[quote=“cctang”]http://www.atimes.com/atimes/China_Business/HF16Cb06.html
[quote]
Hong Kong’s pull threatens Taiwan’s bourse
By Ting-I Tsai
Taipei - More and more Taiwanese businesses are flocking to launch their initial public offerings (IPOs) on the Hong Kong stock exchange, prompting concerns that the island’s own securities market is being marginalized.
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The trend, market analysts and observers say, is marginalizing Taiwan’s own stock market. They urge the Taiwan authorities to lift the current restriction that a Taiwan company’s mainland-bound investment must be kept below 40% of its assets by value. The proportion of Taiwan listings shifting to Hong Kong is already sizable. In 2005, 14 Taiwanese companies went public on Taiwan’s stock market, compared to eight in Hong Kong.
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“Taiwan is giving away [its] status as an Asia-Pacific fundraising hub to Hong Kong, after it [gave] away [its] status as [an] Asia-Pacific shipping hub to Hong Kong with its persistent resistance against opening direct [shipping] links with China,” said Tung Chen-yuan, a professor at the National Chengchi University and a senior researcher on cross-strait economic affairs.
[/quote][/quote]
The part I put in bold is hilarious. “Giving away?” I don’t think they ever enjoyed such status to begin with; relative to HK, the Taiwan exchange has always been marginal. To me, there are two basic reasons why better Taiwan firms would want to list in HK: rule of law， and as this article points out, stupid, politically motivated restrictions imposed by the ROC government.
How many non-Taiwan firms have raised capital on the TSE? I am struggling…
True enough. Perhaps if we changed the phrase to speak of giving away Taiwan’s potential position (as shipping and fund-raising hub), the article’s point becomes a little more meaningful.
A little more…
Hong Kong has long been the landing point for international funds into Asia. Multinationals planning to step into the Chinese mainland or other local economies set up their corporate structure here, in a legal and economic environment they’re familiar with. Similarly, asian companies expecting to be especially attractive to international investors would be wise to list here.
But Taiwan isn’t just an island off the coast of China: as of 10 years ago, it also happened to be home for a large majority of the worlds’ richest ethnic Chinese capitalists + businesses. Modern China’s growth has depended heavily on Taiwanese capital and expertise, as a pained LTH or CSB would remind us. Taipei might’ve never become an attractive listing exchange for multinationals, but for Taiwanese-run businesses that primarily operate in Greater China, it should’ve been a slam dunk.
5-10 years ago, none of these Taiwanese capitalists wanted to trust their assets in the hands of the Communist tufei; it was a real topic of conversation at the dinner table whether this was all a complicated trick by the Communists to steal their wealth. Being consummate entrepreneurs, they saw the obvious value in exporting from mainland China, but they limited their investments to the absolute minimum (production/manufacturing only), while also repatriating profits as quickly as they came in.
Now? If you repatriate your profits to Taiwan, you might never get’em back out again. Hong Kong is a reasonable place to put a holding company, but increasingly, people are coming to realize maybe the Communists are kinda serious about this whole reformed economic/legal system thing. It means more profits are being left in mainland China, corporate structures, wives/children, international schools, etc… are all following. The recent push by Taiwanese financial institutions to open up branches in mainland China is an easy sign of how far the scale has tipped. Taiwanese companies invested hundreds of billions in mainland China over the past two decades without Taiwanese banks… why the push now? Because they know much of these Taiwanese funds are permanently leaving the island, and they have to follow their customer base.
If the relationship had been managed properly from day one, Taipei could have been corporate headquarters for 50% of the non-state owned enterprises in mainland China. Companies like SMIC and Grace would be “Taiwanese”, instead. Over the course of the next 20-50 years, the inability to take advantage of this could translate into a lot of lost New Taiwan Dollars.
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In a country of 1.3 billion people, how many accountants and lawyers will there be?
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In a country of 1.3 billion people, how many white-collar executives + corporate back-office people will there be?
The future numbers here are tremendously huge. And as anyone working in China will tell you, at the present there are very few of the above available in mainland China. So the question becomes, 50 years from now, where will these hundreds of millions of accountants, lawyers, and corporate headquarters be based? Geographic proximity means less and less these days, and China’s economic/legal systems are still in its infancy.
Hong Kong is one obvious answer. Taipei still could be another.
