Taipei from Kaohsiung.
China is a paradise that allows Taiwanese companies to seek new pastures without necessitating upgrading and development. Without China, they would have to make overseas investments elsewhere. Other nations, however, are foreign countries with different languages, cultures and lifestyles. That might make the businesspeople "keep their roots in Taiwan" and actively promote development here. In other words, natural barriers such as language, culture and religion restrain businessmen from moving out easily when the country faces the pressure of an investment outflow -- triggered by a rise in domestic labor costs -- in the process of its economic development. These will force them to stay and to make efforts to upgrade and develop their businesses.
Unfortunately, such natural barriers do not exist between Taiwan and China, which is why Taiwan's industrial transformation has been so difficult. History shows that industries restricted by the government's "no haste, be patient"
Many Taiwanese people -- including Taiwanese businessmen in China -- often use the worsening investment environment in Taiwan as an excuse to relocate. But we should also understand that Taiwan's international investment evaluation is not inferior to those of Japan and South Korea. It is also superior to that of China, proving that Taiwanese businessmen's "mainland fever" is a unique problem which only exists in Taiwan. The universal market theory can be applied to all nations but not Taiwan and China. Taiwan's mainland fever -- which is 50 or even 80 times hotter than that of Japan or the US -- is not only weakening industry's will to transform, it is melting Taiwan's domestic economy, harming our stock market, and throwing more people into unemployment.
Taiwanese enterprises and people have poured hundreds of billions of New Taiwan dollars of capital into China and have set up 50,000 to 60,000 companies there over the past 10 years. Under such mainland fever any goals such as "division of labor across the Strait," "win-win situation," "cross-strait common market" and "building Taiwan into an operating center " will lead to a one-sided victory for China and are merely a fool's paradise. These ideals can only be achieved after mainland fever has cooled down.
Huang Tien-lin is a national policy advisor to the president and former chairman of the First Commercial Bank.
Translated by Eddy Chang
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