Taiwan Investment in China Facts, Issues, and Prospects.ppt

1 Taiwan Investment in China Facts, Issues, and Prospects Presented at USC Asia Conference Seoul, Korea October 28-30, 2004 Dr. C. Y. Lin USC Professor Emeritus Chairman Straight line is the shortest distance between two points. Is it correct? Taiwan v.s. China Cross-Strait Trade Taiwan Investment in China Changes in Investment Behavior Steady increase in number of investment and scale of investment Optimistic about investment in China Medium and large scale companies have invested in China Diversification of Industries Invested Expanding from traditional manufacturing to service industries, including insurance, tourism, and business service Share of service industry Prior to 1995 5.26﹪ 1995-1999 7.96﹪ 2000-2003 8.23﹪ Shifting from labor intensive to capital and technology intensive industries Extending from investment in coastal areas to interior, such as Beijing, Sichuan and Northeastern region Changes in Business Strategies Adopting strategic alliance and joint ventures Developing related industries into satellite systems or clustering in a region Creating own brands in addition to OEM/ODM Changes in Business Strategies Moving operation headquarters to China Developing chain-stores, particularly in food, IT, and communication industries Changing competitive advantage from cost reduction to human resource development, e.g. recruiting graduates from top-rank universities Localization of Business Operations Hiring local management staff Extending business functions from production to RD and marketing Residing in China instead of commuting cross-strait Risks faced by Taiwan Investors in China Market risks Changes in governmental policies and economic environment due to entering WTO. According to a survey, 65%of Taiwan investors in China fear this kind of risk. Severe competition from local private business companies that are improving, growing, and expanding 80% of Taiwan investors are