In a country with corruption saturating the top politicians and business leaders, it is just a matter of time before the house of cards falls down. Sooner or later China will copy the Taiwan experience in politics, and then I will shake with fear.
All China supporters better don’t hold your breath, China will implode and all the arguments you use to support the KMT&PFP&China faction today will be your downfall tomorrow!!!
But wait if PRC sees the pitfalls that ROC is going through. Why would they make the same mistake?
Are they all stupid?
I mean why does CCP still keep talking about Singapore as the ideal model for PRC modern government instead of Taiwan. I am convinced they are serious about not making the same mistakes as ROC when it comes to evolution of their political system.
Or one can say that HK has been the bloodsucker of the Chinese population in the last years, sustaining it’s growth on the fact that they can do pretty much whatever they want if they have the right connections.
Here is an insight on how to get rich in HK :
chinapost.com.tw/asiapacific … 4326&GRP=C
On another matter, if Taiwan ports are really going down, I wonder why does the Kaoshiung one is going to be expanded. And also, if China would even accept it, the direct link of finished goods back to Taiwan would be a huge blow on HK port, now a way for all the goods that come to Taiwan. And, because strategically Kaoshiung is in better position than HK (specially for the Americas), it would represent a even bigger ammount of goods passing in there. That is why the direct link on cargo is only TW-China way…
Er, found it. February 2004, A tad out of date, but maybe interesting nonetheless. PM me with an email address for a copy.
[quote=“mr_boogie”]
On another matter, if Taiwan ports are really going down, I wonder why does the Kaoshiung (Gaoxiong) one is going to be expanded. [/quote]
Misguided optimism dating from a better age for Taiwanese trade.
taipeitimes.com/News/biz/arc … 2003291834
Last year, the handling volume at the port dropped for the first time, showing a 2.5 percent shrinkage for a year-on-year reduction, it pointed out.
Look, the port businesses will eventually leave Taiwan and HK just like the manufacturing did/is doing. Logistics is more of a value added thing than the manufacturing that has left Taiwan and HK, but this is the next thing that will move over the border or strait. It is inevitable and any government attempt to stop this trend is money flushed down the shitter. The difference here for HK and Taiwan is that HK’s economy is free and fair enough for it to move on to the next thing, be it financial services or something else. I have less confidence in Taiwan. The place has obvious strengths in design, but what will stop this from going to the mainland? The things that keep financial services and attractiveness as a place to list in HK is the rule of law and a reasonable regulatory framework. That’s what keeps HK a few steps ahead of the mainland economy. The mainland is not going to catch up in these areas quickly. So what is keeping Taiwan’s strong points in Taiwan? I think it’s mostly the personal convenience of working close to home. That’s not a very good adhesive for preventing the mainland from sucking Taiwan dry. My point here is that both Taiwan and HK have groups of people who are very talented at what they do, be it chip design or financial services. However, talent is mobile and will only stay put if the environment suits it. I honestly want to hear what folks here have think about this question: what keeps businesses and talent in Taiwan, and will it keep business and talent there in the future?
QED.
Money will keep talent in Taiwan, that’s about it. There will be a considerable number who wish to remain on the island for personal reasons, but if the money is there to tempt them away they will go.
The second factor is direct links. With direct links it is entirely possible to maintain R&D and HR and HQ premises and staff on the island, and merely locate the factories on the mainland. Of course, if factory grunts are allowed over to live and work in Taiwan then the highest tech factories could be relocated to Taiwan.
I don’t see the rule of law developing in Taiwan in my lifetime, and we are getting a fairly good insight into Taiwan’s financial regulatory framework at the moment, but direct links would mean a huge shift. Have you read CLSA’s Capital Links report? Very interesting. I might have a copy hanging up in the toilet, pm me with an email address if you want a copy.
Also, last time I saw, Taiwan was fighting against a shrinking work force, and that might be one of the biggest factors in the next years as far as economical growth gets. If Taiwan government does not come with birth measures or import of speacialized work force, what will happen in the future will be that there are not good enough candidates for the high tech companies who work in here, forcing them to move elsewhere.
Also an interesting piece of news on Taiwan growth http://www.taiwannews.com.tw/etn/news_content.php?id=112313&lang=eng_news&cate_img=logo_taiwan&cate_rss=TAIWAN_eng
Just to make an obvious statement here: I see the presence of “money” as being a function of value. If there’s value to being in Taiwan, then money will eventually pool there.
