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Taiwan must not lower standards for 'Taishang'

Taiwan must not lower standards for 'Taishang'

Taiwan's Chinese Nationalist Party (Kuomintang) government must refrain from trying to attract Taiwan companies operating in China to "return home" by replicating "low-cost" conditions or lowering our labor and environmental standards.
The prospect of reversing two decades of outflow of Taiwan capital and manufacturing operations to the People's Republic of China appear to have improved in the wake of a wave of strikes and rising wages and the pressure on Taiwan firms to change draconian management practices in the wake of a series of suicides at the Shenzhen facilities of Foxconn Technology, a unit of the once high-flying Hon Hai Group.
Combined with the tragic events in Foxconn, a wave of strikes in foreign and domestic factories may be announcing the beginning of the end of the era of "cheap and docile labor" in the rapidly industrialized coastal zones of the PRC.
While PRC central and local government and police authorities and management will undoubtedly use both "carrots" and "sticks" to prevent the emergence of independent unionism, these events have injected considerable uncertainty into the future of the PRC's current "world workshop" model as an exporter of cheap goods and, in turn, the China business strategies of many Taiwan companies.
If sustained, the new activism of Chinese workers will also contribute much more to the "termination of blood and sweat shops" than the belated if welcome declaration by 180 Taiwan scholars and activists issued last weekend in the wake of the tragic suicides at Foxconn calling on Taiwan businesses to cease such shameful exploitative practices abroad.
Nevertheless, the appeal struck an important chord by demanding that the Taiwan government not allow Taiwan companies to bring such practices "back" home.
Even though it is questionable whether the "cost-down" mentality or even "sweatshop" management practices, which were fostered during four decades of KMT-imposed martial law rule, have truly left Taiwan, it is indeed critical to Taiwan's economic future to block a "return immigration" of the draconian factory management and low wages and "cost - down" strategies.
The key issues is what will such Taiwan companies and investors do now that they must confront the visible limit point of the viability of this exploitative model in, at least, the coastal zones of the PRC and what will be the policy of our government.
Unfortunately, successive Taiwan governments, whether under the KMT or the centrist Democratic Progressive Party, have been unwilling or unable to wean most Taiwan companies from their addiction to low wage and cost-down business strategies and adopt strategies aimed at boosting value added and total factor productivity, quality, environmental protection, creative designs and brand name marketing that could promote high wage and quality employment.
The latest wave of upward wage pressure in the PRC has again led to calls by many Taiwan conglomerates and "market fundamentalist" economists for the KMT government to attract Taiwan businesses (often known as "Taishang") to "return home" with "favorable conditions."
Revived 'social dumping'
Such incentives include lower corporate income taxes, lower inheritance and gift taxes, favorable rents in industrial zones, streamlined entry into "free trade port zones" and expanded quotas for the use of foreign labor and, by no means least, the publically voiced possibility of "delinking" the wages of foreign labor from Taiwan's basic wage of NT$18,400 a month as mandated by the Labor Standards Law.
Despite statements by MOEA officials urging Taiwan companies to invest in high technology or environmentally friendly "green" products and services, the structure of such perks too clearly presuppose assistance to Taiwan companies in maintaining "cost down" business strategies if they return home. Indeed, the "Cross-Strait Economic Cooperation Framework Agreement" pushed by President Ma Ying-jeou's KMT government also falls into this dilemma by focussing government attention on tariff cuts instead of industrial upgrading.
In our view, Taiwan companies which aim to bring back "cost-down" and "low wage" production methods should be politely encouraged to invest in Southeast Asia or Central and South America or South Asia and help diversify our export markets.
The fact of the matter is that the only and short-term "benefit" of allowing Taiwan companies to bring back this "successful model" will be statistical as positive "multipler" effects for our domestic economy will be minimized if wages are kept specially low in such special zones.
Even more worrisome is the likelihood of further delays to Taiwan's urgent project of industrial upgrading due to the "opportunity cost" imposed by the granting of official incentives to "cost-down" business operations and the resulting squeezing out effect on assistance to high-value added operations.
However, the gravest damage would come if the KMT government caves into pressure from pampered conglomerates and agrees, despite current denials, to directly or indirectly delink the wages for foreign workers in free port zones or elsewhere in Taiwan from the basic wage.
Any moves in that direction will undoubtedly spark international condemnation of Taiwan for backtracking on existing labor and human rights standards and may expose our exports to charges of "social dumping" an issue which already been raised by the European Union with the PRC over its low-cost exports.


Updated : 2021-06-17 16:05 GMT+08:00