The rosy picture of China's economy painted by many media outlets and politicians is mostly just wishful thinking. There are a number of common misconceptions about Taiwanese companies doing business in China that need to be analyzed.
First, since Taiwanese and Chinese speak the same language and are of the same ethnicity, Taiwanese businesspeople can gain easy access to the Chinese market.
When discussing cross-strait relations, the most commonly seen argument is that since both sides speak the same language and belong to the same race, Taiwanese businesspeople should have no difficulty with their investments in China. Thanks to this argument, many Taiwanese companies have relocated to China after experiencing difficulties in Taiwan.
However, although sharing a common cultural background and the same language can be a plus for Taiwanese businesspeople attempting to make investments in China, this advantage can also make them vulnerable to the constantly changing market there.
Twenty years ago, when China was first beginning to open its markets to the world, its thirst for trade and commerce was tremendous. Over the years, Taiwanese businesses may have fared pretty well in China, but Taiwanese will also become the first investors to suffer in China, as many of the businesses never had a great technological edge, and their similarity in culture has also made them the first market to be replaced. This is one of the biggest difficulties faced by Taiwanese businesspeople in China.
Second, Taiwan should vie for a Chinese market that has around 200 million middle-class consumers.
With its "factory of the world" status and and its booming economy, China has nurtured a new middle class. Because of these circumstances, Taiwan's media keeps encouraging Taiwan's business community to go to China and make investments there.
However, China's new 200 million middle-class consumers have also caught the attention of the rest of the worl. With the huge Chinese market being divided between the businesses of all nations, how much can Taiwan profit from the current situation?
The reality is that China is simply luring Taiwanese investors with the bait of a market composed of 200 million middle-class consumers so that it can tie up their capital.
Third, can Taiwanese businessmen rely on China to thrive?
Faced with fierce competition, many Taiwanese companies have transferred their technology and businesses to China in order to survive. However, they are now faced with another challenge resulting from China's growing demand for imported commodities.
From a different perspective, in recent years, there have been dramatic changes in the nation's service sector, particularly the rise of companies providing specialized services or advanced technology. Although the nation's manufacturing sector has poured hundreds of billions of dollars of capital into China, Taiwan has still managed to maintain economic growth of up to 4 percent per year. One has to wonder why Taiwanese businesses cannot instead diversify and continue to develop at home in an environment in which they are already familiar.
Fourth, a large enterprise has to go to China to make a profit.
A responsible enterprise should not only seek to make a profit, but should also assume social responsibility and freely project its vision. In communist-ruled China, nobody can really enjoy freedom. Just look at the experience of some Taiwanese tycoons.
Mike Chang is a Taiwanese businessman based in China.
TRANSLATED BY DANIEL CHENG
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