So, that said, I fully agree with Lord Lucan. There’s not much value to being a semi-capitalist (ignoring numerous state-owned enterprises) island in east Asia, without natural resources and featuring a moderately functional legal system. Taiwan’s sole economic value comes from the people that happen to reside on the island. In this case, they happen to be ethnic Chinese with a strong entrepreneurial tradition and a decent supply of ready capital. That could be quite a bit of value… unless Taiwanese policies force them (and their capital) off the island.
The first preference of most folks is to “stay home”. Give them an opportunity to get near-optimum profits while eating the same foods they ate as children… and they’ll likely take advantage of it.
Or, there’s the alternate “strategy” the CSB administration has tried for the past 6 years: convince millions of Taiwanese businessmen that their sacred duty to the rest of their compatriots is to put some of their money in Costa Rica and Vietnam; besides, is making money isn’t really that important?
As far as mr_boogie’s comment goes… I personally think the demographics issue is really insignificant compared to the other factors at play.
cctang, in 5 years we start to speak, as less and less children go to school, and more and more teachers (that really good job in Taiwan, that gives you an extra kick back in the retirement fund) start to be jobless and move to other positions where they are less qualified (if even qualified at all) because of guanxi, and the system becomes more and more saturated of people who are completelly and totally out of their space. Believe me, I’ve been there… 140.000 teachers have no place in Portugal (that means 1.5% of the Portuguese population), beeing 100.000 of them woman (as in any country in the world, many portuguese girls dream was to be a teacher). The number of schools with less than 10 students is at about 900. And this is in a country where the Population Growth allready is at a 0.15 level.
Don’t forget that aging people have more needs for health care, and there is a huge polution problem in Taiwan.
You really need to actually look at the numbers and do some math.
They’re talking about zero percent population growth in Taiwan by … what, 2020? How many teachers do you really think will be laid off on an annual basis until then? Perhaps 5% of the teacher population? 10%? What percentage of the Taiwanese population are teachers? What percentage of the workforce will these laid off teachers represent?
Now, turn this around. How many Taiwanese work in export-related businesses? How many work in logistics or port-related businesses? By the year 2020, how many of them will have their livelihoods affected by cross-strait policies?
You know, I used to rather enjoy the Christian Science Monitor. But my opinion of them has dramatically fallen over the past few years.
And this editorial is just… so poor… on so many levels.
[quote=“cctang”]You know, I used to rather enjoy the Christian Science Monitor. But my opinion of them has dramatically fallen over the past few years.
And this editorial is just… so poor… on so many levels.
csmonitor.com/2006/0620/p08s01-comv.html[/quote]
Company I work for tracks statements of the PRC govt on a daily basis. It contradicts itself on a regular basis. Last Tuesday price controls were “working” reining in runaway raw material prices, but by Thursday new economic cooling measures were needed. This is the danger of any statistics-based reporting. Who makes up the statistics?
I don’t know if I agree what you just described can be fairly called “contradiction”. The measures were working until they weren’t working. Well, I guess the term contradiction is still correct; I just don’t agree with the implications that the Beijing government knew better about the effectiveness of its politics but chose to mislead. At the very least, I’d want to see the context of the first quote that you paraphrased here.
Of course, every government on this planet is constantly managing its economy via both fiscal and monetary policy. National economies have always been an experiment in action, and there’s a constant feedback cycle which leads to policy decision changes. Now that we’re no longer talking about the “national” economy but rather the “global” one… these decisions get hard.
In my opinion, Beijing has been responsible in its official financial statements. (I don’t mean editorial comments. I mean the stuff coming out of the PBOC and finance ministries.)
financeasia.com/article.aspx?CIaNID=33891
Chicago Mercantile Exchange (CME) has rolled into Hong Kong, opening its new Asia-Pacific headquarters in the SAR on the back of expanded products offerings, its proximity to China business opportunities and its self-proclaimed increasing focus on Asia. The opening is also timely for CME as it has announced plans to list new futures contracts and options on futures on the renminbi against the dollar, euro and yen and a new Korean won product.
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“While we have had a presence in Asia-Pacific for some time, we felt now was the right time to expand our reach by establishing a new regional headquarters in Hong Kong to facilitate further expansion of our product offerings and increased level of service to our Asian-based customers. Hong Kong was the clear choice of location due to its close relationship with Mainland China, its role as the regional financial hub, and its infrastructure and communications links with the region.”