Global Chinese entrepreneurship, diasporic Chinese entrepreneurship in particular, is a long-standing phenomenon for scholarly research. The historian and sinologist Gungwu Wang created a pyramid concept of Chinese migration with huashang (华商 meaning Chinese merchants and traders) as the foundation. Historically and in contemporary times, entrepreneurship has been a vital aspect of diasporic Chinese life and crucial for understanding Chinese migration, diasporic formation, and ancestral homeland/hometown development. This symposium aims to investigate the phenomenon further. We are particularly interested in: identifying the distinct patterns in diasporic Chinese entrepreneurship in historical and comparative perspectives and the relations between diasporic Chinese entrepreneurs and their ancestral homeland/hometowns; tracking the global and local forces that have transformed the ways in which Chinese migrants start and run their businesses in different national or transnational settings; the importance of local and transnational networks in business; the causes and consequences of entrepreneurship that are distinctly Chinese or are based on sub-ethnic identity; and the ways in which the understanding of global Chinese entrepreneurship would shed light on the general phenomenon of ethnic/immigrant entrepreneurship.
“The Untold Truth of China's Resilience to the US-China Trade-War: Data and Case Studies”
Jinwu Xiong, China University of Political Science and Law; Ying Lowrey, Alibaba Research Institute
“Transnationalism and Immigrant Entrepreneurship: A Case Study of Self-Employed Foreigners in Hangzhou, China”
Zhenxiang (Zeke) Chen, UCLA; Xiaoguang Fan, Zhejiang University
“Confucian Entrepreneurship: Rediscovering and Reinventing a Distinct Chinese Entrepreneurship in a Global Context”
Matthias Niedenführ, University of Tübingen, Germany
“Capitalizing on Opportunities during the Covid-19 Pandemic: Business Transitions among Chinese Immigrant Entrepreneurs in France”
Simeng Wang, The French National Center for Scientific Research, France; Xiabing Chen, Sorbonne University, France
“How Unique Is Jack Ma? High-Performing Entrepreneurship and Social Mobility in China”
Robyn Klingler-Vidra, Jiawei (Steven) Hai, Ye Liu, and Adam Chalmers, King’s College London, UK
"'I Sell Therefore I Exist': Markets' Contestation, Digital Labor, and Emotional Petit Capitalism of Chinese Migrant Women in Taiwan"
Beatrice Zani, Sciences Po Lyon, France
“Cultural Rationales for Becoming an Entrepreneur: An Ethnographical Approach to the Entrepreneurial Motivations of Chinese Newcomers in Tokyo”
Bin Li, Free University Berlin, Germany
“Chinese Immigrants' Contribution to Trade: Network Competence vs. Educational Attainment”
Howard Xiaohua Lin, Ryerson University, Canada; Xiyan Yang, Shanghai University of International Business and Economics
“From Street Food to Gourmet Food: The Globalization and Popularization of the Uighur Lamb Skewers by Chaoxianzu Chinese”
Changzoo Song, University of Auckland, New Zealand
“Intergenerational Similarities and Differences among Overseas Chinese Entrepreneurs”
Mei Zhang, University of Science and Technology Beijing, China
“Privileged Migration and Middle Minority: Comparing Taishang in Dongguan and Jakarta”
Ping Lin, National Chung Cheng University, Taiwan
“Kin Networks, Women, Chinese Family Businesses and Entrepreneurship: Some Theoretical, Methodological and Research Formulations”
Kwok Bun Chan, The Hang Seng University of Hong Kong
“Entrepreneurial Masculinity and Disjunctive Intimacy: Taiwanese Businessmen and Their Families across the Taiwan Strait”
Hsiu-Hua Shen, National Tsing Hua University, Taiwan
“Intergenerational Transformation and Sexual Division of Labor in Middle-Class Sino-Thai Business Families”
Xiaoxiao Ma, Minzu University, China
“Transgenerational Intent of Taiwanese Business Families: Immigrant Context as Exposure to Country Differences in Family Logic”
Stone Han and Hsi-Mei Chung, I-Shou University, Taiwan; Artemis Chang, Queensland University of Technology, Australia
Welcome to the UCLA Asia Pacific Center's
International Symposium on Global Chinese
Entrepreneurship.
