Slow development

Despite the province's trail-blazing performance and the latest moves by Fosun and Huatian, investment in Taiwan by mainland companies has developed slowly, said Dai Shugeng, a professor of economics at Xiamen University.

In the first nine months of this year, 1,587 investments from Taiwan to the mainland, with a combined value of $2.16 billion, were officially approved, according to the Ministry of Commerce.

Pineapple cake is one of the popular snacks in Taiwan. Its Taiwan producers see the market potential on the Chinese mainland. [Photo/ Xinhua]

"Compared with that figure, the number of cases of mainland investment in Taiwan is minute," Dai said.

In a keynote speech at the second Economic and Financial Forum in June in Taipei, Zhang Wei, vice-chairman of the China Council for the Promotion of International Trade, pointed out that the sectors opened by Taiwan's economic authorities focus mainly on labor-intensive industries.

Investment in the manufacturing sector is highest in food and beverages. Meanwhile, the service sector, mostly restaurants and retailing, is a highly competitive market characterized by low profit margins, said Zhang, who noted that the situation has dampened enthusiasm among mainland investors.

Although the mainland and Taiwan signed the Economic Cooperation Framework Agreement in 2010 to eliminate tariffs and ease trade restrictions, mainland investors still face a number of hurdles when investing in Taiwan, said Xiamen University's Dai.

Mainland investors in these sectors need to map out their cooperation strategy with their partners in Taiwan for review by the island's economic administration. The applications are also subject to investigation, including checks of applicant eligibility, the authenticity of certification and the feasibility of the project, before approval is granted by the relevant authorities, he said.

For some ultra-competitive industries, such as semiconductors and other electronic components, mainland investors have no absolute control of the business, because their stake is limited to 50 percent, he added.

"Compared with other Asian investors, mainlanders could take advantage of the cultural and linguistic similarities, but all these restrictions are weak links, because they only apply to investors from the Chinese mainland."

Wang Jing, chairwoman of Fujian Newland Group, the first mainland enterprise to invest in Taiwan, has warned about restrictions. Provided to China Daily

Wang Jing, chairwoman of Fujian Newland Group, the first mainland enterprise to invest in Taiwan, said she was pleased with the mutual benefits accruing from her investment, through which she learned new management techniques from her Taiwan counterparts and her employees enhanced their creativity. However, she warned that investors may be dissuaded by the inconveniences caused by the regulations.

"To encourage more investment from the Chinese mainland to Taiwan, a fairer mechanism, one without the numerous restrictions, must be established. However, that would require further negotiations between the economic authorities on both sides of the straits," said Dai Shugeng.

"Another important issue is that investment projects should be entirely predicated by market forces. The authorities should back off. Only when the authorities agree not to intervene will more areas be opened in the future," he said.

Contact the reporter at sunli@chinadaily.com.cn