Taipei/Tokyo/Beijing Golden Triangle: Vincent Siew's Mission Impossible
United Daily News editorial (Taipei, Taiwan, ROC)
August 31, 2012
Summary: Former Vice President Siew has long devoted himself to economic diplomacy. He is well versed in the nuts and bolts of international economic cooperation. Promoting industrial cooperation between Taipei, Tokyo, and Beijing is a difficult and thorny task. It could be a case of "Mission Impossible." Nevertheless the public hopes it will succeed.
Full Text below:
Former Vice President Vincent Siew is President Ma's highest ranking policy advisor. Last week he led a delegation from the Ministry of Economic Affairs to Japan. His goal? To promote Taipei/Tokyo industrial cooperation. He floated the concept of a Taipei/Tokyo/Beijing "Golden Triangle" to politicians and businessmen. Diplomatic fires continue to burn over the Diaoyutai Islands conflict. They underscore the purpose of this veteran official's visit.
Taipei/Tokyo industrial cooperation has a long history. It began in the 1960s. Three way Tokyo/Taipei/Washington trade became the so-called "flying geese formation." It became Japan's model for the vertical division of East Asian industry. During the 1980s the Japanese Yen appreciated sharply. Taiwan became the stronghold for Japanese industrial outsourcing. Beneficial cooperation increased. During the 1990s Mainland China's economy began to rise. Taipei/Tokyo industrial cooperation underwent a substantial change. Four way Tokyo/Taipei/Beijing/Washington trade gradually replaced three way Tokyo/Taipei/Washington trade. Nevertheless, private sector Taipei/Tokyo cooperation never ceased. Bilateral economic and trade relations remain close.
The global economic situation is changing rapidly. Taipei and Tokyo must establish a new mode for industrial cooperation. One. South Korea's industrial competitiveness has improved rapidly. Samsung has surpassed Japan and is catching up with the US. It is a powerful threat to Taiwan and Japan in the global market. Taiwan's industrial strengths are in manufacturing and in midstream and downstream marketing. It is relatively lacking in brand building and upstream technology and innovation. Japan has international brands and leading-edge technology. But its markets are conservative and relatively closed. Therefore, each side can make up for the other's shortcomings. This will significantly enhance their international competitiveness, and enable them to resist the "Korean wave."
Two. The Yen has sharply appreciated in recent years. The financial tsunami erupted in 2008. The Yen appreciated nearly 40% against the U.S. dollar., This greatly reduced the competitiveness of Japanese exports. Japanese businesses were put to the test. Last year's March 11 earthquake interrupted industrial production and disrupted the supply chain. This taught everyone a lesson. It strengthened international cooperation and the outsourcing of production. Now take Taiwan. Taiwan businessmen had an OEM export model that relied on the Mainland for production. The financial tsunami made this model obsolete. Industrial transformation and upgrading became imperative. Industry on Taiwan and Japan are strengthening cooperation and investment. This is mutually beneficial and absolutely essential.
Three. The Chinese Mainland has risen economically. The Asian and global economies are growing. Taipei and Beijing have signed ECFA. They have enlarged the cross-Strait economic and trade development niche. But Taipei must also synchronize and increase industrial cooperation with its major trading partners. It must avoid over-reliance on a single market. Tokyo may clash with Beijing over who will dominate Asian economic development. But it cannot ignore the vast business opportunities in the Mainland market. Therefore if industry on Taiwan and Japan can work together to develop the Mainland market, they can complement each other. Each can get what it needs.
These are all important considerations. Before former Vice President Vincent Siew stepped down, he called for the establishment of a "Taipei/Tokyo Industrial and Economic Platform" to accelerate industry consolidation between Taiwan and Japan. This would create a win-win situation. ECFA would add to this advantage. The formation of a Golden Triangle consolidating industry between Taipei/Tokyo/Beijing would create a win-win-win situation. In late June the United Daily News Group sponsored a summit, "Two Critical Years -- Blazing a Trail for Taiwan's Economy." Former Vice President Siew served as chief moderator. During his closing remarks Siew reached some specific conclusions. He called on the government to create a new cooperation platform between Taipei and Tokyo -- within three months. The government is now echoing the United Daily News Group's recommendations. It is taking a clear course of action. Vincent Siew is walking the walk. This is a laudable achievement.
Industrial cooperation between Taipei and Tokyo requires translating the Taipei/Tokyo/Beijing "Golden Triangle" concept into action. Three major difficulties must be overcome.
The first difficulty is economic. Past industry cooperation between Taipei and Tokyo or between Taipei and Beijing, basically amounted to a vertical division of labor. But the future will involve a horizontal division of labor and mutual investments. Therefore industry competition will increase as well. Tokyo and Beijing are competing to be the head of the Asian economy. Establishing win-win and win-win-win modes of cooperation will require considerable wisdom
The second difficulty is cultural. Japan is conservative and cautious. This is true of its government, its business practices, and its national character. Everything is done by the book. This is at odds with Taiwan and the Mainland, with their emphasis on decisiveness and speed. This inevitably affects the effectiveness of cooperation. The listing of Hon Hai shares in Japan encountered numerous obstacles. This reflects the vast differences in corporate culture.
The third difficulty is political. Strengthening economic cooperation requires good diplomatic relations and a favorable political atmosphere. The diplomatic fires set by the Diaoyutai Islands conflict have undermined trust between Tokyo and Taipei, and Tokyo and Beijing. They reflect deep-rooted historical grievances and strategic conflicts between Beijing and Tokyo and Washington and Bejing over interests in Asia. They hamper efforts to promote cooperation by non-governmental organizations and industry. They prevent the Taipei/Tokyo/Beijing "Golden Triangle" from getting off the drawing board.
Former Vice President Siew has long devoted himself to economic diplomacy. He is well versed in the nuts and bolts of international economic cooperation. Promoting industrial cooperation between Taipei, Tokyo, and Beijing is a difficult and thorny task. It could be a case of "Mission Impossible." Nevertheless the public hopes it will succeed.