Taiwanese Investment Research Articles

“This is a Favorable Moment for Us to Move Forward with Hungarian–Taiwanese Relations”

Abstract The present study examines the process and international context of Hungarian–Taiwanese bilateral negotiations leading to the opening of the Taipei Trade Office, based on Hungarian archival documents. The process began with the democratization of political life in Taiwan in 1987 and was followed by Taipei’s subsequent opening towards Eastern European socialist states. Hungarian politicians were initially cautious about the establishment of relations with the island, as they always had to consider China’s political sensitivities and the possible consequences of their actions regarding Sino–Hungarian relations. However, the year 1989 marked a turning point. The Hungarian leadership urged economic cooperation with Taiwan because economic liberalization in Hungary resulted in a financial crisis, and Taiwanese investment and financial assistance could contribute to easing the situation. The Taiwanese side was willing to engage in financial cooperation in exchange for greater international visibility.

Value chain organization models of Taiwanese electronic information enterprises in Mainland China and their spatiotemporal evolution processes.

This study examines Taiwanese investment in Mainland China as it is an important part of cross-strait economic cooperation. Using sample data from Taiwanese-listed electronic information enterprises in Mainland China (1990–2016), this study combines ArcGIS spatial visualization and case analysis to investigate their value chain organization models and spatiotemporal evolution regularity. The results show that the value chain of the electronic information industry for Taiwanese investments in Mainland China has three models: vertical integration, modularization in production sharing, and production extension. Vertical integration is the main production organization model of these Taiwanese listed electronic information enterprises, expanding from single production to the entire manufacturing value chain, followed by sales, and finally R&D. This model is still in use in the Western Taiwan Straits Economic Zone, whereas the other four Taiwanese investment agglomerations, namely the Bohai Economic Rim, Yangtze River Delta, Pearl River Delta, and Western Delta Economic Circle, began to expand to both ends of the production link, particularly to the sales link. High-value -added enterprises adopting production sharing models began to show a trend of expansion to inland cities, and enterprises adopting the manufacturing–sales model (a production expansion model) had the widest distribution. Finally, at the city level, the value chain fragmentation structure of Taiwanese and developed countries’ cross-border (multinational) enterprises in Mainland China were consistent, that is, they matched the Chinese city hierarchy; at the regional level, however, the Western Delta Economic Circle pioneered to become a hub for Taiwanese electronic to information enterprises set up their R&D and sales links in Mainland China. Investigating chain-alike spatiotemporal expansion of Taiwanese investment in Mainland China is important for the integration and development of the value chain, production network, and enterprise spatial organization theories.

Impact of Regional Environmental Regulations on Taiwanese Investment in Mainland China

Based on the perspective of regional differences and decentralization, this article investigated the impact of environmental regulations on Taiwanese investment in mainland China from theoretical and empirical perspectives, and analyzed whether local governments are competing to lower environmental standards to attract Taiwanese investment so as to maintain their comparative advantages. This paper constructed a theoretical model through a two-stage game model. With the panel data of each province in Mainland China from 2006 to 2016, the theoretical propositions were empirically tested through the system GMM estimation method. The results show that the environmental regulation policies adopted by the local governments in the mainland have a significant inhibitory effect on the investment volume of Taiwan-funded enterprises, and the interaction between environmental regulations and local tax burden levels also has a negative effect on Taiwanese investment. Local governments have the motive to reduce environmental regulations to attract investment.

A Study on the Willingness of Large-scale Multinational Manufacturing Employees to Expatriate to Vietnam

