Taiwan businessmen witness mainland's evolving business environment over 40 years of reform and opening-up

By Li Xuanmin and Zhang Hongpei in Fujian Source:Global Times Published: 2018/6/27 22:33:40

Taiwan businessmen witness evolving business environment over 40 years


An overview of Pingtan county in East China's Fujian Province, the nearest place in the Chinese mainland to Taiwan. Photo: Li Xuanmin/GT



Editor's Note:

Fujian, the nearest province in the Chinese mainland to the island of Taiwan, has witnessed a growth in the number of Taiwan businessmen from a handful to tens of thousands during China's 40 years of reform and opening-up. Those Taiwan entrepreneurs have become a driving force in Fujian's economic takeoff, bringing capital, technology and management experience to the local economy. Global Times reporters recently paid a visit to the province and talked with several businessmen who invested since the late 1980s as well as some Taiwan youths who started up businesses in recent years. They shared their experiences of starting up businesses in the mainland. 

Chen Xiurong, a 50-something Taiwan businesswoman who came to East China's Fujian Province in the late 1990s, has experienced a dramatic shift in the market environment over the years, from needing to pay to take an elevator in a department store to ordering everything through the  click of a mobile phone.

Chen is among the first Taiwan entrepreneurs who came to the mainland for businesses and witnessed the massive changes Fujian has undergone over the past few decades since the implementation of the reform and opening-up policies.

"When I first came to the mainland with my father in 1987, all the department stores in Fuzhou [capital of East China's Fujian Province] were State-run, with a limited and outdated selection of goods. Consumers even needed to pay for taking elevators at the store," Chen Xiurong, the founder of Yuan Ju Real Estate Development Co, told the Global Times.

Spotting huge opportunities stemming from local residents' rising purchasing power, Chen's father, a well-known Taiwan entrepreneur who is of Fujian origin, opened one of the first high-end commercial department stores, Xianshi, in Fuzhou in 1989, selling clothes, cosmetics and imported goods.

The department store was a huge success. Locals walked into the store out of curiosity and were dazzled by designs they had never seen before. "All Fujian residents knew that if you wanted to buy the best products, you should come to Xianshi," she recalled. 

Similar to Chen's experience, Tianfu Holding Company, a Xiamen-headquartered tea producer and supplier founded by Taiwan businessman Rie-Ho Lee, who is also of Fujian origin, is another example of how the Taiwan investors shared the benefits of the mainland's reform and opening-up.

Lee opened his first tea-producing factory in Zhangzhou, Fujian, in 1993,  his first business in the mainland. Since then, Lee's business has enjoyed robust growth.

"At that time, we did not have any competitors at all. Opening one store could bring a huge amount of profit, and we were making money like riding on a rocket," recalled Lee, who is now in his 70s.

He added that the labor cost and housing rental fees at that time were inexpensive. "Hiring a beautiful waitress only took about 300 yuan ($45.51) a month, compared with a monthly salary of 9,000 yuan in the island of Taiwan," Lee told the Global Times over the weekend.

A view of Xianshi Department Store in 1990s Photo: Courtesy of Chen Xiurong



 

A view of Xianshi Department Store in June Photo: Courtesy of Chen Xiurong

Evolving environment

Recalling her experience in the 1990s, Chen, who was called by her father to take over the department store's management, said in a straightforward manner that she was reluctant to come to the mainland because there were huge gaps of at least several decades between the living standard of Taiwan and the mainland.

The business environment was also unfriendly to Taiwan businessmen in the 1990s, Chen added. People from Taiwan like Chen had to "find connections" in the local government so that their application could be approved and processed swiftly.

Lee also complained about restrictions on the areas of investment applied to Taiwan businesspeople in the 1990s.

"Taiwan regulators did not allow me to make a direct investment in the mainland and I bypassed them, applying through my company in the US. However, I became more frustrated when I learned that my company in the mainland could not directly export tea to foreign markets under relevant rules. I had to find a mainland tea agency," Lee said.

"I felt abandoned because both sides did not love me."

However, after 40 years of reform and opening-up, the business environment for Taiwan entrepreneurs is better and changing a lot.

For example, Lee's company was allowed in the 2000s to ship tea directly overseas. And now, Lee is planning to open 500 stores in countries and regions that benefit from the Belt and Road initiative.

In February, the Taiwan Affairs Office of the State Council announced 31 measures aiming to provide better opportunities for Taiwan businesses in the mainland. Under the new rule, Taiwan companies are placed on a level playing field with mainland peers, eligible for "Made in China 2025" manufacturing and infrastructure development contracts.

Speaking of the evolving business environment, Chen also took note of a standardized and transparent application procedure nowadays in the mainland.

Wu Jiaying, chairman of the Taiwan Businessmen's Association in Xiamen, who came to Xiamen in 1996 to start his business, told the Global Times that "local governments' working efficiency has been obviously enhanced, which reassures Taiwan investors that they should stay and continue their business here."

New concerns

However, since Tsai Ing-wen, the current Taiwan leader, came into office in 2016, cross-Straits relations have deteriorated. This in turn has threatened Taiwan enterprises' businesses in the Chinese mainland.

For example, as the number of tourists from Taiwan slid due to strained cross-Straits relations, Tianfu's tea products also experienced a mild drop in sales in the mainland, according to Lee.

"Taiwan entrepreneurs in Xiamen have encountered more inconvenience due to the suspended cross-Straits exchange mechanism," Wu noted. "For example, in the past, we could reimburse medical fees directly back to Taiwan if we received treatment in Xiamen, but now we're afraid of being sick because the Taiwan administration is purposely making it much harder," said Wu.

A Taiwan businessman told the Global Times on condition of anonymity that currently, the raw material from Taiwan for the firm's products has faced stricter customs checks, resulting in delayed delivery and higher expenses.

Wu also noted that Taiwan businesses are now faced with many more rivals in Fujian with pressure not only from growing local enterprises and foreign-funded firms, but also homogenous competition from themselves.

Lee also admitted that the growth of Tianfu's revenue is slowing amid intense competition.

Besides, Taiwan enterprises in traditional industries such as shoes and clothing are now faced with a transformation to advanced manufacturing, as the mainland's economy pursues high-quality development and labor costs rise substantially.

For example, the locations where these Taiwan investors initially established their plants have now become urban centers. As such, the plants need to improve their production processes to meet environmental requirements, Wu explained, noting the trend is that more Taiwan firms with outdated capacity and requiring intensive labor are moving out of Xiamen to Southeast Asia and Africa.

"Meanwhile, more high-tech Taiwan firms, such as the ones in the biotech and integrated circuit sectors, as well as high-level services, are seeking a foothold in the mainland," he added.


Newspaper headline: Taiwan businessmen witness evolving business environment over 40 years


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