Great to see you from all
over the world virtually.
Thank you for coming
and welcome.
My name is Min Zhou.
I'm Professor
of Sociology and Asian American Studies, the
Walter and Shirley Wang Endowed Chair in U.S.-China
Relations and Communications, and Director
of the Asia Pacific Center at UCLA.
The UCLA
Asia Pacific Center promotes greater knowledge
and understanding of Asia and the Pacific
region on campus and in the community through
innovative research, teaching, public programs,
and international collaborations.
We focus
on intra-Asian and trans-Pacific connections
from historical, contemporary, and comparative
perspectives and encourage interdisciplinary
work on cross-border and supra-national issues
on language and culture, politics, economy
and society, and sustainability in the ongoing
processes of globalization.
Our center runs
the Program on Central Asia, Taiwan Studies
Program, the Hong Kong Studies Program, and
we are also an academic partner of the Global
Chinese Philanthropy Initiative.
The International
Symposium on Global Chinese Entrepreneurship
is beginning with a keynote speech on Taishang,
referring to Taiwanese business people, China
and the global value chains by Dr. Jieh-min
Wu, followed by four panels of research paper
presentations, one right after Dr. Wu's keynote
speech this evening via Webex and three panels
tomorrow via Zoom.
The central theme of our
symposium is global Chinese entrepreneurship.
We particularly focus on diasporic Chinese
entrepreneurship, which is a long-standing
phenomenon for scholarly research in the social
sciences.
The historian and Sinologist Wang
Gungwu coined the concept of huashang, meaning
Chinese merchants and business people, and
developed a theoretical model for understanding
centuries-old Chinese migration and diaspora
formation, viewing huashang Chinese business
people as the foundation of the Chinese diaspora.
Historically and in contemporary times, entrepreneurship
has been a vital aspect of diasporic Chinese
life.
One cannot possibly understand Chinese
migration, diasporic formation, transnational
engagement, and homeland development without
looking into entrepreneurship.
This symposium
aims to investigate this phenomenon in greater
detail.
We have selected 21 papers written
by authors from mainland China, Taiwan, Hong
Kong, New Zealand, the UK, Germany, France,
Canada, and the United States.
These papers
cover a wide range of topics ranging from
changes in the distinctive patterns of Chinese
entrepreneurship, gender dynamics in business
families, relations between diasporic Chinese
entrepreneurs with the economies of their
host countries and countries of origin, the
ways in which Chinese migrants start and run
their businesses in different national and
transnational settings, the importance of
local and transnational networks in business,
consequences of entrepreneurship that are
distinctly Chinese or are based on sub-ethnic
identity, to the most recent and timely topic
exploring how Chinese businesses are affected
and capitalizing on the COVID-19 pandemic.
So this symposium is organized and hosted
by the UCLA Asia Pacific Center and co-sponsored
by the Center for Global Management at the
UCLA Anderson School of Management and the
Contemporary China Research Cluster at the
University of Hong Kong.
The symposium is
supported by the Taiwan Studies Lectureship
from the Taiwan Ministry of Education represented
by the Taipei Economic and Cultural Office
in Los Angeles.
I thank our partners for their
co-sponsorship and funding support.
I would
also like to thank in particular my center
staff: Executive Director Elizabeth Leicester,
Assistant Director Aaron Miller, and student
assistant Lauren Nip for their incredible
support and tireless work behind the scenes.
And thank you all for coming.
The entire symposium
will be recorded and will be made available
on our center's website.
Please use the Q&A
function to submit your written questions.
During the Q&A time after the speaker's presentations
we will select your questions for our presenters.
Now I am pleased to introduce today's keynote
speaker, Dr. Wu Jieh-min, who is a senior
research fellow at the Institute of Sociology,
Taiwan Academia Sinica.
His research interests
are in political economy, political sociology,
and social movements.