<p>越南是目前台商在新南向國家中投資最多的國家，且隨著大陸投資環境變遷，已有需多大型台商跨國製造業將製造基地遷往越南，使得台灣母公司的管理及技術等相關人才需外派台幹進駐越南，但許多員工並不願離開台灣，故考驗著公司外派制度。本研究以大型跨國製造業Y公司的員工作為研究對象，探討影響員工外派越南意願的因素。本研究提出越南整體環境、越南廠環境、公司外派政策、家庭親友支持、生涯態度、薪資期待、越南接受度，共七組影響外派意願的因素，並建立影響外派意願的因果關係模型。在模型中，共有11路徑及研究假設，並以相關分析、正典相關分析、複迴歸分析來檢定後，11假設皆成立，這表示這些因素間確實有高度相關。且以路徑分析來驗證飽和模型是否成立，結果發現11路徑有8達顯著水準，修正模型後，這七條路徑的因果關係模型成立。本研究建議公司為提升外派意願及確保外派台幹及越南廠績效，需在台時規劃相關課程及安排與越南籍員工共事等措施，讓員工進一步認識越南環境並進而接受越南及其文化，並持續優化外派政策與越南廠環境等。</p> <p> </p><p>Vietnam is currently the country with the most Taiwanese investment in the new Southbound countries, and with the changes in the investment environment on the Mainland China, there are already many large-scale Taiwanese multinational manufacturing companies that need to relocate their manufacturing factories to Vietnam, making the management and technology of the Taiwan parent company relevant talents need to be sent to Vietnam, but many employees are unwilling to leave Taiwan, so the company’s expatriate system is tested. This study uses employees of large multinational manufacturing company Y as the research object, and explores the factors that affect employees’ willingness to expatriate Vietnam.</p> <p>This study puts forward seven groups of factors affecting the willingness to send out, including the overall environment of Vietnam, the environment of the Vietnamese factory, the company’s expatriate policy, family and friends support, career attitude, salary expectations, and acceptance in Vietnam, and establishes a causal relationship model that affects the willingness to expatriate. In the model, there are a total of 11 research hypotheses, and after verification by correlation analysis, canonical correlation analysis, and multiple regression analysis, all 11 hypotheses are established, which means that these factors are indeed highly correlated. In addition, the cause and path analysis is used to verify whether the saturation model is valid, and it is found that 8 of the 11 cause paths reach a significant level. After the model is revised, the causal relationship model of these seven causal paths is established.</p> <p>This research suggests that in order to increase the willingness to expatriate overseas workers and ensure the performance of the expatriate Taiwanese and Vietnamese factories, the company needs to plan relevant courses and arrange to work with Vietnamese employees together while in Taiwan, so that employees can further understand the Vietnamese environment and accept Vietnam and its culture, And continuous to optimize the expatriate policy and Vietnam factory environment.</p> <p> </p>

Spatiotemporal Evolution of the Taiwanese-Funded Information Technology and Electronics Industry Value Chain in Mainland China

The Chinese Mainland has become the largest production base and a major potential market for Taiwan’s information and electronics industry. Thus, studying the spatiotemporal evolution of the Taiwanese-funded information technology and electronics industry in the Mainland from the value chain perspective is necessary. This will help deepen the labor division and collaboration between the cross-strait information technology (IT) and electronics industry for sustainable development. Using Taiwanese investments during 1991–2012 and detailed firm-level data for 1976–2012, this study examines the spatiotemporal trajectory and geographical patterns of the labor division of Mainland China’s Taiwanese-funded IT and electronics industrial value chain from a modular perspective. Based on the characteristics of the modular production process, the Taiwanese-funded IT and electronics firms in Mainland China are divided into four modules—parts manufacturing (PM), key parts manufacturing (KPM), complete machine manufacturing (CMM), and design and marketing (DM). We found that: (1) technology and value witnessed clear stage changes; (2) the PM and CMM modules were more decentralized, and the four modules formed five clusters; and (3) despite an increase, the degree of the four geographical divisions of labor was relatively low. This study offers implications for research and IT policy and electronics enterprises’ production practices.

The Impact of Financing Capacity on R & D Investment <br/>—Empirical Analysis Based on Micro Data of Manufacturing Enterprises in Guangdong

Under the background of the rapid expansion of R & D investment of industrial enterprises in China, this paper based on the 2005-2007 China Industrial Enterprise Database, conducted research on manufacturing enterprises in Guangdong Province, and used the micro-data at the enterprise level to empirically study the impact of financing capacity on R & D investment. It is found that the financing ability of enterprises has a significant positive effect on their R & D investment. Among them, with the expansion of the scale of enterprises, the promotion of corporate financing capacity to its R & D investment has gradually increased; the financing capacity has also significantly affected the R & D investment of all types of enterprises, and for state-owned enterprises, foreign-funded enterprises and Hong Kong, Macao and Taiwanese investment enterprises. The impact is significantly stronger than that of the private sector. Its promoting effect is not affected by regional differences. Finally, based on the results of the quantitative analysis and the actual situation in Guangdong Province, the author has put forward some countermeasures and suggestions.

