The proposed trade pact between Taiwan and mainland China will be a tonic for Taiwan’s economy, Japanese business strategist Kenichi Ohmae said in a speech at the Presidential Office June 22.
Ohmae attributed Taiwan’s impressive recovery from the global financial tsunami to successful trading with China since the Lehman crisis in 2008.
From the perspective of Japan, many analysts thought it would be impossible to seal the proposed economic cooperation framework agreement within Ma’s first term. “But it seems possible and working,” Ohmae said, adding that “ECFA is a carefully crafted tonic for Taiwan’s continued success.”
With a full-fledged ECFA, 17 percent corporate tax and 370 direct air links per week, Ohmae believes that Taiwan is likely to turn into a business hub for the Chinese-speaking economies.
Ohmae said Taiwan’s economy is not overly reliant on China, as it is a trend for most countries in Asia to increasingly depend on China, and Taiwan is simply “leading the group” and “taking advantage of its own strength.”
“I think the two countries’ relationship has accelerated in the positive direction, even to the point of making the [South] Koreans call it ‘Chiwan,’” revealing their worries about Taiwan’s success in China, Ohmae said.
“Your government has also done an exceptionally good job in providing a competitive environment compared with [South] Korea, China itself and Japan,” Ohmae said. “So I don’t know why people are complaining.”
Ohmae said Taiwan has come through three phases of industrial transformation in China, the last of which is utilizing cheap labor to expand manufacturing. The recent incidents at Hon Hai Precision Industry Co. Ltd., especially its subsidiary Foxconn, are accelerating the end of phase three, he claimed.
Due to doubling wages and the appreciation of the Chinese yuan, it will be difficult for Taiwan’s companies to stay where they are and replicate original equipment manufacturer and original design manufacturer formulas, according to Ohmae.
The next step for Taiwan is professional and financial services, in which it needs to surpass the roles played by Hong Kong and Singapore relative to China, Ohmae said. “And it is a challenge.” (THN)
Write to Michelle Lu at kaiping@mail.gio.gov.tw