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Be aware of mainland China and Taiwan stronger manufacturing links in ICT

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A current article from Knowledge@Wharton is drawing our attention to the fact that mainland China and Taiwan are fast becoming essentially one in the important ICT sector, and this will further increase their global influence. See: Computer Compatriots: Taiwan and China Draw Economically Closer [Sept 1]

We are talking here about things like the already existing fact that more than 90% of notebook and netbook computers manufactured worldwide are from the combined manufacturing bases of Taiwan and mainland China. Things like that will be significantly increased in the future due to the Economic Cooperation Framework Agreement (ECFA) that Taiwan and China signed in June.
Important updates:
ECFA to Further Drive China`s Procurements in Taiwan [Jan 5, 2011]: “Last year China organized 13 official buy-Taiwan groups, which together purchased products worth about US$20 billion. This year the projected groups may focus their purchases of 539 duty-free items as on the ECFA fast-track gainer list. The first group to arrive in 2011 will be from Liaoning, said to be led by provincial governor Chen Zhenggao and slated to arrive in Taiwan in mid-February.”
Taiwanese Banks Lend Over US$31 B. to Clients in China [Oct 11]: “Some say that large enterprises in Taiwan borrow from domestic banks and then transfer part of the loan to affiliates in China. So, including such transferred loans, China would have borrowed more than NT$1 trillion or US$31.25 billion from Taiwan. However, some say that the value is unknown for the exact amount of loans flowing to Taiwanese firms in China through their parent companies in Taiwan is not tallied.”
ECFA to Bring Strong Boost to Taiwan`s Economy [Sept 21]: “In its initial period, ECFA calls for the removal of tariffs on more than 800 items on an “early-harvest” list in three stages over a two-year period. The list includes 530 items included at Taiwan’s request (worth an annual US$13.8 billion in shipments to China) and 267 items included at China`s request (worth an annual US$2.86 billion in shipments to Taiwan). ECFA will also further open up cross-straits financial dealings. … Given Taiwan`s growing dependence on the Chinese market, the institutionalization of economic relations across the Taiwan Straits is vital to the continued development of the island`s economy.”
Cross-Strait Investment Protection Agreement May Be Signed by Year End [Sept 17] — With cross-Taiwan Strait Economic Cooperation Agreement (ECFA) having taken effect, Taiwan and China can start talk on investment protection agreement.
Taiwan should emulate investment strategies of local governments in China, says Acer founder [Sept 29]: “The Taiwan government has been encouraging international enterprises to set up regional headquarters and R&D centers in Taiwan for a while, but has said more than it has actually done for incentives it offered and promises made. … Shih also recommended that Taiwan-based manufacturers shift some of their resources to own-brand business operations and those related to proprietary intellectual property so as to avoid price competition.”

ECFA is prompting both sides to capitalise on this opportunity. Only the Taiwanese interest is, certainly, well manifested in the public media:
Ministry [of Economic Affairs in Taiwan] works to attract major ICT and auto firms [July 4]
Ma expects Taiwan to become a regional trade hub after ECFA [Aug 18]

This is all despite of the current political and economic interests, ties:
Inconvenient impacts of Taiwan-PRC ECFA [Aug 5]

3d Parties are aiming to capitalise on the opportunity as well, which could only enhance the role of new mainland China and Taiwan cooperation further:
Beyond Geopolitics – The Case for a Free Trade Accord between Europe and Taiwan [July 8, 70 pages]
ECFA could open way for EU-Taiwan FTA [July 8]
ECFA could be Taiwan’s window for trade deals: [a European] think tank [July 29]
Israel welcomes ECFA as good for business [Aug 26]

Keep in mind, however, that ECFA is quite controversial from general social and public interest point of view. There are even some unexpected contradictions for outside observers unaware of the peculiarities of the “internal” situation. To demonstrate that, here is a notable exerpt from Taiwan: Let’s go poking around under the rock of ECFA [Aug 24] blog post, written after the Legislation Yuan of Taiwan approved the ECFA agreement on August 17:

After Hong Kong signed CEPA, it has become the city with the largest wealth inequality in the world. We don’t want an ECFA that let the rich get richer and the poor get poorer.

Some general background information on the “players” and the “play” (not ECFA in particular):

Taiwan: About Taiwan [April 11, 2008]

Over the past 20 years, Taiwan has become the world’s fourth largest ICT (Information and Communication Technology) hardware producer and holds #1 ranking WW ICT product market share with more than 10 particular products (e.g. Notebook PC, Desktop PC, Computer Motherboard, Computer Server, CDT monitor, LCD monitor, Optical Disk Drive, Digital Still Camera, WLAN, Mobile Phone, and PDA etc.) By estimation, 75% of PCs installed in the world with Windows OS are produced by Taiwanese IT companies. Today, the entire production base has mostly migrated to mainland China due to low cost in labor and land factors. However, the Taiwanese entrepreneurs are dominating at least 75% of the ICT hardware production value produced in the PRC (People’s Republic of China). Impressively, Taiwan is also the fourth largest semiconductor industry in the world. Naturally, Taiwan is a major procurement center (One-Stop-Shopping) for global ICT companies.

Taiwan [from wikipedia]
Distinctive Characteristics of China’s Path of ICT Development: A Critical Analysis of Chinese Developmental Strategies in Light of the Eastern Asian Model [May 12, 2008]
Adapting to the China Challenge: Lessons from experienced multinationals [Sept 20, 2007]
Sons of The Yellow Emperor Go Online: The State of the Chinese Digital Diaspora [July 2, 2010]



  1. […] China: Taiwan is leading the way except IOT Posted on November 8, 2010 by nacsa In my post Be aware of mainland China and Taiwan stronger manufacturing links in ICT [Sept 2] it has already been proven that mainland China and Taiwan are fast becoming essentially […]

  2. […] China: Taiwan is leading the way except IOT [Experiencing the Cloud, Nov 8 – Dec 30, 2010] – Be aware of mainland China and Taiwan stronger manufacturing links in ICT [Experiencing the Cloud, Sept 2, 2010 – Jan 5, 2011] – New high-tech and direct investment […]

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