In recent years he has
published a number of highly influential books
on Taishang and cross-strait relations, including
Rent-Seeking Developmental State in China:
Taishang, Guangdong Model and Global Capitalism,
published in 2019; The Anaconda in the Chandelier:
Mechanisms of Influence and Resistance in
the "China Factor," published in 2017; The
Double Helix of Power and Capital: A Taiwanese
Perspective of China/Cross-Strait Studies,
published in 2013; Third View of China; and
The Era of Significant Changes: Taiwan 1990-2010.
And the list of his publications can run on
and on.
Now without further ado, let's welcome
Dr. Wu.
Dr. Wu, please go ahead.
Thank you for inviting me to this event and
your very kind introduction.
Today I'm going
to present a story about the Taishang which
may not have been presented in the same argument
as I will do below.
Can I have my slides?
Min, can you see my slides?
Not yet, but it should come on I think.
Okay, is Aaron there?
Can you put on my slides?
I think I already shared it.
I just finished
again.
Just one second.
Please bear with us.
No problem, it happens.
It's...
actually it's you know almost...
And Jieh-min you cannot share your slides?
I already shared it but it did not appear
on the screen.
Can you see it on your screen?
I cannot.
No, mine either.
So can I do it?
Oh okay,
now we are seeing it.
Okay.
Talking about China's development model must
begin with Guangdong, and talking about the
processing threat growth model in Guangdong
means starting with Taishang, but this is
a very sensitive subject on both sides of
the Taiwan Strait.
Any mention of the Taiwanese
contribution to the Chinese economy inevitably
involves value judgments, so this is why this
contribution has long been treated as unclear
or even unmentionable.
At the Bo'ao Forum in 2018, Chinese President
Xi Jinping announced: "Today, China has become
the world's second largest economy, its top
industrial nation, its top trading country
and its top holder of foreign exchange reserves.
Today, the Chinese people can proudly say
that China's second revolution of opening
reform has not only profoundly changed China,
but has also profoundly influenced the entire
world.
During the forum, Xi Jinping also met
with Taishang and some Taiwanese politicians.
He acknowledged that the progress of China's
forty years of opening reform has to be chalked
up to our Taiwan compatriots and Taiwan companies,
but he also required Taiwan's industrial and
commercial sector to express support for the
Taishang have a twofold effect on China.
Taiwanese
investors and managers have helped make China
the factory of the world, but they have also
been charged with a political mission.
In
fact, Taishang has some influence on Taiwan's
national elections over the last twenty years.
For a long time, scholars have studied why
China was able to achieve its economic rise
in such a short time.
Six years ago, the American
political scientist John Mearsheimer published
an article, "Say Goodbye to Taiwan."
He predicted
that a rising China would ultimately achieve
hegemony in East Asia, and then it would proceed
to annex Taiwan.
Mearsheimer went on, "By
trading with China and helping it grow into
an economic powerhouse, Taiwan has helped
create a burgeoning Goliath with revisionist
goals that include ending Taiwan's independence
and making it an integral part of China.
In
sum, a powerful China isn't just a problem
for Taiwan.
It is a nightmare."
Of course
Xi Jinping and Mearsheimer hold very different
political views on Taiwan, but they reach
similar conclusions.
That is, both feel that
Taiwan has played a role in China's economic
rise.
Next please.
Today Taiwan is at a critical juncture and
the Taishang are likewise, but the prospect
of the rivalry between China and the U.S.
is still uncertain.
For decades, the interaction
between China and the U.S. has profoundly
shaped Taiwan's place on the world map politically
or economically.
Some say the world is stumbling
into a new Cold War.
Others say the relationship
is more like a long-term strategic competition.
In any case, Chinese leaders have asserted
that China should seek economic self-sufficiency.
Under these circumstances what direction should
Taiwan take and how should Taishang cope with
the great uncertainties?
In this study I used Taishang as a main actor
in my development narrative.
Next please.
In this figure I provide a simplified broad
map of the events over the last 40 years.
In this narrative, Taishang together with
Hong Kong businesspeople were key agents in
introducing the global value chains into China
from the start.
The upper left box shows that
since the 1980s global value chains began
to shift in the East Asian region from the
Four Tigers to China and Southeast Asia.
