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Taishang: a Different Kind of Ethnic Chinese Business in Southeast Asia Hsin- Huang Michael Hsiao, I- Chun Kung, and Hong- Zen Wang

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Taishang: a Different Kind of Ethnic Chinese Business in Southeast Asia Hsin- Huang Michael Hsiao, I- Chun Kung, and Hong- Zen Wang 7 Taishang: A Different Kind of Ethnic Chinese Business in Southeast Asia Hsin- Huang Michael Hsiao, I- Chun Kung, and Hong- zen Wang Introduction Taiwanese transnational capital emerged in the mid-1980s, and its importance is now widely recognized by Taiwanese scholars in various disciplines. There has been an increasing interest in investigating the nature of this newly emerging transnational capital, which is consid- ered to be different from the Western or Japanese forms. Studies of Taiwanese businesses (taishang) in Southeast Asia have concentrated on the domains of overseas investment patterns (T. J. Chen 1994, 1998; Y. C. Chen 1997; Lin 2002), industrial relations (Chan and Wang 2005; Kung 2002; Wang 2002), and ethnic relations and overseas Chinese networks (Hsiao and Kung 1998; Tseng 1999). Some scholars have noted that, to taishang, Southeast Asia is not only a geographical area, but also a cultural entity, and thus their investment behavior as a whole is embedded in the social contexts of the region. As latecomers to transna- tional capital in Southeast Asia, taishang demonstrate some distinguish- ing features (see also Shu 2000, 2001). Using taishang as the keyword to search title, abstract, and keywords in the database Zhonghua minguo qikan lunwen suoyin (Index of Republic of China’s journal articles), up to the end of 2006, there are over 500 entries. However, having checked one by one, only 37 articles have really dealt with taishang and Southeast Asia in a specified way. This shows that current research on the taishang of Southeast Asia has not gone beyond the general description of overseas investment, paid attention to the social context of the host country, or examined the social impact of overseas investment. Among these academic articles, about one- quarter are from the field of economics, focusing solely on overseas investment and location choice, taishang’s comparative 156 Hsin- Huang M. Hsiao, I- Chun Kung, and Hong- zen Wang 157 advantages in export, or the impact of economic change on taishang production. These studies have not considered the taishang as a social (human) subject that migrates to a strange new world so as to take advantage of local conditions and to engage in production. In addi- tion, the rising power of the mainland Chinese economy in the past two decades has had an unexpected effect in attracting more Taiwanese investment to China. Unfortunately, existing economic studies have ignored the fact that investment in Southeast Asia since the 1980s has actually helped taishang to gain the necessary management skills for large- scale production, or for subsequent investment in China (Lim and Wang 2006). Research on taishang in China or Southeast Asia has often considered them to possess more social connections and economic resources than immigrants to Taiwan and, therefore, assumed that they would not encounter problems of adapting to lives in unfamiliar places. In addition it is often assumed that their social connections with ethnic Chinese in Southeast Asia would necessarily facilitate their business entries and practices, and that they are unlikely to run into too many local political and economic barriers (Wang 2008). Such an approach demonstrates that the existing literature has basically essentialized the ethnic economy, considers it to homogeneous and static, and pays inad- equate attention to changes in the global economy and market forces. Therefore, this chapter will argue that the taishang phenomenon in Southeast Asia should be understood first in terms of its capital forma- tion and special characteristics, and second in terms of the influence of the political economy of the host countries. We will tackle the issue of how the taishang have globalized their capital and business strategies to maintain their competitiveness in the world economy. It also explains how the taishang have reorganized their industrial production networks and how they manage labor relations in Southeast Asia. The information that feeds this chapter is drawn primarily from interview data collected in various research projects conducted by the three authors over the past decade. These projects include (1) “Taishang in Southeast Asia: Networks and Ethnicities,” a three- year project spon- sored by