Taiwanese Seek Lower Cost
The development of Taiwanese investment in mainland China is particularly interesting. Though there is a great deal of political tension between the two states, which at times has erupted into hostile posturing by politicians, in practice there is increasing economic interdependence of the two countries. Investment by Taiwanese in mainland China has been growing rapidly in recent years, up from US$2.5 billion in 2000 to US$7.5 billion in 2003. Many Taiwanese companies have been seeking lower labour costs through shifting operations from Taiwan to mainland China. Fujian province has been particularly attractive for Taiwanese companies as it is located close to Taiwan, across the Formosa Strait. As well as being close to Taiwan there are many ties in terms of history, culture and family links between Taiwan and Fujian, so Taiwanese businessmen do not have such high barriers to climb as other foreign investors when they try to understand China’s markets. In addition to the many Taiwanese cable companies, large and small, that have »satellite« operations in Fujian, the larger Taiwanese cable groups have more extensive interests in other parts of China. Much of the Taiwanese activity is in products used by OEMs, e.g. LV energy cable and electronic cables for assemblies, or magnet wire.
Hong Kong Invest in Guangdong
There are similarities between Hong Kong and Taiwan in terms of their economic relationships with mainland China. Hong Kong has the advantage over Taiwan of having much better political relations with the PRC. Even before control of Hong Kong reverted to China, the territory acted as a major gateway for trade with China. Since incomes and costs in Hong Kong are comparable with Europe or the US, for many years Hong Kong companies have sought lower cost manufacturing bases by shifting operations into Guangdong, which lies adjacent to Hong Kong, but Hong Kong companies now also have operations elsewhere in China.
Major Japanese Investments in China
Japanese cable companies have a major presence in China. All the major Japanese cable groups and several other Japanese wire & cable companies have Chinese operations, though much of the activity has been in harness operations, rather than wire & cable. In addition to exporting cable and assemblies back to Japan, the cable-makers in China also supply to the many Japanese OEMs that have set up manufacturing in the country.
Modest Korean Presence
Despite the close proximity of the two countries, Korea’s cable-makers have not generally been very active in China, with the major exception that the largest Korean group, LS Cable, has several operations in China. In fact, Korean cable companies have been as active in setting up joint ventures in Vietnam as they have in China.
