Wednesday, June 16, 2010

Welcome with Open Arms the Return of the Salmon

Welcome with Open Arms the Return of the Salmon
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
June 16, 2010

Labor is on strike all over the mainland. Wages are skyrocketing. What is to become of Taiwan businesses on the mainland? This is a matter of urgent concern.
Mainland China is the "world's factory." Taiwan is its primary upstream supplier. Recently Taiwan's economy has slumped. One of the main reasons behind Taiwan's economic growth is exports by Taiwan-based businesses on the mainland. The industrial environment on the mainland has changed. This has affected not just Taiwan businesses, but Taiwan's economy as a whole. Naturally the government cannot turn a blind eye to this development.

Officials are now enthusiastically beckoning Taiwan businesses, "Why not return? We welcome you with open arms!" In fact these arms have been open for who knows how many years, for over a decade, but nobody ever noticed. Open arms are nothing new. Why should anyone expect a sudden increase in enthusiasm now?

This scenario cannot help but leave one feeling sad and helpless. Taiwan businesses are like ants on a hot stove. They don't know where to run to keep from being burned. Some observers assume that since our government has done nothing, these businesses have no choice but to return to Taiwan. Officials could then pad their resumes. But this is wishful thinking, and unlikely to pan out. Taiwan businessmen are fending for themselves. They are engaging in land speculation, switching to domestic sales, and changing track. Even assuming we wish to preserve these industries, plenty of backward countries have wages lower than the mainland, including Vietnam, Indonesia, and Cambodia. Unless Taiwan makes itself more attractive, will the salmon really be forced to return?

Officials have endlessly stressed Taiwan's outstanding talent, proud technological standards, comprehensive infrastructure, superior location, and therefore Taiwan's great appeal. But none of this is new. These conditions have prevailed for over ten years. Yet an endless stream of businesses have fled Taiwan.

Believers return stress the need for a 17% cut in business taxes. They stress the need for additional concessions and subsidies substantial enough to encourage the salmon to return. But difficulties abound. The government's finances are already in dire straits. How can it offer more concessions and subsidies? If Taiwan businesses on the mainland are given special dispensations, is that fair to Taiwan businesses on Taiwan?

In fact, if we merely change our thinking, all these problems can be solved. Imagine endless, barren stretches of land in Yunlin and Chiayi. If only we could replicate the essence of Singapore there. Imagine a clean and beautiful countryside, comprehensive and convenient facilities, orderly planning, decisive and effective management. Add across the board liberalization, low taxes, a simplified tax system, ready access to transportation, including access to the Port of Mailiao in under one hour by car, and from there to other major ports. Imagine a new town in which every worker has his own house, and all his living needs have been met. Imagine the same labor policies as Singapore.

This oasis amidst a wasteland would need no officials with open arms. Overseas companies would fall over each other to locate there. It would not be Singapore. It would be better than Singapore. It would have the whole of Taiwan's economy as backup. It would be close to the favored Chinese mainland. It would be a thousand miles ahead of Singapore. After businesses elbow each other aside to relocate there, it would attract limitless capital and business opportunities. It would not even require public subsidies for infrastructure construction. Domestic investment would surge, creating millions of jobs.

In this "economic and trade zone," would we still cling to base salaries of 500 USD? To contracts that bind employees hand and foot and provoke unnecessary labor conflicts and administrative burdens? If employees prosper, would such negative and meaningless regulations be necessary? Therefore, in these particular locations, the minimum wage may no longer be necessary.

These competing vendors will of course include Taiwan businesses. Such a superior environment, combined with low cost labor similar to Singapore's, is something they have long dreamed about. Some worry this may attract sweatshops unable to survive on mainland coastal regions. Tens of thousands, even millions of foreign workers would be confined within these plants, replicating Foxconn's painful experience. "Is this really what Taiwan wants?" they ask.

Those who project such dire scenarios clearly not believe Singapore is a hotbed of sweatshops, with countless oppressed workers struggling to survive in conditions worse than death. Would Singapore's situation, replicated on Taiwan, really be as awful as described?

Of course not! When businesses elbow each other aside for resources in this "special economic zone," the most capable will come to the fore. They will be the most competitive companies with the most efficient supply chains, the ones most able to complement Taiwan's peripheral industries, create jobs, develop Taiwan's advantages, and upgrade Taiwan's overall competitiveness. Sweatshops will find it hard to find a footing. Instead, this free and open "special economic zone" will enable Taiwan to shine, and to create a new future for the people.

Those who advocate an "economic zone" today are pursuing just such a goal. The logic is so clear. Who can dispute it?

2010.06.17 01:38 am














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