Do Experts in Financial Magazines Exhibit the Representativeness Heuristic? Evidence from Taiwan

This paper investigates the use of the representativeness heuristic by experts in Taiwanese investment magazines. We reveal that high-performing experts exhibit less use of representativeness heuristics and more use of herding stock recommendations than poor performers do. Representativeness and herding recommendations increase when sentiments are pessimistic and during bull markets. In general, more representative stocks yield lower abnormal returns and higher return comovement. However, for high-performing experts, recommendations with some degree of representativeness have a higher abnormal return than do recommendations with no representativeness. In addition, stock return comovement caused by herding recommendations catches more market-level news than does stock return comovement that is caused by representativeness.

Survival of outward FDI in China’s food industry

PurposeThe purpose of this paper is to investigate the stability of Taiwanese and Japanese outward foreign direct investment (FDI) in China’s food industry and explore the Cox proportional hazard model to examine the factors that may affect the duration and stability of FDI.Design/methodology/approachThe data used in this study come from firm-level survey conducted in different Chinese provinces. Based on the data, survival analysis on the determinants of FDI in China’s food industry was constructed and used for analysis.FindingsEstimated results from the study show that the survival rates are higher for Taiwanese FDI than for Japanese FDI from 2003 to 2012. In addition, empirical results show a positive relationship between R&D expenditure/domestic investment and the hazard rate, implying that Japanese investments with greater R&D expenditure and domestic investment would decrease the survival of FDI in China. On the contrary, Taiwanese investments with greater R&D expenditure and domestic investment would enhance the survival of FDI in China.Originality/valueIt could be the first that survival comparisons across countries are conducted together in the relevant FDI studies of the food industry. For robustness, survival rates for 10 major provinces and cities where affiliates conducted FDI in the food industry are examined.

State and business in Taiwan’s economic diplomacy under the Lee Teng-hui administration and the implications for current cross-strait relations

This study suggests that a modified theory of new classical economics is useful in assessing Taiwan’s economic diplomacy during both the Lee Teng-hui and current administrations by means of a holistic perspective (levels of analysis). ‘Business‘ is the independent variable in the analysis. The theory of new classical economics implies that the utilities of Taiwanese investment are more effective than the contradictory political objectives of the Taipei government. The impact of business on the result of economic diplomacy is the unintentional easing of tensions across the Taiwan Strait while Taiwanese businesses have pursued profits. Collectively, businesses have strengthened the security of the Taiwanese state, while the Taiwanese government has pursued inconsistent policies (other variables) since President Lee took office. The holistic perspective is heuristic for understanding and explaining Taiwan’s economic diplomacy during the Lee Teng-hui administration. This approach produces the recommendation that the government provide disinterested and effective judicial systems and conclude investment guarantees, double taxation and free trade agreements to help Taiwanese businesspeople. In a wider context, Taiwan’s economic diplomacy aims not only to serve the interests of the government or state but also to further the interests of the Taiwanese state as a whole, including all residents of Taiwan.

Migration between Southeast Asia and Taiwan: Trends, Characteristics and Implications

The migration of human resources between Southeast Asia and Taiwan is significant, indicating a close bilateral relationship. This study takes the perspective of economic development to examine the migration flows, aiming to explore the migration impacts of differences in societal development. Based on the Taiwan-Southeast Asia relative development status, the study further theorizes the possible migration trends between the two places. Empirically, the investigation focuses on major types of migration from Indonesia, the Philippines, Thailand, and Vietnam to Taiwan, including contract workers, immigrant spouses, professionals and the skilled, as well as students. The Taiwan to Southeast Asia migration covers mainly those migrants induced by Taiwanese investment. According to available information, the migration between Taiwan and Southeast Asia is rather asymmetric, with the Southeast Asia to Taiwan flows far more important than the counter flows. This fact indicates an advantageous position for Taiwan to cultivate relations with the migrant sending nations. It also provides a niche for every source country to work closely with Taiwan in migration management and migrant protection, for the interests of both the places of origin and destination.

Exploring the benchmarks of the Taiwanese investment trust corporations: Management and investment efficiency perspectives

Through an additive efficiency decomposition (AED) approach in data envelopment analysis (DEA), we evaluate the management and investment efficiencies of Investment Trust Corporations (ITCs) in Taiwan for the period 2007–2011. Furthermore, the AED-DEA and a network-based ranking approach in DEA are jointly used to rank and identify ITCs that can be treated as benchmarks. Frontier projections for ITCs are also highlighted. In general, our results demonstrate that the sample ITCs have higher investment efficiency than the management efficiency. Foreign ITCs appear to be the most efficient ones as compared to local ITCs and financial-holding ITCs. Finally, we construct a competitive map to help mutual fund managers improve their operating performance, resource allocation, and investment strategy formulation.