the National Science Council between 1999 and 2002, which involved fieldwork in Malaysia, Indonesia, Thailand, Vietnam, and China; (2) “Exit: Cross- border Investment and the Local Embeddedness of Taishang in Asia Pacific,” sponsored by the National Science Council in 2002; (3) “Market and State Together? Changing Labor Relations in Taiwanese Companies in Southeast Asia,” financed by the Academia Sinica in 2001; (4) “Transnational Capital, International Migration 158 Taishang: Ethnic Chinese Business in Southeast Asia and Ethnic Division of Labor: Labor Regimes in Vietnam’s Taishang Factories” and (5) “A New Paradigm or an Old Trick? Effect of Private Codes of Conduct on Industrial Relations in Vietnam,” supported by the National Science Council in 2001 and 2003–4, respectively. The field- work interviews were conducted with Taiwanese Business Associations, as well as taishang employers and managers in various Southeast Asian countries. The informants were selected from the membership list of the Taiwanese Chamber of Commerce in Malaysia, Vietnam, Thailand, Indonesia, and China, and from the Taiwan Directory of Overseas Firms published by the Ministry of Economic Affairs. Reorganizing taishang production networks in Southeast Asia Investment by Taiwanese companies in Southeast Asia has grown sig- nificantly since the late 1980s, a phenomenon that has been attributed by many economists primarily to the changing economic environment in Taiwan. The abrupt appreciation of the Taiwan currency in the late 1980s caused problems for many export- oriented and labor- intensive local industries. In 1987, the New Taiwan dollar rose 22.4 percent (from NT$36.00 to NT$28.95) against the US dollar. This led to an increase in the average monthly wage in the manufacturing sector from US$353 in 1985 to US$821 in 1990 and then to US$1086 in 1992, which undermined the competitiveness of labor- intensive small- medium enterprises. Inevitably, overseas investment emerged as an alterna- tive for such businesses. Since then, from being a meager investor in Southeast Asia before 1986, the taishang have emerged as the largest investors in the region. Between 1959 and 2006, Taiwanese companies ranked third in terms of investment in approved projects among foreign investors in Malaysia, third in Thailand, sixth in Indonesia, seventh in the Philippines, and third in Vietnam (Table 7.1). Before 1990, overseas investment from Taiwan was concentrated in Southeast Asia. As the political tensions between Taiwan and China eased at the beginning of the 1990s, and as China began to open up its economy and market, huge amounts of Taiwanese capital began to flow into China from 1991 (IDIC 2002). Most of this investment has gone into the manufacturing industry, which is the most competitive sector in Taiwan’s economy. As the official surveys of the Taiwanese government have repeatedly shown, the most important reason for moving factories abroad is the need to secure cheap labor. Table 7.1 Taiwanese investment in Southeast Asian countries, 1959 to March 2007 (Unit: US$ million) Year Thailand Malaysia The Philippines Indonesia Singapore Vietnam Cambodia Cases Amount Cases Amount Cases Amount Cases Amount Cases Amount Cases Amount Cases Amount 1959–89 642 2,097.25 477 1,257.05 348 349.41 75 1,381.38 35 22.72 2 4.69 0 0 1990 144 782.70 270 2,347.83 158 140.70 94 618.30 10 47.60 8 135.80 0 0 1991 69 583.50 182 1,326.17 109 12.00 58 1,057.80 13 12.50 13 224.19 0 0 1992 44 289.90 137 574.70 27 9.10 23 563.30 11 8.79 15 615.80 0 0 1993 61 215.40 86 331.18 21 5.40 20 358.90 12 69.47 30 757.66 0 0 1994 88 477.50 100 1,122.76 42 199.15 48 2,484.03 19 171.19 55 575.48 2 15.87 1995 102 1,803.90 123 567.80 34 13.60 89 567.40 20 31.65 45 913.34 14 10.03 1996 66 2,785.20 79 310.40 22 117.11 111 534.60 54 165.00 47 478.62 34 163.73 1997 62 414.30 63 480.40 16 80.56 101 3,419.40 27 230.32 54 249.56 62 44.04 1998 69 253.60 74 263.40 19 30.48 91 165.20 56 158.18 62 258.15 25 138.51 1999 86 211.10 66 70.26 18 19.15 92 1,486.10 19 324.52 80 201.33 15 55.39 2000 120 437.41 92 241.07 10 5.42 82 134.54 40 219.53 135 403.33 15 18.85 2001 50 158.69 88 296.58 9 11.99 69 83.85 26 378.30 140 1,004.92 8 56.97 2002 41 62.93 64 66.29 22 236.35 50 83.18 27 25.76 198 511.82 4 6.82 2003 57 338.83 57 163.69 17 47.11 49 117.54 15 26.40 190 540.67 1 1.00 2004 53 268.53 78 109.09 11 29.52 41 68.87 18 751.78 171 562.53 6 4.60 2005 63 417.66 71 113.64 N.A. 25.30 43 133.39 16 97.68 187 570.59 4 4.19 2006 63 284.30 70 110.48 N.A. 38.05 27 218.62 18 806.30 125 241.61 1 16.44 2007 (1–3) 13 78.68 10 11.61 N.A. N.A.
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