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Taiwan's doors not to be rashly opened to Chinese investors: MOEA

Taiwan's doors not to be rashly opened to Chinese investors: MOEA

Ministry of Economic Affairs (MOEA) officials pledged Monday that the country's doors will not be rashly opened to Chinese investment in Taiwan's IC design sector before a consensus is reached on the issue amid rising opposition to the idea.

Public hearings and conferences will be held to discuss the proposal and collect the opinions of all those concerned, said officials at the MOEA's Industrial Development Bureau.

A consensus will be needed before any doors are opened, they stressed.

Economic Affairs Minister John Deng triggered the controversy when he said in late November that he will push for the opening of the IC design sector to Chinese investment before he steps down next year, raising both national competitiveness and national security concerns.

He suggested the possibility after China's Tsinghua Unigroup, a state-controlled conglomerate, voiced interests in acquiring a stake in MediaTek Inc., Taiwan's largest IC designer.

MediaTek has said it is open to any form of cooperation with Chinese investors and has urged the government to lift the ban on Chinese investment in Taiwan's IC design sector.

Chinese investors are currently allowed to buy shares in Taiwan's contract chip makers and IC packaging and testing service providers under certain conditions but not to hold a controlling stake.

Tsinghua Unigroup raised eyebrows recently by reaching agreements, pending regulatory approval, to buy 25 percent stakes in Taiwan's second, third and fourth largest IC packaging and testing companies, but it has not yet reached any deal with MediaTek.

Deng's remarks and Tsinghua Unigroup's aggressive foray into Taiwan's IC sector triggered strong opposition from a civic group made up of people who opposed the opening of Taiwan's ICT industry under a controversial trade-in-services pact with China that has yet to ratified.

The Anti-ICT Opening League launched an online petition on Nov. 10, calling for academia and industry to reject lifting the ban on Chinese investment in the sector.

As of 3:40 p.m. Monday, the campaign on the website at had drawn the endorsement of 246 people, including 79 electrical engineering and computer science professors, 41 experts in the sectors, and 98 professors in other fields.

The league's three initiators, who jointly launched a campaign last year against allowing Chinese investment in the type-II telecom sector, argued that the IC design sector will play a vital role in the future development of Taiwan's high-tech sector, and no decision should be made rashly on the sector's opening to Chinese capital.

The three are Lin Ying-dar, a computer science professor at National Chiao Tung University; Lin Tsung-nan, an electrical engineering professor at National Taiwan University; and Li Jung-shian, an electrical engineering professor at National Cheng Kung University.

In a statement summarizing their latest appeal, the Anti-ICT Opening League urged President Ma Ying-jeou's administration, which will complete its second and final term in May 2016, to leave major issues to the new government, to be elected on Jan. 16, 2016.

The group contended that once the doors are opened, it will be easy for China's government to penetrate Taiwanese IC design companies and control their operations and development with a stake as small as 10 to 15 percent.

Once the funds come in, it said, Taiwanese companies will succumb to pressure from the Chinese market and Chinese government and lose the power to set their own directions and control of their operations.

"By then, the technologies, high-end manufacturing processes, advanced research and development, and long-term relationships with partners up and down the supply chain will all be absorbed and moved away by Chinese investors legally through internal transfers," the statement said.

The league said it could not let Chinese state-run enterprises build their own "red supply chain" or even help China build weapons through their acquisition of stakes in Taiwanese companies.

On Monday, an MOEA official responded that Taiwan's IC design sector had an 18.9 percent global market share, second only to that of the United States. "The IC design industry is extremely important to Taiwan's overall competitiveness," acknowledged the official, who declined to be named because he was not authorized to comment publicly on the issue.

He noted, however, that many international companies have forged strategic partnerships with China and contended that Taiwan should "take good advantage of the Chinese market and mainland China's industrial system" to create the greatest economic benefits for Taiwan.

The MOEA will carefully evaluate and review the potential impact on Taiwan's industry, society and overall economic development if Chinese capital is allowed into Taiwan's IC design sector, the official said.

On such investments, strict management mechanisms and controls will be established to prevent inappropriate technological transfers to China, the theft of commercial secrets, malicious talent poaching and the relocation of businesses to the mainland, the official noted.

Tsai Lian-sheng, the secretary-general of the Taiwan-based Chinese National Federation of Industries, took issue with the Anti-ICT Opening League's position.

He said Taiwan must enter the international market and should work together with China because that's where its main market is. Without seeking out cooperative relations there, the sector will still see good talent lured away by Chinese headhunters.

"In the long run, it is not good for Taiwan," Tsai said.

Differing with Tsai, the Taiwan Electrical and Electronic Manufacturers' Association suggested the issue should be thoroughly discussed and decided after the presidential and legislative elections in January. (By Milly Lin, Yang Shu-min and Elizabeth Hsu)

Updated : 2021-09-25 07:23 GMT+08:00