Kunshan (China) (AFP) – Bustling Taipei-style shopping streets, majestic temples to the island’s deities, and thriving factories dot the eastern Chinese city of Kunshan, a hub for Taiwanese businesses for years. However, those firms are now feeling the strain from cross-Strait tensions that have stoked safety fears among companies. Taiwanese entrepreneurs, known as “Taishang” in Mandarin, poured billions into mainland China since ties began improving in the 1990s, playing a crucial role in its rise to become the world’s second-largest economy. Yet, their numbers have dwindled in recent years, with the number of Taiwanese working in China dropping from 409,000 in 2009 to 177,000 in 2022, according to estimates provided to AFP by the Straits Exchange Foundation, an unofficial intermediary between Taipei and Beijing.
China’s economic slowdown and mounting trade tensions with Washington are partially responsible for this decline, the organization reports. James Lee, a 78-year-old Taiwanese industrialist who was forced to close his cable and electrical outlet factory in southern Guangdong province in 2022, attributes his losses to “politics.” “You have to be very careful when you speak,” Lee told AFP. “We Taiwanese businessmen are afraid.” Bolstered by their mastery of Mandarin and business acumen, Taishang have thrived as wily intermediaries between international markets and China’s vast industrial manufacturing base. Perhaps the most famous of these entrepreneurs is Terry Gou, the founder of Foxconn, whose extensive factories in China produce iPhones that have helped make it the world’s biggest contract electronics manufacturer.
An hour’s drive from economic powerhouse Shanghai, Kunshan has served as a key hub for Taiwanese-owned industry in China since the 1990s. “Back then, it was a rice field,” recalls Annie Wang, an industrialist from the island who arrived in Kunshan in 1996. “Taiwanese companies were fortunate to coincide with the 30 most glorious years of Chinese manufacturing,” she reflects. Now, Wang heads an electronics subcontracting manufacturing plant, a small technology park, and a coffee utensil brand. At the height of the boom, Kunshan was home to more than 100,000 Taiwanese, according to unofficial figures from local associations. However, the number of Taiwanese companies in the city has shrunk from more than 10,000 a decade ago to fewer than 5,000 today.
The Taishang have felt the squeeze as relations between Taipei and Beijing have plunged to their lowest depths in years. The Chinese Communist Party — which claims Taiwan as its territory but has never controlled it — has hardened its stance against alleged “Taiwanese independence activists,” even calling for the death penalty for alleged secessionism. New regulations, which also encourage citizens to report alleged pro-independence activities, have had a chilling effect on Taiwanese businesses in mainland China. “We are not sending Taiwanese employees (to China) because we don’t know how to guarantee their safety,” industrialist Lee explained. “The initial favorable conditions have disappeared, and now there are many additional risks,” Luo Wen-jia, vice chairman of the Straits Exchange Foundation, told AFP.
China’s economic woes and rising production costs are compounding these issues. “When we first went there, we thought that China’s economy would continue to improve because its market is so large and its population is so big,” remarked Leon Chen, a Taiwanese businessman who worked at a battery component factory in the southeastern province of Jiangxi. “But we haven’t seen this materialize because there are some issues — there is the US-China trade war and there was the pandemic,” he added.
In response, Taiwanese manufacturers are turning to new, more profitable — and less politically sensitive — locales. “Some went to Vietnam, and some went to Thailand, Indonesia, and the Philippines, and some returned to Taiwan,” Luo noted. Between 2016 and 2024, Taiwanese investments in Vietnam approved by the Ministry of Economic Affairs in Taipei soared 129 percent, from US$451 million to more than US$1 billion. Over the same period, investments in mainland China fell 62 percent, according to the same source. This decline could significantly impact Beijing’s “united front” strategy, which has relied on Taishang communities to promote Taiwan’s political integration and, ultimately, unification.
As Beijing launches military drills practicing a blockade of Taiwan and Taipei cracks down on Chinese spies, Taishang risk being caught in the crossfire. In October 2023, Foxconn was placed under investigation by Chinese authorities — a move widely seen as linked to a bid for the Taiwan presidency by its founder. “There is no way to compare it with the heyday, but we can still make ends meet,” said Chen. “If the environment for doing business in China becomes worse and worse, we would have no choice but to leave.”
© 2024 AFP