The
first wave of GVC shift was mostly in labor-intensive
traditional industries such as shoes, bicycles,
garments, toys, and mainly went to Guangdong.
Next in the initial stage Taishang were significant
drivers in this global capital shift.
The
second wave of "Mainland Fever", so to speak,
came about in the late 90s and is centered
on ICT assembly factories.
Taishang serve
as a bridge between China and global capitalism
and China seizes this opportunity to merge
into GVC and make itself into the factory
of the world.
At this stage local growth alliance
is all formed across coastal China.
The core
members of this local coalition was Taishang
and other foreign capital and the local governments,
and the GVC lead firms and the central government
of China were invisible members.
Foreign investment therefore transformed the
Chinese economic structure.
The export processing
sector in the coastal area became an engine
of growth.
In the process, the Chinese government
gained an enormous amount of foreign exchange
which laid a foundation for China's economic
life.
In the meantime rent-seeking activity
has been pervasive, but curiously it hasn't
hampered economic growth.
Actually it's a
kind of rent-seeking that differs from the
typical situation of rent-seeking.
I define
it as institutional rent-seeking or institutionalized
rent-seeking.
In this model, local officials
organize themselves into a cartel or syndicate
to sponsor enterprises and in turn they collect
fees from the foreign companies.
Next please.
Back in 1994, a Taiwanese manager vividly
describes local officials as rent-seeker and
also as protector.
He said, "They had units
as numerous as buffalo hair, and they wanted
money for everything!
The number of times
they came extorting payments was unbearable.
It made it impossible for me to manage the
factory...
What could I do?
I telephoned our
official sponsor and asked them to handle
it.
They were almost always
able to take care of things very quickly.
You know, we gave them a lot of money.
If
we didn't ask for their help, what were
we paying them for?”
Can you go back to
the last slide?
The last one, yes, thank you.
It sounds so far so good, but there's a dark
side to this local coalition.
It excludes
migrant workers.
The workers that have produced
the largest economic surplus in this labor-intensive
model, but the workers have been deprived
of most of the economic rewards.
Building
on empirical findings and theoretical reflection,
I have devised a term to analyze China's experience.
That is "rent-seeking developmental state."
For the sake of brevity, I don't expand on
this topic for now.
Since China's rise, the
government has constantly called for rapid
upgrading.
For example, Guangdong has been
carrying out a strategy called tenglong huaniao,
that is to empty the birds and that is to
empty the cage and uh usher in new birds since
the aughts, since the late aughts.
This together
with a sudden shock of the global financial
crisis during 2007 and 8 put tremendous pressure
on Taishang and other foreign companies and
eventually resulted in the reorganization
of local alliance during this period the central
government pushed for the "red supply chain"
and "Made in China 2025" its ultimate intention
is to challenge the technological hegemony
of the West and bypass a global value chains
by creating China's own supply chain system
in this new economic process that made China
assertive and even aggressive in its international
behavior, the U.S initially opened its market
to China and invited China into this EOI developmental
model.
But, 30 years later the U.S. is finding
it its interest threatened by China and
has begun to change its long-term engagement
policy, and the U.S. has imposed sanctions
on
Chinese firms such as Huawei and the SMIC.
And we are still in this historical process.
Finally what should Taiwanese enterprise be
doing in this new situation?
I will come back
to that question in the last section.
Next
please.
For now let's first look at how Taishang helped
introduce GVCs into China.
Next please.
Taiwanese
processing factories have been following the
global value chains to find their niche.
Once
the GVCs arrived, China followed the same
logic.
In essence the latecomers are climbing
the GVC power ladder.
At the pinnacle of the
GVC are the lead firms.
They control either
the brands and end markets or they control
the crucial technologies.
That means that Taishang
had to go where the brand firms want them
to go.
Take the footwear industry as an example.
Yue Yuen which which is called Paochen in
Taiwan, its a
parent company in Taiwan.
Yue Yuen is one of the largest shoe manufacturers
in the world.
Yue Yuen followed its buyers into China in
the late
please.
