Chips, Money, Politics: New Paper Analyses Taiwanese High-Tech Investment in China

Xiphias Consulting´s latest briefing analyses risks and opportunities of Taiwanese investment in China. Focussing on the semiconductor industry as one of the most important industry sectors in Taiwan, the paper identifies threats and benefits for the complicated cross-strait relationship.

While cheap labour – production staff on the mainland earns about a tenth of the average Taiwanese worker – is an important factor, politics may be influenced by Taiwanese companies investing in China, too. “The relocation of production to China has resulted in the hollowing out of Taiwanese industry with the implication that should production facilities in China be affected by a disruption to cross-strait interaction, Taiwan has no real way to maintain its position as a world semiconductor power,“ says Jon Blankfield, senior consultant at Xiphias Consulting. “It makes any deterioration in cross-strait relations risky for Taiwan and strengthens the mainland´s hand in talks.“

The Kunshan-Suzhou region in China´s Jiangsu Province serves as the premier example for Taiwanese strategic coupling in China and the migration of whole industry clusters rather than individual companies. Cluster migration involves building new institutional relationships, labour pools and supply networks as well as the reintegration into global production networks.

In 1992, the first major investment in Kunshan was made by Foxconn, an assembler of high-tech products such as Apple´s iPhone. Foxconn relocated to the region, pulling its supply chain across the Strait in the process. Suzhou established its own high-tech industrial zone, attracting the world´s biggest technology firms and currently boasting projects of some 40 Fortune 500 companies.

While the concentration of high-tech companies in one comparatively small region in China could potentially have serious economic and technological implications, it may also have serious political ramifications when it comes to the relationship between China and Taiwan. It is an important example for the state-business nexus in international politics. Actors on the business side react primarily to short-term economic factors, yet they are often blind to political relations that may have a massive long-term influence on business operations.

Xiphias Consulting is an independent risk and business intelligence consultancy, offering research on risk and environmental factors. By providing companies and non-profit organisations with the best information available, Xiphias Consulting enables them to succeed in complex or hostile environments.

The new briefing Risk Assessment: Taiwanese Semiconductor Investment in China can be downloaded for free as a pdf document on www.xiphiasconsulting.com.

Contact details:

Dirk Siebels
Gorch-Fock-Str. 15
24960 Glücksburg
Germany
Phone: +49 4631 407041
E-mail: info@xiphiasconsulting.com
Web: www.xiphiasconsulting.com

This release was published on openPR.