Korea and Taiwan: Tigers Rising - Dragons and Tigers: A Geography of South, East and Southeast Asia - page 378

T Tokyo and Osaka. With its multiplex of service, indus-
trial, and agricultural activities, linked by transportation
and communication networks, this part of Taiwan
exhibits all the features of a kotadesasi zone.
Hsinchu Science Park, established in 1980, has be-
come the world' s third largest high-tech industrial center
with strong links to California' s Silicon V alley . Hundreds
of U.S.-schooled Taiwanese are now employed at
Hsinchu. A second science park is being built near
Tainan. Taiwan now leads the world in the production of
notebook computers and is among the top three makers
of desktop computers and peripherals. However, a small
domestic market, increasing labor costs, shortage of land
for expansion, and lack of raw materials have compelled
structural and spatial changes.
Taiwan has taken advantage of commoditization of
the personal computer (PC) industry: the division of the
PC market into two sectors—big name-brand marketing
and sales and hundreds of no-name component suppli-
ers. Taiwan has garnered the latter—the Original Equip-
ment Manufacture market. Three-quarters of the
country' s electronic products are sold under another
brand name. For example, more than 80 percent of flat-
screen displays sold under such names as Acer and Dell
are manufactured by Taiwan and Korea.
In this export-driven economy , small and medium-
size firms are dominant. Unlike Japan and South Korea
where large corporations were beholden to large banks in
the financial crisis of 1997, Taiwanese companies bor-
rowed from savings clubs and mutual aid associations.
Bad loans were minimal and banks did not collapse.
T Trade with China is easing Taiwan through the current
economic downturn.
A penchant for expansion, combined with cost effi-
ciency , has led Taiwan to extend its operations overseas,
where both space and cheap labor are available. More
than 80,000 firms have moved offshore—half to South-
east Asia and half to the PRC. For example, Paochen
footwear could employ 10,000 workers in Taiwan but
employs 120,000 in the PRC. On the mainland, it is the
world' s largest producer of Nike, Reebok, and other
name-brand shoes.

photographic, and other technical instruments. Many
exports are parts to be assembled on mainland factories—
the final products destined for Japanese, American, and
European markets.
Taiwanese businesses have invested an estimated
US$150 billion in mainland projects. Along with Hong
Kong, it shares half the investment projects in Shanghai' s
Pudong development project and China' s Xiamen SEZ.
Some estimates put Taiwan' s involvement in China' s IT
production at 70 percent. In 2009 Taiwan opened up 100
of its industries to mainland investments. The first sec-
tors to be opened will include such industries as automo-
biles, textiles, plastics, computers, cell phones, hotels,
herbal medicines, and wholesale firms. About one mil-
lion Taiwanese—mostly business executives—now live
in China. Half of these live in Shanghai.
Until recently , because of the political situation, most
Taiwan-China trade was indirect via Hong Kong. But
Hong Kong, even with its SAR status, is now part of the
PRC. In 1997, transshipment services commenced be-
tween Kaohsiung and Xiamen and Fuzhou in Fujian
Province—the first authorized cross-strait shipping links.
Beginning in 2003, direct air links were put in place
for the Chinese New Y ear celebrations. In 2009, the
number of direct flights between China and Taiwan were
increased from 108 to 270 per week. Furthermore, Tai-
wan increased its daily quota of visitors from China to
3,000 from 300.
T To further ease restrictions, vessels from China or
Taiwan are no longer required to transfer cargo at a third
port. Instead, they only have to pass through the waters
of a third port on their way across the Taiwan Strait. For-
eign ships are not allowed to participate in this trade be-
cause the PRC considers cross-strait traffic to be
domestic. Foreign ships can ply the Hong Kong-Shanghai
route but not the Shanghai-Taiwan route.
Taiwan is also creating five Free T Trade Zones (FTZs)
to enhance the bamboo network and handle the China
trade. FTZs now exist in the major ports of Taipei, Kaoh-
siung, and Taichung, and Keelung Taowan is the coun-
try' s first aviation FTZ.
As part of its efforts to lure Taiwan into the PRC fold,
China has deepened and widened, and increased the
number of berths at all its major ports to accommodate
large Taiwanese ships. It also gives preferential treatment
to Taiwanese investors on the mainland who have built
factories from Suzhou to Urumchi. Some fear that Tai-
wan' s increased foreign investment and plant location in
the PRC could ultimately hold the country hostage to the
whims of the Communist government in Beijing.

CROSS-STRAIT BAMBOO NETWORK
A bamboo network of trade has grown more complex as
China has become Taiwan' s largest trading partner. In
2009, 30 percent of Taiwan' s exports went to China.
These include such things as machinery , chemicals, plas-
tics, flat panels, electronics, and a variety of optical,