Yue Yuen had employed 30,000 migrant workers
in a single factory complex in Guangdong,
as
early as in 1990s.
At its peak capacity
around the mid 00s, it employed around 100
thousand workers in China.
So how can we conceive
of this size?
In 1994 when I went to Dongguan
A manager described the situation
to me.
Quote "the factory provides room and board
and there are so many workers that they eat
to support a local medium-sized pig farm"
unquote.
This helps us visualize the spillover effect
of Yue Yuen's massive employment.
Basically Yue Yuen could
sustain the livelihood of the entire town
where
it's located.
Another manufacturing Giant, Foxconn which
specializes in Apple products,
at one point it hired 300,000 workers in
Shenzhen and at its peak it employed 1 million
workers throughout China.
Next please.
From a macro perspective, China's urban industries
employed a total of 84 million workers in
Among them 21 million were employed by foreign
companies and more than one third were employed
in Guangdong.
Next please
Taking a closer look
Taiwan and Hong Kong companies employed almost
half of the workers in the foreign-invested
sector as you can see it's 48.7%
And this is for 2006 and then the table is
for 2011 and we look at we look at the
structure, they are similar.
It's 46.8%
and in Guangdong only it's 61.8% in the year
of 2011.
Next slide please.
Now back to Yue Yuen.
Yue Yuen was listed on Hong Kong
exchange stock exchange.
Lower labor cost made
a significant contribution to Yue Yuen's profits,
but believe it or not in the government's
registration system, Yue Yuen's production
arm remained a lailiao jiagong chang
that is a processing factory until the early
local governments to collect an enormous amount
of processing fees and other types of economic
rent.
In Guangdong, foreign companies had to
remit foreign exchange into China in order
to pay their processing fees.
As a rule the Chinese sponsoring unit took
percent of the processing fees as its service
charge.
Next
This table give you a sense of how important
the processing fees were to local governments
in the first stage of Guangdong's development.
The table shows that in Dongguan alone throughout
the 1990s throughout the 1990s the estimated
income from processing fee remittance was
more than the formal tax revenue.
This column
is the fiscal revenue the formal tax income,
and this is the estimation of 30%
of processing fees.
So you can see from the
red ink is more than the formal
revenues.
Here the amount more than this column.
So up until 2003 this year, two years that's
two years after China had entered the WTO
the processing fees remained a main source
of local government income.
Next please.
Since the mid 00's the Chinese
government has faced a serious challenge of
upgrading.
Taishang have also faced some difficulties.
In the traditional industries they have faced
a double challenge from international competition
and from mailand-owned companies excuse me,
and also
from the mailand-owned companies nipping at
their heels.
This has forced Taishang to
transform they have to transform they have
to upgrade.
And apart from closing down or
skip town you know, they have three options:
the first one is to transform or upgrade on
the site, the second is to move inland areas,
and the last one is to move overseas.
Here we
are seeing a new shift in the global value
chains.
Next please.
Again the case of Yue Yuen is illuminating.
Under pressure from the government, the company
changed its registration from a processing
factory
that is from a lailiao jiagong chang into
a single-venture foreign corporation.
Into a (inaudible)
so now its a legal entity and it
has to pay tax.
Since the new century, Yue Yuen has
moved most of its production lines to the
inland regions.
But its most important movement
has been to take production lines overseas
mainly to Vietnam and Indonesia.
Next please.
As you can see from this figure, Yue Yuen's
production volume in China declined from 38%
in
year.
By by way of contrast, Vietnam now takes up
about
production in the late 00's, the Chinese government
began enacting new labor laws and improving
working conditions for the migrant workers.
These new state policies gave labor and local
government governments an incentive to demand
better pay from foreign companies.
They also
contributed a wave of strikes in Guangdong.
Not surprisingly, Yue Yuen's experiences strike
in 2014.
The workers demands what, they demands
back payment of social insurance fees,
and also the housing provident funds.
As a result, Yue Yuen paid a total of 400
million yen RMB. 400 million
RMB in the back payments.
The company
estimated that this would add about 1.50 cents
to the cost of each pair of name-brand shoes
from then on.
