18 July 2018
Taiwan Rattled by Unilateral Mainland Wooing of Talent and Businesses
Back in February, when the mainland unveiled 31 measures designed to lure Taiwan's best businesses and brightest minds, no one predicted the impact they have had on the territory's commercial sector and its ambitious graduates.
Following the May 2016 elections that saw Tsai Ing-wen installed as President, relations between Taiwan and mainland China took something of a nosedive, with official contact reduced to a minimum. At the same time, the work of the two bodies established to boost links – Taiwan's Straits Exchange Foundation (SEF) and the mainland-backed Association for Relations Across the Taiwan Straits (ARATS) – also ground to a halt. Of late, though, the mainland government – to the concern of its Taiwanese counterpart – has sought to unilaterally implement a number of policies designed to directly foster greater commercial and cultural cross-strait ties.
Foremost among these has been Several Measures for Promoting Cross-Straits Economic and Cultural Exchanges and Cooperation (31 Measures for Taiwan), an initiative jointly launched by Beijing's Taiwan Affairs Office and several other mainland government departments on 28 February this year. A wide-ranging policy document, it granted many Taiwan-based businesses the same entitlements as mainland companies across a significant number of sectors, including taxation, land-use, finance, employment, education, cultural issues, medical services and film / television. Of these 31 measures, 12 accord the same status to Taiwan and mainland businesses, while the remaining 19 grant Taiwan residents the legal status previously only enjoyed by their cross-strait counterparts.
On the commercial side, in more specific terms, the measures entitle Taiwanese companies to be treated no differently to domestic businesses if participating in the Made in China 2025 programme, while any high-tech cross-strait business active on the mainland will also qualify to pay corporate income tax at a reduced rate of 15%. Similarly, all mainland-registered subsidiaries of Taiwan-based research institutions, universities or other relevant enterprises can now enjoy the same treatment as their mainland counterparts when applying for national research funding.
Furthermore, for the first time, Taiwanese companies are now entitled to bid for mainland contracts in the energy, logistics, water conservation, environmental protection, urban utilities and infrastructure development sectors. At the same time, they can seek to participate in mainland government procurement tenders, while also having been given the go-ahead to take a stake in formerly state-owned enterprises through equity holdings, cooperative joint ventures, mergers or acquisitions.
Singling out the financial sector for particular attention, Taiwanese banks and other related businesses have been cleared to work with China UnionPay (and several other non-bank payment companies) to provide their compatriots with small payment facilities. The same institutions have also been approved to provide syndicated loans in association with mainland banks as a means of supporting the further development of the manufacturing and service industries.
Of the 19 measures targeted more at individual citizens, these primarily relate to those Taiwanese residents looking to travel to the mainland for educational, employment or entrepreneurial reasons. Drilling down a little, these legislative changes allow Taiwanese candidates to sit the required examinations for 53 mainland-specific professional and technical qualifications, as well as for 81 vocational certificates. Additionally, Taiwanese professionals can now participate in certain approved national talent schemes, while also being free to appear in mainland TV programmes or to produce film / broadcast material exempt from any quota restrictions.
The measures have also lifted a number of the previously applicable bars to entry, with properly-qualified Taiwanese individuals no longer required to pass a substantial number of additional examinations in order to take part in mainland-based fund management or securities / futures trading activities. They will, however, still have to pass an examination designed to confirm their familiarity with the relevant mainland regulations. In a similar move, Taiwan-trained academics will be allowed to teach in mainland universities, with their previous non-mainland educational qualifications deemed to be fully valid.
In addition to the national level measures introduced in February, several local government bodies across the mainland have announced their own Taiwan-targeted incentives and preferential policies. Almost topping the list here is Fujian, with the southeast coastal province unveiling 21 such measures back in March. While not quite as prolific, Wenzhou, Suzhou, Shandong, Shanghai and Yunnan have also introduced similarly cross-strait-friendly policies.
Stealing the number one spot by a considerable margin, however, is Xiamen with the city having formally adopted 60 such measures in April. In particular, the 3.5 million strong conurbation has looked to lure in Taiwanese talent, reserving 5,000 jobs / internships for former residents of the territory.
In the case of more experienced personnel, the city is offering an annual allowance of RMB200,000 (US$30,000) for those signing a three-to-five-year contract, up to a maximum of RMB1 million. For particularly distinguished experts, the ceiling is RMB300,000 a year, up to a cumulative total of RMB1.5 million for the period of their tenure.
A little late to the party, Shanghai announced 55 incentive measures as of 1 June. These included financial support for any Taiwanese business looking to establish a presence in the city.
Shanghai also took the opportunity to roll its preferential cross-straits policies into two of its existing initiatives – moves to establish five centres of excellence within the city's boundaries, as well as plans to build the city's reputation in four particular sectors. In terms of the five centres of excellence, these will have an individual focus on nurturing international economics, finance, trading, shipping and technology / innovation, while the four areas the city is looking to become synonymous with are professional services, manufacturing, retail and culture. As well as supporting these twin development priorities, it is also hoped that any Taiwanese incomers will make a substantial contribution to the success of the city's inaugural China International Import Expo in November, a massive five-day event intended to introduce the mainland's rapidly expanding consumer market to countries and businesses across the world.
While the mainland government's enthusiasm for all things cross-strait has clearly trickled down to many of the country's larger cities and outlying regions, it is a development that has proved far less welcome in Taiwan itself. In particular, there has been widespread concern that the allure of the newly-welcoming mainland could result in something of a brain drain, with many of Taiwan's brightest and best tempted to relocate by the generous incentive packages on offer.
Looking to assess the impact of the mainland's apparent largesse, Global Views Monthly, one of Taiwan's leading current affairs publications, conducted a telephone survey of 1,007 Taiwanese residents aged 18 or above. Among its findings was that 61.6% of respondents in the 18-29 age group said the mainland's overtures had increased their desire to relocate. Perhaps more worryingly for local politicians, 68.5% of respondents doubted the ability of their government to respond effectively to the mainland move, while 71.5% considered a brain drain a distinct possibility.
In response to these concerns and others, Taiwan's government launched Four Directions and Eight Strategies, a series of initiatives designed to counter the potential negative impact of the mainland's measures. In terms of The Four Directions, these focus on retaining talented individuals by improving Taiwan's study and work environment, capitalising on the territory's existing strengths within the global supply chain, breathing new life into its stock market and investing in the development of the domestic multimedia sector.
For their part, The Eight Strategies make better pay for academics a priority, while also aiming to nurture innovation, ensure key employees are properly rewarded, improve the daily work lives of those in the health sector, enhance the protection of intellectual property rights, spur widespread industrial upgrade, raise the global profile of the territory's stock exchange and promote the domestic film and television industries on an international basis.
With a June survey showing that 38% of all Taiwan's graduates now plan to work overseas, with the mainland being their preferred destination, it could be that the government's Strategies and Directions may well prove to be both too little and too late. What is clear is that the mainland's unilateral wooing of the territory's commercial sector and its most talented up-and-coming professionals is already starting to make an impact.
With many more mainland cities and provinces said to be planning their own Taiwan charm offensives, Tsai Ing-wen and her ministerial colleagues may well have to devise a far more wide-reaching retention programme if they don't want to witness more and more businesses and individuals purchasing tickets for that 1,700km one-way Taipei-Beijing trip.
Robert Kang, Special Correspondent, Taipei