Home-Bias Investment Measure: Evidence from a Repeated Experiment in Taiwan

This study uses repeated experiment to explore the possible reasons of home-bias investment. The results indicated that the reasons for home-bias investment are information asymmetry or familiarity, resulting in over-investment in Taiwanese investment vehicles. The level of home-bias investment changed with the level of information asymmetry changes. A significant difference in home-bias investment was observed for different levels of education, investment experience, age, annual income and annual investment. Moreover, the difference in investment ratio did not change based on different levels of information asymmetry.

Local Embeddedness, Upgrading and Skill Development: Global Value Chains and Foreign Direct Investment in Lesotho's Apparel Industry

Many low-income countries (LICs) are integrated into apparel global value chains (GVCs) through foreign direct investment (FDI). This is also the case in Lesotho that has developed to the largest Sub-Sahara African (SSA) apparel exporter to the US under the African Growth and Opportunity Act (AGOA). More recently, a new apparel export market has emerged in Lesotho the regional market of South Africa. The two export markets US and South Africa are supplied by different types of FDI firms affiliates of largely Taiwanese transnational producers and South African manufacturers that are incorporated into distinct value chains. This paper assesses the implications for upgrading of integration into these two value chains in Lesotho - the value chain characterized by Taiwanese investment and feeding into the US market under AGOA and the value chain characterized by South African investment and feeding into the South African market. These value chains differ with regard to ownership patterns, end markets, export products, governance structures and firm set up, investors motivations, and perceptions on main challenges. These different characteristics have crucial impacts on upgrading possibilities, including functional, process and upgrading. Thus, from the perspective of upgrading and sustainability, ownership patterns, local embeddedness and market diversification matter. The emergence of South Africa as an alternative end market and the different value chain dynamics operating in the South African retailer-governed value chain open up new opportunities from those of the AGOA/Taiwanese-dominated value chain.

A new era for studies on cross-Strait relations: Introduction

After more than half a century’s separation, interaction between China and Taiwan has increased and has progressively changed from a politico-economic interaction to a more civic interaction. Scholars working on cross-Strait relations have recently begun to pay attention to the civic influence of Taiwanese businesses on the relationship. Some emphasize the importance of sub-governmental interactions in the process of cross-Strait integration. Others assert that Taiwanese businesses can exercise economic leverage to constrain the Chinese government in cross-Strait policymaking. These scholars stress bottom–up processes by observing current phenomena, then deducing the emerging pattern of cross-Strait relations that may be influenced by business activities. Taking account of changing trends in scholarly discussions of the cross-Strait relationship, this special issue of China Information presents current research in this field. Unlike studies on top–down processes that affect political and economic interactions between China and Taiwan, several contributions in the special issue highlight bottom–up mechanisms affecting such interactions by examining the identity of Taiwanese businesspeople and migrants, as well as the activities and implications of Taiwanese charitable organizations operating in China. This issue focuses not only on the impact of China on Taiwan, but also the impact of Taiwanese investments, migrants, and exports on Chinese society.

Internationalization of Taiwanese manufacturing firms: The evolution of subsidiary mandates and capabilities

We explore the internationalization of Taiwanese manufacturing firms by studying the evolutionary trajectories of their subsidiaries. Building upon the literature, we formulate and apply dimensions capability development and mandate expansion to explain the evolutionary paths of Taiwanese foreign direct investment. Subsidiaries are categorizable into groups from low to high performance: Pure Implementer, Capability Contributor, Mandate Extender and Global Innovator. Using data from Taiwanese firms’ foreign expansion, we find that subsidiaries with longer host-country experience and founded by parent firms with higher geographic dispersion are more likely to expand their mandates and/or develop new capabilities, which in turn lead to better subsidiary performance.