Next please.
After strikes and paying the costs Yue Yuen
try to ask for a
higher price from the orders from the firms.
The following response was reported by a manager
he said "The result was that the clients,
that is,
brand firms, say sorry and just ran off, because
because it's still producing Adidas, and
yet if only Yue Yuen says I want to raise
prices
then you either don't think it's worth the
trouble, or you don't continue.
Usually with
a sales unit to negotiate price and get an
extra 2 only 2 or 3 cents is already a miracle.
So the major brands like Nike and Adidas actually
won't pay the whole amount.
They said you want
perspective of the brand buyer, I'm going
to
buy where the prices are cheaper.
I'm good
Next please.
Chasing low labor costs is the
fate of labor-intensive industries.
In our
Taishang story, Yue Yuen is a mega factory
but it's still painstakingly climbing the
power ladder of the GVC.
Moreover Taishang
are facing the situation of mainland factories,
or luzichang, catching up from behind.
Local suppliers have production skills directly
from international buyers.
A manager in Dongguan
Dong Guangdong, anticipated that Yue Yuen
would move
all of its production lines out of Guangdong
within
before we jump to this conclusion there's
twist in the story.
The fact is that Taishang
themselves have been cultivating these mainland
suppliers over the years over the 20, 30 years.
Many of Chinese suppliers that have cut into
supply chain, and gain their working experience
in Taiwanese factories.
They started out
as apprentices under Taiwanese bosses and
learn production and management skills from
their Taiwanese mentors.
In Taiwan this is a
process we call oo-tshiu
pian thau-ke.
Or in English it's translated as "apprentice-turned-boss".
What's happening now in mainland
China is very not much like what happened
in Taiwan during the 1960s through the 90s
Next please.
For this reason, fellow sociologists
Cheng Chih-peng, I'm sure Chih-peng is also
at this
conference and uh, Chih-peng is there right?
Chih-peng coined the term "Taizixi qiye"
and that is an enterprise under Taiwanese
system.
I slightly rephrased it as "Taizixi luzichang"
which means mainland owned factory
under the Taiwanese system or "Taiwanese-acculturated
mainland-owned factories".
Next please.
The localization process has been accompanied
by technical emulation and cultural diffusion.
As they run up the GVC ladder, mainland factors
also strive to catch up with Taishang.
In this
transformation many Taishang survive the
throes of upgrading.
They have evolved from
a contract manufacturer in the GVC to a "quasi
international buyer" or "supply chain integrator".
Taishang that remained in the Pearl River
Delta
were those who survived new state policy changes
and the labor strikes and also achieved at
least a level of upgrading.
Next
please.
The transformation of Yue Yuen and other companies
testifies
to the survival ability of this category of
Taishang even so as long as Taishang seek
their survival in the hegemonic logic
of the GVC.
Today we are continuing to face
the pressure of being overtaken by mainland
factories.
The game rules for climbing the GVC power
ladder were established by the lead firms
and the Taishang only cling to their number
two position by following the lead firms so
the Taishang all almost always chasing, you
know, trying to catch up in the power ladder
of GVC.
Next please.
More recently Apple began
sending iPhone assembly orders to a mainland
factory, its large Luxshare ICT.
This was the first iPhone order given to a
mainland factory.
The founder of Luxshare, Grace Wang, was a
line worker at Foxconn before she started
establishing
her own company in 2004.
In this reorganizing
of Apple GVC in China, Luxshare merged naturally
merged with two Taiwanese factories and that
assembled Apple cell phones.
This company also
employs many companies, technicians, and managers,
and has several Taiwanese suppliers among
its
investors.
So, Luxshare is called "an enterprise
with Taiwanese bones draped in mainland skin".
Next please.
Apple is dividing its global market into a
"China market" and a "non-China" market.
Next
please.
In all conceptualization, the story
of Grace Wang is another example of "oo-tshiu
pian thau-ke".
This time it occurred in ICT
sector which signals China is moving up the
GVC ladder.
Next.
Since the early 2010s, China began promoting
a big-push industrial upgrading strategy.
