Foreign investment

Taiwanese politicians and business people have little reason to be modest when they hold lectures about their country’s economy. Thanks to record growth, Taiwan has hauled itself out of financial crisis.

Moreover, Taiwanese goods are ubiquitous all over the world. Shih-Chao Cho is the director general of the Bureau of Foreign Trade in the Taiwanese Ministry of Economic Affairs. He was recently in Berlin to address economics and foreign policy experts.

He came to persuade them of the benefits of working with Taiwan, not only because of low tax rates and 23 million potential consumers but thanks to the connection with the Chinese mainland. His office was instrumental in clinching the Economic Cooperation Framework Agreement (ECFA) deal with Beijing.

"European companies can benefit from this by working with Taiwanese companies," he told the audience in Berlin. "They can invest in Taiwan and then export their goods to China toll-free. Or they can invest in China along with a Taiwanese firm and then build factories, companies or supermarket chains there."

Opening up to the Taiwanese market

Taiwanese firms are currently allowed to export 539 products to China duty-free but the figure is expected to rise to over 8,000 over the next year. Moreover, the Chinese services and banking sectors, which have been closed until now, will be opened up to Taiwan.

Thus, Taipei hopes to become a hub for Chinese and Asian trade, which is why it would like to make free trade agreements with other countries. It is currently in negotiation with Singapore and India, and hopes to talk to the EU soon.

"It's a rather simple agreement to do and it has huge benefits, mostly in services, automotives, but also for instance the ICT industry and electronics,” said Hosuk Lee-Makiyama from the European Center for International Political Economy in Brussels who was also in Berlin.

"This means it's a quick win and has large potential. The key question is of course: When we will have a position and strategy on how to deal with mainland China? That decides the future of how we will relate to Taiwan."

Until now, the EU has been reluctant to provoke Beijing by negotiating any such agreement with Taiwan.

Not that significant

However, Friedolin Strack from the Voice of German Industry did not think it would make a big difference anyway. Nor did he believe Taiwan could have a significant impact on Germany’s business relations with Beijing.

"The toll barriers are not the most decisive element in business with China," he explained. "We need reliable partners, and German companies have to look at how to protect their technology. Many companies have already invested in China. The eased trade relations between Taiwan and the People’s Republic are a good signal but nothing that will make German companies more interested in Taiwan than they have been until now."

Taiwan might not be the key to Beijing but it remains an exciting market especially with regards to technological innovation. This is something that Taiwanese representatives would do well to emphasize during their pitches to the EU.

Author: Mathias Bölinger / act
Editor: Ziphora Robina