Exploitation, exploration, and how learning affects strategic intent in multinational enterprises' foreign direct investment decisions: A commentary essay

Research on foreign direct investment is a rich vein of inquiry in international business and management literature. Scholars explore various aspects of FDI including the reasons for location selection. Chen and Yeh's research is in that tradition. Under the title of “Re-examining location antecedents and pace of foreign direct investment: Evidence from Taiwanese investment in China”, they explore Taiwanese investment in China and re-affirmed previous findings of other scholars that organizational learning alters the trajectory of investment. The essay here comments on their contributions, impact on practice and policy, and limitations. Finally, the essay discusses implications for future research and recommends relevant readings on the topic.

Re-examining location antecedents and pace of foreign direct investment: Evidence from Taiwanese investments in China

The objectives of this study are to examine variations in the preferences of location antecedents and the pace of foreign direct investment (FDI) by multinational enterprises’ (MNEs) in relation to increased FDI experience and evolved strategic intentions. Using a rank-ordered logit model (ROLM), this study analyzes a total of 2688 investments in China from 731 Taiwanese-listed firms (TLFs) during 1997–2007. The results show that TLFs demonstrate distinct preferences for location antecedents at different stages of their FDI in China. In the early stages, TLFs attempt to exploit their existing competency and favor locations with advantages in infrastructure, labor cost, market size, and openness. In the later stages, locations with better production efficiency, labor quality, and R&D capability are more attractive because TLFs have become accustomed to the local business environment and intend to explore capabilities that create sustainable competitiveness in the face of competitive challenge. The results show that two antecedents, agglomeration and policy incentive, have consistent influence on location choice during the entire FDI process. The results also show that greater FDI experience contributes to a more intensive inter-investment time span and accelerates a TLF's investment pace.

The effects of outward FDI on home‐country productivity

PurposeThe paper aims to examine the effects of outward foreign direct investment (O‐FDI) on home‐country productivity.Design/methodology/approachA panel data set for 15 Taiwanese manufacturing industries over the period between 1991 and 2007 is employed for a model in which productivity is regressed on a measure of O‐FDI.FindingsThe study finds no significant positive or negative effect of O‐FDI on productivity. Breaking down the data by location of the investment, however, we find that O‐FDI in other countries enhances productivity in Taiwan, while O‐FDI in China does not. We interpret the positive role of O‐FDI in other countries as relating to the outcome of strategic asset‐seeking nature of Taiwanese investments in these countries.Research limitations/implicationsIn order to analyse the productivity effect of O‐FDI more precisely, one would need to compare the firm outcomes in the presence of multinational production with the outcomes that would have prevailed in the absence of multinational production. Unfortunately, we cannot observe what would have happened to firms that did engage in multinational production had they not done so.Practical implicationsThe findings suggest that the Taiwanese Government should distinguish the level of liberalization towards O‐FDI for different locations and in different types of industries. In particular, the government should channel more investment towards export‐oriented industries especially those in “other countries”.Originality/valueThe paper employs a contingency approach, examining the conditions under which O‐FDI impacts upon home productivity.

Does organizational strategic fit in supply chain relations affect the propensity for strategic change?

Purpose – The purpose of this paper is to explore the relationship between the strategic fit of supply chains and the formulation of future strategies.Design/methodology/approach – This study focuses on Taiwanese investments in China and offers models based mainly on the transaction cost theory and the eclectic theory using data surveyed from 1,100 Taiwanese companies in China's Pearl River Delta (PRD) and the Yangtze River Delta (YRD).Findings – Strategic fit from the perspective of the degree of vertical integration and the degree to which a Taiwanese firm fits in the local supply chain can affect the propensity for strategic change. That is, strategic fits in internalization strategy for vertical integration and in localization strategy for fit in the local supply chain are related to how a firm formulates its future strategies. Industrial factors between technological sectors and non‐technological sectors, and geographical factors between the YRD and the PRD further reveal different levels of signific...

Foreign direct investment and wage inequality: is skill upgrading the culprit?

This article examines whether inward Foreign Direct Investment (FDI) is a source of wage inequality between skilled and unskilled labour in developing countries. Although the literature has explored wage inequality issues, we studied the impacts of FDI on skill upgrading comprehensively, together with trade and other factors (such as FDI externalities). Specifically, our analysis introduces the origin of FDI, controls for plant heterogeneity and relates the results to the FDI theory on Multinational Enterprises (MNEs). The results show that, on average, FDI caused wage inequality because of FDI-led skill-biased technological change. However, Japanese and Taiwanese investments helped to alleviate the inequality. Japanese and Taiwanese FDI is motivated by cost advantages achieved through vertical FDI and thus increases relative demand for unskilled labour.