Bustling Taipei-style shopping streets, majestic temples to Taiwan’s deities and thriving factories dot the eastern Chinese city of Kunshan, for years a hub for Taiwanese businesses, but now the firms are feeling the strain from cross-strait tensions that have stoked safety fears.
Entrepreneurs from Taiwan poured billions into China when ties began improving in the 1990s, playing an important role in the nation’s rise to become the world’s second-largest economy, but their numbers have dwindled, with the number of Taiwanese working in China dropping from 409,000 in 2009 to 177,000 in 2022, according to estimates provided by the Straits Exchange Foundation.
China’s economic slowdown and mounting trade tensions with Washington are partially responsible, the foundation said.
Photo: AFP
However, James Lee, a 78-year-old Taiwanese industrialist who was forced to close his cable and electrical factory in Guangdong Province in 2022, blamed “politics.”
“You have to be very careful when you speak,” Lee said. “We Taiwanese businessmen are afraid.”
Bolstered by their mastery of Mandarin and business acumen, Taiwanese entrepreneurs have prospered as wily intermediaries between international markets and China’s vast industrial manufacturing base.
Photo: AFP
Perhaps the most famous of them is Terry Gou (郭台銘), the founder of Hon Hai Precision Industry Co, whose vast factories in China churn out iPhones that have helped make it the world’s biggest contract electronics manufacturer.
An hour’s drive from economic powerhouse Shanghai, Kunshan has been a key hub for Taiwanese-owned industry in China since the 1990s.
“Back then, it was a rice field,” said Annie Wang, an industrialist from Taiwan who arrived in Kunshan in 1996.
“Taiwanese companies were fortunate to coincide with the 30 most glorious years of Chinese manufacturing,” she said.
Wang heads an electronics subcontracting manufacturing plant, a small technology park and a coffee utensil brand.
At the height of the boom, Kunshan was home to more than 100,000 Taiwanese, according to unofficial data from local associations, but the number of Taiwanese companies in the city has shrunk from more than 10,000 a decade ago to fewer than 5,000 today.
The Taiwanese entrepreneurs have felt the squeeze as relations between Taipei and Beijing plunge to their lowest depths in years.
The Chinese Communist Party — which claims Taiwan as its territory, but has never controlled it — has hardened its stance against alleged “Taiwanese independence activists,” even calling for the death penalty for “secessionism.”
Rules that encourage citizens to report alleged pro-independence activities have had a chilling effect on Taiwanese businesses in China.
“We are not sending Taiwanese employees [to China] because we don’t know how to guarantee their safety,” Lee said.
“The initial favorable conditions have disappeared, and now there are many additional risks,” Straits Exchange Foundation Secretary-General and Vice Chairman Luo Wen-jia (羅文嘉) said.
China’s economic woes and rising production costs are adding to the problems, he said.
“When we first went there, we thought that China’s economy would continue to improve because its market is so large and its population is so big, but we haven’t seen this materialize because there are some issues — there is the US-China trade war and there was the [COVID-19] pandemic,” said Leon Chen, a Taiwanese businessman who worked at a battery component factory in Jiangxi Province.
In response, Taiwanese manufacturers are turning to new, more profitable — and less politically sensitive — nations.
“Some went to Vietnam, and some went to Thailand, Indonesia and the Philippines, and some returned to Taiwan,” Luo said.
Between 2016 and last year, Taiwanese investments in Vietnam approved by the Ministry of Economic Affairs soared 129 percent, from US$451 million to more than US$1 billion.
Over the same period, those in China fell 62 percent.
This decline could deal a blow to Beijing’s “united front” strategy, which has seen it lean on Taiwanese communities to promote Taiwan’s political integration and, ultimately, unification.
As Beijing launches military drills practicing a blockade of Taiwan and Taipei cracks down on Chinese spies, Taiwanese entrepreneurs risk being caught in the crossfire.
Hon Hai in October 2023 was placed under investigation by Chinese authorities — a move widely seen as linked to a bid for the presidency of Taiwan by its founder.
“There is no way to compare it with the heyday, but we can still make ends meet,” Chen said. “If the environment for doing business in China becomes worse and worse, we would have no choice but to leave.”
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