Taiwan Today

A senior economist with Japanese think tank Mizuho Research Institute believes the “Chaiwan” phenomenon will help strengthen the strategic Taiwan-Japan economic and trade alliance. At a seminar hosted by the Interchange Association Japan in Tokyo July 2, Singo Ito said three possibilities existed for trilateral interactions between Chaiwan and Japan. The first would see Japanese companies investing in Taiwan and entering the mainland market through these enterprises. If this occurs, then closer cross-strait economic and trade relations would benefit Japanese companies, he said. The analyst said Japanese businesses would be threatened if both Chinese and Japanese companies compete to place orders with Taiwanese enterprises. This would also occur if Taiwanese and Japanese companies compete for markets on the mainland. The term “Chaiwan” was first coined by the South Korean media and refers to Taiwanese tech companies joining hands with Chinese manufacturers in taking up the lion’s share of the world’s original equipment manufacturer orders in the IT sector. Ito believes given the existing Taiwan-Japan trade structure, which features numerous examples of firms from both countries joining hands to enter the mainland market, expanding the “Chaiwan” economy could help develop the economic and trade aspects of Taipei and Tokyo’s strategic alliance. The economist said Taiwan-Japan business cooperation in entering the mainland offers several benefits for Japanese enterprises. These include the Chinese government’s preferential treatment of Taiwanese businesses, and fewer barriers in terms of communication due to language and culture. Japanese-invested enterprises in Taiwan are also positive about Taiwan relaxing regulations on cross-strait economic exchanges, he said. On the other hand, Ito cautioned that Japanese companies need to keep a close eye on the policymaking of Taiwan’s government in regards to agreements with China. Japanese companies may face competition from Chinese enterprises if the government further opens up investment and orientates its import market toward China. To ensure beneficial cooperation, Ito called on Taiwanese companies to keep their Japanese partners abreast of any possible mainland expansion plans. Speaking at the event, Tsai Hung-ming—a member of Taiwan’s National Security Council Advisory Committee—explained that Taiwan would relax regulations restricting investment on China and open up to the import of Chinese products only after conducting careful reviews. Tsai said this would be performed in a stable manner that prioritizes Taiwan’s interests and the security of its industries. He added that the government is presently undertaking these assessments. Tsai said Taiwan hopes to normalize cross-strait economic and trade relations and sign a framework agreement for economic cooperation. He said this would not only reduce China’s restrictions on Taiwanese firms but also benefit the future development of Japanese companies in Taiwan with regard to trade on the mainland. (PCT-JSM)