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Taiwan can be Ireland’s Gateway to China
Asia is home to some of the world’s fastest growing and most dynamic economies, and it is widely accepted that Ireland should seek to develop greater trade and investment links with the region. Taiwan is highly worthy of consideration in this regard and it is high time to evaluate and redefine the role Taiwan can play in Ireland’s future, writes Dr. Harry Tseng, Taiwan Representative to Ireland.
With a vibrant market of 23 million people, Taiwan holds great potential in its own right. It also acts as a bridge and a gateway into the vast Chinese market. By virtue of the special relationship it shares with its larger neighbour, it is strategically positioned as a spring board. Japanese businessmen have intuitively recognised this for years and forged alliances with enterprises in Taiwan so as to take full advantage.
Ireland’s exit from the EU/IMF bailout in December 2013 was a great achievement. Yet most of the Irish banks are still struggling to get out of the shadow of financial crisis. In comparison, Taiwanese banks are much healthier and stronger. Taiwan’s RMB business took a quantum leap in 2013. By the end of March 2014, only 13 months after the establishment of the cross-strait currency clearing mechanism, Taiwan’s RMB deposit soared to over RMB 268 billion. It is worth noting that the RMB 200 billion threshold took Hong Kong 6 years to cross. By issuing Formosa bonds, Taiwan welcomes Irish businesses that plan to raise funds in the Chinese market.
Several globally renowned research institutions have confirmed Taiwan’s status as a competitive business partner. For instance, the Profit Opportunity Recommendation report, published by Business Environment Risk Intelligence (BERI) in December 2013, ranked Taiwan as the world’s number 3 investment destination among 50 major economies around the world. It also predicted that Taiwan’s financial sector would maintain robust growth momentum in 2014 and 2015, with most banks enjoying a healthy structure and stable profits.
Indeed, Taiwan has worked hard to build a receptive business environment for foreign partners. The investment climate has been strengthened by the introduction of tax and funding incentives, low interest loans, the lowering of business tax to just 17%, and the adoption of a series of reforms to make investment simpler. This has seen Taiwan consistently ranked as one of the world’s best investment environments.
Bilateral trade between Taiwan and China registered at US$165 billion in 2013. And their ties promise to only get stronger, particularly in light of the Economic Cooperation Framework Agreement (ECFA) signed in 2010. This is a hugely significant development, and marks a crucial departure in the cross-strait dynamic. Essentially, the ECFA lays out a blueprint for the future, providing for the deepening of trade links and liberalisation of the market. It is effectively equivalent to a fledging Free Trade Agreement, and that can only give cause for hope and excitement.
Taiwan also has comprehensive distribution networks and supply chains, thanks to its immense presence in China where, remarkably, over 40% of its total exports contain Taiwanese capital. Taken together with its strategic location and sound infrastructure, Taiwan stands out as the ideal choice of a base for operations in Asia, as well as an excellent access point into China. There are now more than 600 flights weekly between China and Taiwan, landing in more than 40 Chinese cities and penetrating the “inner China” that most international airlines cannot. China’s strategy today is to hoist its huge domestic market, where Taiwanese businesses already set up their presence.
What is perhaps most appealing is the considerable safety and security Taiwan can offer. European firms trying to break the Chinese market often run into difficulties. By operating through Taiwan or establishing strategic alliances with Taiwanese firms, it is possible to minimise risk and instead benefit from a more familiar environment based on strong rule of law and protection of intellectual property rights (IPR) and proprietary information. This, crucially, extends to doing business across the Taiwan straits thanks to an IPR agreement signed with China in late 2011, which specifically extends coverage to foreign companies operating in Taiwan.
Ireland and Taiwan rely on innovation and education as our weapons for economic growth. We both are leaders in science and technology, with Taiwan spending nearly 3% of its GDP on R&D annually. There is no doubt in my mind that strategic collaboration between our businessmen will prove most rewarding.
Written by: Dr. Harry Tseng, Taiwan Representative to Ireland
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