Next please.
In fact, this is a grand roadmap for developing
national power and it includes the following
steps: The Belt and Road initiative in 2013,
Asian
Infrastructure Investment Bank (AAIP), A "Big
Fund" for the semiconductor supply chain and
Made in China 2025, with its first item the
semiconductor supply chain.
These plans are
very a bit ambitious, unlike the trajectory
of "following the GVC to forge the factory
of the world", like the Taiwanese or like
the
traditional industry in the mainland.
The new
state policies seek to bypass the West-dominated
GVCs, and try to create China's own "red supply
chains".
Based on my research two years ago,
the two year period between 2018 and 2020.
projects, but by the mid-2020 that is this
year and this summer, many such plants had
already failed.
By contrast, two companies have
made substantial progress.
That is Huawei and
SMIC.
Huawei's subsidiaries
HiSilicon has developed a high-grade chip
design
capability.
Likewise SMIC has been able to
produce 40 nanometer chips, yet the U.S. government
has put Huawei on the Entity list since
last year due to national security concerns.
SMIC was also put on the designation in, put
on the designation list this year.
China cannot
make a breakthrough without technology from
the U.S. and other western countries is evident.
Next please.
Why is China's ambition being
challenged by the U.S.?
Most of you are probably
aware of the reasons, so for the sake of time
I will just skip this slide, next please.
The U.S. began waging its technology war against
China since 2018.
The target was high-grade
semi-conductor chips.
China has now been almost
completely reliant on U.S. for its supply
of high-grade chips.
The "chip's shortage pain" so to speak, cannot
be
cured overnight.
Next.
So what are the prospects
for the U.S-China rivalry?
The Trump Administration
has attempted a policy of "decoupling" with
China.
Yet 40 years of globalization have integrated
China's economy with the whole world.
The U.S.
recovering from China would be a long process
if not impossible.
The Biden administration may
engage a China policy that differs from Trump's.
The whole world is watching what the Biden
team will do on China.
And besides the world
market China continued china continues to
attract Wall Street tycoons.
As you can see
the IPO of Ants Group uh just uh a week ago
fresh and
tycoons.
So China continues to attract Wall Street
tycoons and the German automobile industry,
just to
mention a few.
Now.
Next please.
Now my concluding
section.
Next please.
As I have tried to make clear,
numerous Taishang have contributed to China's
rights especially during its first phase of
opening reform.
China's economic development
is facing a critical turning point right now.
Based on the current Chinese blueprint it
appears that China no longer sees Taiwan as
an essential partner for its further development.
But, let us first look at the trend of in
Taiwan's
economic relations with China at the macro
level over the last 20 years.
As you can see from this figure, this figure
with
China.
Taiwan's trade dependence with China
lingers up until now it still lingers around
concentration with China remains a high 40%.
To a great extent the trade volume reflects
triangular trade relations, therefore Taiwan
is
not dependent on China, on China's domestic
market, as the numbers might suggest it was
at first
glance.
And yet, the complex economic interdependence
between both sides is undeniable.
Next please.
Figure 4 shows the trend in Taiwan's
direct investment in China as a share of its
global investment.
Up up to the early 2010s,
around this area, it's a peak, it's the peak.
China took the largest chunk at more than
is more than 80% here in 2010 to
So you can see how how much is the attraction
of of China to to Taiwan to Taishang, but
since around 2011, Taiwanese money has largely
been reoriented, reorienting elsewhere so
it's going down dropping, there's a trend
until now.
More recently funds has been re-shored to
Taiwan.
This capital movement began however
before the U.S. trade war.
U.S-China trade war.
But the trade war has accelerated the process
Next please.
Right now China is facing double pressure
from within and without.
The Chinese economy has
actually has slowed down, and there's a big
uncertainty in the U.S-China rivalry.
The Xi Jinping government has iterated a
new slogan of "double circulation"
within which with emphasis on "internal
circulation".
Xi Jinping has recently
talked about forming China standards, he said
"We had to make major breakthrough in critical
core technologies, making a breakthrough in
a block
of core components, putting forward a block
of high-grade products, and forming a block
of China standards...During the 30 years from
now until the mid-century until the mid 21st
century, China will construct a modernized
strong socialist nation."
