1990-1995: Taiwanese manufacturers focus on production activities in the initial stage; and are
rarely involved in the activities of marketing and R&D.
1996-2000: With the rising familiarity with the local environment and talent, Taiwanese IT
manufacturers begin to realize that if they move partial R&D activities to Mainland
China, they can employ local project personnel who have basic science and engineering
training with cheap wages, thus reducing manufacturing cost. In the early stage,
Taiwan’s IT manufacturers adopted a division of labour mode for high/low product
levels between Taiwan and Mainland China, in other words, the activities of R&D
design were maintained in Taiwan, and the developing activities of process technology
stayed in Mainland China.
2001-2005: In consideration of costs and management, most Taiwanese IT manufacturers choose
factory sites as the R&D centre; therefore most IT manufacturers distribute their
factories across East and South China, only a few game and software manufacturers
choose to set up factories in North China with fragmentary distribution. As the
production rates of Taiwan’s IT manufacturers rise substantially in Mainland China, the
patterns of division of labour of manufacture shift to the labour-division mode of test-
and mass-production after 2000. In a situation where the two sides suppress ‘Three
Direct Links’ across the Taiwan Straits for political reasons, the R&D activities of
Taiwanese IT manufacturers in Mainland China shift quickly from the stage of accessing
mass production to the stage of product development. In this stage, Taiwanese engineers
come and go on both sides of the Strait.
To sum up, the impact of Mainland China on Taiwan’s ICT sectors can be divided into four stages
over the past 10 years: i) before 1997, mainly producing in Taiwan; ii) between 1997-2000, both
Taiwan and Mainland China expanding; iii) between 2000-2002, expanding in Mainland China and
keeping the same size in Taiwan; iv) after 2002, expanding in Mainland China and decreasing in
Taiwan.
Among the largest-scale 500 foreign-capital enterprises for import and export in Mainland China in
2004, 249 were IT manufacturers, and 70 came from Taiwan; hence the proportion of Taiwan
manufacturers was 28 per cent. From the viewpoint of Taiwanese IT manufacturers’ contributions
in Mainland China in 2004, the scale of imports and exports reached US$ 112.3 billion: The export
value was US$62 billion and import value US$50.3 billion; the total favourable balance was up to
US$11.7 billion, which represented 23.3 per cent of the import value. If we compare this with the
same sample group of 2002, we find there were 37 manufacturers which were on the list for the first
time, and 23 of them were listed first in the group. All the information shows that the production
scale of Taiwanese IT manufacturers in Mainland China has a tendency to expand gradually.
At the same time, if we analyse 33 Taiwanese IT manufacturers listed on board in 2002 and 2004,
we find that though the import value rose to US$18.9 billion, since the export value was US$30.1
billion, a US$3.89 billion of unfavourable balance (24.6 per cent of the import value) has already
shifted to US$7.28 billion of favourable balance (20.9 per cent of the import value), which shows
that according to the trend where large MNC plants ask Taiwan IT manufacturers to raise
production proportions in Mainland China, the orders for export which originally created foreign
exchange for Taiwan have already been quickly transferred to China.
The degree of dependence on Taiwan’s exportation to China had reached 37.23 per cent by 2004,
and the trade surplus exceeded $50 billion. The estimated amount of Taiwan’s investment in China
is more than US$50 billion, which is more than 40 per cent of Taiwan’s total foreign investments.
While the export dependence of Taiwan on China is getting deeper than before on the one hand, the
import dependence of China on Taiwan is decreasing on the other hand (Table 10.16). For the
Taiwanese electronic components industry in particular, the export dependence was 52.8 per cent in
2004, representing a 2.09 point increase over the previous year.
Table 10.16: Degree of import/export dependence between Taiwan and Mainland China
Degree of import/export dependence
Export dependence of Taiwan on China
Import dependence of China on Taiwan
2003 2004 +/－ 2003 2004 +/－
The Economic System 34.27 37.21 2.94 11.96 11.54 -0.42 Electronic Components 50.67 52.76 2.09 21.48 22.57 1.09 Manufacture 34.47 37.42 2.95 12.63 12.44 -0.19 Electronic Equipment (Radio, TV
& Communication)
13.06 13.88 0.82 8.56 7.31 -1.25
Source: Shen (2006/3) The Direction of Taiwan’s Industrial Development under the Changing Global Economy and trade，IDB/MOEA
In 1995, the percentage of production in Taiwan for information hardware manufacturing still
remained 75 per cent, the percentage of investment in overseas production in Mainland China was
14 per cent, and in other foreign countries (mainly in Southeast Asia) was 11 per cent. In 2000, the
percentage of production in Mainland China reached 31.3 per cent and 19.6 per cent in other foreign
countries, and only 49.1 per cent production was left in Taiwan. The percentage of Taiwan’s
information hardware industry production going abroad (especially to Mainland China) increased
year by year, and reached 79.5 per cent in China and 13.7 per cent in other countries by 2005, with
only 6.8 per cent remaining in Taiwan (see Figures 10.10a and 10.10b).
In 1999, the percentages of “power supply” and “casing” among the products of information
hardware produced in Mainland China reached over 60 per cent, “motherboard”, “monitor” and
“CD Rom/DVD Rom” were around 35 per cent-45 per cent. It is worth noting that the laptop PCs
were mainly produced in Taiwan in 2000 (95.8 per cent), however after that, the production
percentage of laptop PCs in Mainland China rose rapidly to reach 94 per cent by 2005. The also
happened with other information hardware products. For instance, the percentage of “CD
Rom/DVD Rom”, and “Digital Camera” etc. produced in China was over 90 per cent, and
“motherboard” and “LCD monitor” also 80 per cent (see Figures 10a and 10b). These two figures
also show the transformation of information hardware products, with some products that show up in
Figure 10.10a for 1996-2000 not appearing again in Figure 10.10b, such as LCD monitors, LCM,
and digital cameras, etc.
Figure 10.9a: Overseas production by Taiwan’s Information Hardware manufacturing,
1995-2000
Source: MIC(ICT Country Report)；2006/3
Note：Data are based on the shipment value and exclude the projectors
China
Figure 10.9b: Overseas production by Taiwan's Information Hardware manufacturing,
2000-2005
Figure 10.10a: Products produced overseas, 1996-2000
Figure 10.10b: Products produced overseas, 2000-2005
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Notes
1 See below for many of these acronyms as well as further details.