The Political Economy of CrossStraits IT Links

1
The Political Economy of Cross-Straits IT Links

• Dr. Tse-Kang Leng
• Professor of Political Science
• National Chengchi University, Taipei

2
Evolution of cross-Straits economic interaction

• From lonely warrior to big boys
• Cluster effects in the Yangtze Delta
• From air man to family man
• Impacts of globalization and localization
• Taiwanese IT firms link ethnic Chinese talent

3
Challenges to Taiwanese initiatives

• Civilian governance across the Taiwan Strait
• From regulations to moral persuading
• Losing timing for being an Asian Pacific hub
• R D becomes the core of policies

4
Forces of Global Governance
Privates Governmental Third Sector
Supranational
National
Subnational
5
Chinas Foreign Capital Inflows
(January-October, 2005)
Country
HK Korea British Virgin Islands USA Japan Tai
wan Singapore Cayman Islands Germany Canada U
K
Macau Netherlands Malaysia France
Contracted Amount UnitUS100 million
6
Who are Taiwanese IT firms?

• Registered as an Foreign Company 
• Human Resources
• Overseas Chinese and Returning Chinese Students
• US engineers in the R D Sector
• Taiwanese and Singaporeans in the operation
  sectors
  
• Managers from Hong Kong in the logistics sector

7
Strategies of Globalization and Localization

• From cheap-labor exploiter to high-tech broker
  and mediator
  
• Technology transfer from major international IT
  companies
  
• Domestic networks with Chinese universities and
  academic institutions
  
• Beijing Branch balancing acts, political
  Connections.
  
• Talent inflows and outflows

8
Made in China, by Taiwan ?

• Mainland initiatives jointly made by
  international brand holders and Taiwanese
  contractors
  
• Main reasons to cut cost, enhance international
  competitiveness, and maintain the global
  production networks
  
• Private Firms One step ahead of government
  policies
  
• Challenges
• Movement of complete supply chain
• China Direct Shipping model
• Taiwan's R D and logistics capacities

9
Venture Capital and Global Networking

• Common characteristics
• Globalization of funding
• Alliances with foreign VC firms
• Human resources and know-how
• Links with China's capital market reforms
• State-business networks

10
Human Resources and Network Formation

• Brain circulation to home countries
• Trilateral vs. bilateral talent flows
• Urban interaction
• Unbalanced interaction
• Decreasing advantages of Taiwanese IT talents in
  China
  
• 50 receive the same salaries
• 20 under-paid or local-paid
• 30 enjoy higher salaries and stipends

11
Brain Drain from Taiwan to China?

• Knowledge broker management and engineering
  know-how
  
• Spring--board effect
• Global citizen vs. two-way brain drain
• Tug-of-war on attracting ethnic Chinese talent
• Brain-drain vs. brain circulation

12
Advantages and disadvantages of Taiwanese IT
talents

• Strength
• Team work
• Innovative spirit
• International connections of the senior managers

• Weakness
• Ambition
• Confidence
• Self-marketing
• Global experience of the younger generations

13
Top Choices of Overseas Assignment for the
Taiwanese

14
Top Choices of Overseas Assignment for the
Mainland Chinese

15
Likelihood of Return to the Home Country From
Silicon Valley
1. Participants were asked to choose between
quite unlikely, somewhat unlikely, dont
know, somewhat likely, and quite likely. The
data in the table are for those who answered
somewhat likely and quite likely.
2. Participants were asked to respond either
yes or no. The data in the table are for
those who answered yes.
16
Government Initiatives

• Infrastructure provider, RD facilitator, and
  deal maker
  
• 6 RD clusters in the next 5 years
• He Jian , TSMC, UMC
• Hon Hai case competitive offers from across the
  strait

17
President Chens New Years speech Democratic
Taiwan Thriving Onward

• Upholding of the Taiwan consciousness
• Chinas ambition to annex Taiwan
• Taiwans sustainable development as the greatest
  interest in cross-strait economic and trade
  policies
  
• Proactive Management and Effective
  Liberalization as the new mindset and course of
  action in Taiwans future cross-strait economic
  and trade policies

18
Implementation of the proactive management and
effective liberalization policy

• Government will coordinate with relevant agencies
  to strengthen management mechanisms and the
  agencies power in relation to such economic
  aspects as
• China-bound investment
• Cross-strait trade
• Agriculture
• Finance
• The mini-three-links
• Shipping
• Visits to Taiwan by citizens of China

19
The role of Local States

• Implementation of globalization from below
• Cross-Strait interaction as inter-region
  relations
  
• Role of city authorities
• Golden Triangle

20
Semi- State Agencies

• Political nature of economic interaction
• From SEF to CETRA
• Low key CETRA
• ISC, exhibition, and service provider.
• Chinese buyers and deep global networks.
• CETRA vs. TAITRA

21
State-Business Relationship

• Chi Mei vs. Evergreen
• Political connections with the Taiwanese
  government
  
• Green Taiwanese Business in China
• Anti-secession law
• Hsu Wen-long and Stan Shih

22
Conclusion

• Institutions, Ideas, Interests
• Globalization and localization
• Fragmented state, fragmented society
• IT Interaction based on human resources
• Transformation of state and market