Xi says 30 years
from now, this tone appears to be more realistic
than that announced in the ambitious "Made
in
China 2025".
China is still keen to acquire
advanced technologies from abroad to boost
its people's strategy.
Next please.
We can identify two models emerging.
The first
model is the birth of a new ecosystem with
Chinese capital as its foundation.
Take the
telecommunications industry for example, the
state and state-owned capital are cooperating
with private capital to create a value chain
system controlled by the Chinese themselves.
This emerging sector is gradually putting
pressure on international capital and even
U.S. companies.
The second model is led by the
mainland supply chains in the traditional
industry.
It's in large part generated by the
spillover effect from the Taishang production
networks.
Here Taishang plays an intermediary
role as GVC integrators and that Taishng continue
participating in the value capture game.
Both
models involve Taishang in different ways.
As
as long as China needs to connect with the
outside world in terms of market, in terms
of foreign exchange acquisition and advanced
technologies, China still needs Taishang
as an agent.
In turn many Taishang want
to benefit from fuller cooperation with China.
And the global capital needs China too.
Next
slide please.
For example in the footwear industry, buyers
at the top of the GVCs still need to tai song
to serve as supply chain integrators globally
and on the mainland.
As we have seen Yue Yuen
has reduced its China capacity to a very tiny
proportion but brand firms the Yue Yuen still
need
Guangdong as an R&D center and some inland
areas some inland Chinese areas has high-end
production centers.
In the semiconductor industry
China has tried to construct its own supply
chain but has met a series of challenges made
of sanctions from the U.S. government.
U.S. sanctions
has prevented TSMC from Taiwan.
U.S. sanctions
uh have just just told TSMC that they cannot
produce chips from Huawei since this past
september.
For the same reason, for same reason,
Huawei cannot acquire high-grade chips from
major companies such as Qualcomm.
So you can
see the sanctions against Chinese companies
are not only from the American companies themselves
but also including uh the high-tech companies
around the world.
You know why because the
foreign companies using the U.S. technology
content so the U.S. government have this leverage
to to uh to to exert uh to use against China.
However, many Taiwanese engineers I mean now
still many Taiwanese engineers work in Chinese
chip fabricators and the design houses
for higher pay for higher pay.
Taiwanese companies
such as Mediatek also been providing chips
to major Chinese cell phone brands other than
Huawei.
Next slide please.
In the wake of U.S. sanctions, the Chinese
government
is putting more funds to the construction
of an indigenous semiconductor supply chain.
A top Taiwanese manager, Charles Kau,
who has helped Tsinghua Unigroup produce advanced
memory
chips.
He recently commented "China's development
in high-grade semiconductors will be contained
by harsh U.S. measures.
But in the area of low-grade
consumer goods, China can help the world and
the doesn't pose a threat, and there's good
chance
that China can continue to grow.
In next 10
to 15 years, China will achieve a low-grade
semiconductor supply chain.
It's an opportunity for that.
I think this
nation of Chinese civic development
and he spent years working for Chinese chip
maker
Next slide please.
But economics can never
be isolated from politics and geopolitics.
For Taiwan, dealing with the mainland involves
a deep-rooted problem of security.
Does Taiwan
have to choose between security and prosperity?
And in the case of some high-tech Taiwanese
companies can they continue to sit on the
fence, or do they have to pick a side?
Those
who understand the volatility of the world
order will not accuse the founder of TSMC
Morris Chang, of being an alarmist when
he says: "In this time, TSMC just quietly
plays
its part in the supply chain.
But when the
world gets restless, which is now, TSMC becomes
a battleground for geo-strategies."
Morrison
accurately diagnosed a problem of our time,
but the battleground, defined as such, is
not merely applied to TSMC but to the entirety
of Taishang and Taiwan, just to say the least.
Thank you, thank you for your patience.
Thank you very much Dr. Wu.
Thank you so much
for your informative, insightful and provoking
talk and I have learned so much from it.