The cross-strait services trade agreement provides major opportunities for Taiwanese firms to do business in mainland China, Premier Jiang Yi-huah said today at a seminar on traditional Chinese medicine.
Taiwan's e-commerce, finance and services companies will all be in strong positions after the agreement is signed, the premier stated. "Services businesses will have a particular advantage, as their product quality, attitudes, culture and management structure are all much more advanced than those of their mainland counterparts," he said. "Hence, the inking of this agreement is a major opportunity for Taiwan to increase its sales in the mainland market."
Jiang stated that Taiwan's traditional Chinese medicine industry should respond proactively to the agreement, taking advantage of the opportunity it presents by restructuring to upgrade its manufacturing and using its current strengths to create higher-quality products and expand into mainland China and other markets.
"There is no reason to fear that Taiwan will be wiped out in a free and open market. Instead, we should consider how many opportunities we will have in such an environment. Taiwan's young people are full of creativity and the spirit of learning. We should use this opportunity to fully exploit Taiwan's advantages," he said. Jiang also asked for faith that the government will stand together with business.
The premier mentioned that though the government opened Taiwan's traditional Chinese medicine market to mainland wholesalers on June 30, 2009, only one of the 464 such businesses in Taiwan is from the mainland, and its capital is a mere NT$2.1 million (US$70,159). The Taiwanese market is only open to mainland wholesalers, he emphasized, and it will not be opened to the mainland's ingredient retailers or manufacturers in the future.
In response to fears that the opening of the Taiwanese market will leave the country vulnerable to an "invasion" of capital and monopolistic control by mainland firms, leading to price-fixing, the premier said that when mainland firms apply to do business in Taiwan, the Ministry of Economic Affairs' Investment Commission will evaluate the scale of their capital, their business type, and their potential impact on Taiwan's industries. Any investment that would have a serious negative impact on Taiwanese businesses would not be permitted. The Investment Commission also has a representative from the Department of Health (DOH), he told the seminar participants.
"The government will absolutely not open the door and then leave it unguarded," Jiang insisted. "If any enterprise attempts to monopolize its industry, the government will certainly implement the Fair Trade Act to prevent it and impose penalties. The state will proscribe monopolies, as it has done in the past."
The cross-strait services trade agreement affects people in many ways, the premier said, and he thanked citizens for their support. "Taiwan is an island nation, and if it wants to expand outward it must lean on its strengths. It cannot remain outside of world economic development trends. Currently, nations are ceaselessly signing free trade agreements with the goal of allowing their strongest products to be sold in foreign marketplaces.
"Taiwan has sought to join regional free trade organizations in recent years, such as the Trans-Pacific Partnership and other East Asia-based groups. Joining such partnerships requires negotiation with other nations. During such talks, Taiwan will receive relatively greater benefits in its areas of strength, which translates into greater economic vitality in the future. Some weaker industries could be harmed, however, and if they are, the government must counsel industries on how to mitigate that impact, such as by using it as an opportunity for industry restructuring.
"It is natural for people to panic and worry at the beginning of liberalization, but I am convinced that because Taiwan is a strong, free and democratic society which has already been opening its economy [to the mainland] for four years, this agreement will not cause any problems, and negative effects will be extremely limited."
The implications of the agreement for traditional Chinese medicine are a matter of great importance for all parties, the premier said, as this industry is very important for Chinese-speaking communities worldwide. The Harvard Business Review has named traditional Chinese medicine one of four key industries of the next 20 years on a global scale.
In closing his remarks at the traditional Chinese medicine seminar, Jiang expressed hope that the Taiwanese industry would continue producing high-quality products while becoming more internationally competitive.
The premier said he discussed his suggestions for the industry with the minister of the DOH and the chairperson of the DOH's Committee on Chinese Medicine and Pharmacy, urging joint efforts to seek solutions to unresolved issues as well as flawed or outdated laws and regulations.
Finally, Jiang guaranteed his support for all traditional Chinese medicine associations and requested their backing in return for the government's efforts to open the Taiwanese economy.