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wholly-owned or partially owned Foxconn subsidiaries. The official indirect investment figures were taken from the Hon Hai Annual General Shareholders’
Meeting (AGM) Handbook for the respective years. The direct investment figures were taken from the Investment Commission of the Ministry of Economic Affairs (MOEAIC) website. According to Taiwanese legislation1, Taiwanese entrepreneurs who aim at outward investments and technical cooperation are required, before engaging in any cross strait operation, to submit an application to the MOEAIC and wait for a positive response.
Since the Hon Hai AGM Handbooks and the MOEAIC both list investments in American Dollars, all figures reported in this paper, unless otherwise noted, are reported in USD.
1.4 Methodological issues and research limitations
The above is the proposed research design of this dissertation. However, due to some methodological issues and the confined scholarly scope, there are some limitations and restrictions which the reader should keep in mind.
In the fist part of the paper, for the first section dealing with the Flying geese model, I did not encounter any worrisome problem. The only issue I had to deal with is that some of the works discussing the model, especially those published before the 1960s are written in Japanese. Given that I am considerably handicapped by a poor Japanese skill, making it impossible to use Japanese-language sources, I resorted to later reformulations of the model. Since the same scholars authored both pre-and-post 1960 literature, I believe the works I selected are fully reliable and the quality of the discussion won’t be negatively affected.
Also in the first section of the paper, chapter three will only provide a brief overview of the spatial development of Mainland China after 1978. Some might argue that a broad overview of the Chinese economy and politics would be necessary to be able to fully grasp these phenomena, which are all relevant to the main subject of this thesis. However, in order to make this research confined and feasible, this analysis will only look into the main episodes of China’s spatial development that will help explain investment relocation.
1 Article 35 of the “Act Governing Relations between the People of the Taiwan Area and the Mainland Area” (Taiaān Diqu Yu Dalu Diqu Renmin Guanxi Tiaoli 臺灣地區與大陸地區人民關係條例) (Executive Yuan, 2009).
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For the second section, the methodological issues to solve were many more.
Data on indirect investments before 2002 is not available. The earliest AGM Handbook available on Hon Hai’s official website is the Handbook from 2003, which lists investment data from 2002.
I encountered the same problem for direct investments before 1991. The Executive Yuan established an investment commission in April 1968 and further upgraded it into the current MOEAIC in October 1973 (MOEAIC, 2005). Despite the long history of the commission, it started recording Taiwanese national firms’
investments in Mainland China only in 1991. In order to work with coherent data, I decided to conduct the quantitative analysis of the investments considering the 2002-2013 period. Investments prior to 2002 will be addressed through a qualitative analysis based on academic papers and data retrieved from Foxconn official website’s group profile.
Since at time of writing Foxconn has not released the information about the indirect investments made in 2014, and that MOEAIC did not provide me with the value of the direct investments, this year will be addressed through a qualitative analysis based on the released news and the data provided by the Investment Commission of the Ministry of Economic Affairs.
In the English version of Hon Hai annual reports and AGM Handbooks, the translations of some Foxconn invested facilities are occasionally misspelled. In order to maintain data coherence and facilitate the data analysis, the misspelled names were brought back to the correct spelling. For several other Chinese company names, it was not possible to find an official English translation. In those cases the author decided to make use of the pinyin transliteration of the company names, providing the original formula in the footnotes. In the 2008 and 2013 English version of AGM handbooks, in the section reporting the indirect investments made in the years 2007 and 2012, there are two entries by the name “Fu Jin Shun Precision Industry (Shenzhen) Co., Ltd”. The same entries in the original Chinese version of the handbooks were listed with the name “富晉精密工業 (晉城) 有限公司” (fujin jingmi gongye jincheng youxian gongsi) which translates to “Fujin Precision Industrial (Jincheng) Co. Ltd.”.
Similarly, a $36,000,000 investment in "Interface Technology (Shenzhen) Co., Ltd.”
included in the 2013 English version of the AGM handbook, in the Chinese version is listed under the name “業成科技 (成都) 有限公司” (yecheng keji Chengdu youxian
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gongsi) also known with its English name “Interface Technology (Chengdu) Co., Ltd.”. Since Foxconn’s annual reports specify that the translated version is intended for reference, and that only the Chinese text has legitimacy, in these cases decided to use the data retrieved from the Chinese version of the documents. Further Contacting Hon Hai’s public relations office in Taiwan, they confirmed that the Chinese versions were the correct ones.
During the process of data collection, the author also found out that the English version of the 2003 AGM handbook does not list any investment made in the preceding year; in this case I had to refer to the original Chinese version of the handbook. Similarly in the 2011 AGM handbook, in the section reporting the company’s new indirect investments in Mainland China during the preceding year, erroneously listed the 2009 investments, already listed in the 2010 AGM handbook.
The correct data were retrieved from the Chinese version of the 2011 AGM handbook.
A last inaccuracy in Foxconn’s documents is in the amount of the 2012 investment in
“Gds Software (Shenzhen) Co., Ltd.”. In the English version of the 2013 AGM handbook, the listed amount is $10,000,000 instead of the $100,000,000 reported correctly in the Chinese version.
I am also aware that my analysis is incomplete in regards to three issues.
First of all I did not take account of the Chinese facilities acquired when Hon Hai merged with Taiwanese-based companies. One example is the case of “Taiwan Premier Image Technology Corporation” merged by Foxconn in 2006 (Honhai, 2013b). In the MOEAIC record of Taiwanese national firms’ investments in Mainland China, Foxconn’s investments in newly acquired subsidiaries are listed under the name of the acquired company instead of under Hon Hai or Foxconn.
A second limitation of this research is that it can only explain investment relocation as a result of the combined action of market self-regulating mechanisms and government control. The analysis is unable to separate between the two causes and assess their relative impact on investment decision.
A third limitation of this work is that it concentrates on only one company, Foxconn. For a better legitimization of the results of this thesis, it would be necessary to extend the study to companies other than Foxconn and make an international comparison between Taiwanese, Singaporean and Hongkongese companies, which all invested in China in the same years.
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I am aware that these are three relevant points that could have provided new perspectives on the topic, however, doing justice to them would require too much time and space. Therefore, the author of this thesis chose not to address them.
Yet, an assessment of the relative impact of the market self-regulating mechanisms and government control over investment relocation, as well as the expansion of the research to other companies other than Foxconn, would be very relevant to include in future research.