Mainland China’s business environment for Taiwanese firms has some feeling ‘targeted’

This is the first part in a series about how Taiwanese businesses are faring in mainland China.

Despite Beijing’s push for integration and a stronger national identity, Taiwanese businesses in mainland China say they face a complicated, fickle environment that can leave them feeling singled out or “targeted”.

Many such companies say they have become encumbered by red tape and additional checks, particularly when an election approaches and tensions boil across the Taiwan Strait.

Still, the size of the mainland market and its geographic proximity mean that while many may be complaining, few will seriously consider leaving.

“We still face operational challenges. Even after the resumption of wine shipments to the mainland, we are required to get new registration numbers and conform to new packaging and labelling rules,” said an employee of Kinmen Kaoliang Liquor, which is based in Taiwan’s Kinmen county, speaking on condition of anonymity. “The registration process is a complex paper chase … We heard that some have sought help from mainland brokers who charged exorbitant fees.”

In January, Beijing scrapped an import ban on Kinmen Kaoliang and 62 other Taiwanese firms that had been in effect since late last year, and imports of Taiwanese sugar apples resumed in June, despite military posturing in the strait. Tensions between them escalated dramatically following an August 2022 visit to the island by then US House Speaker Nancy Pelosi.

But the employee said the regulatory “long haul” to get products onto the mainland was arduous, even with Quemoy, the Taiwanese-controlled offshore island also known as Kinmen, being roughly 5km away from Xiamen in Fujian province.

Not all export applications are granted, they added.

“So, we hope that cross-strait politics, and January’s presidential election on the island, can go the way Beijing hopes, and that there is more peace across the strait so that we, and numerous others, can benefit and concentrate on business rather than other matters,” the employee said.

Beijing regards the self-governed island as a renegade province that must be reunited with the mainland, by force if necessary. And some Taiwanese businesspeople accuse Beijing of politicising trade.

Cross-strait ties have deteriorated since Tsai Ing-wen from the independence-tilting Democratic Progressive Party (DPP) came to power in 2016 and was reelected in 2020, hampering trade, tourism and investment with the mainland.

Taiwanese businesses trying to navigate the mainland’s labyrinth of new, changing rules to tap into the market also say they feel like they are being given the cold shoulder.

At last week’s China International Import Expo (CIIE) in Shanghai, representatives of some Taiwanese firms in attendance alleged that they had been “tucked away in a corner”.

Kinmen Kaoliang’s booths were near a remote corner, while prime positions were occupied by American, Hong Kong and Southeast Asian exhibitors. The employee said that when they and other Taiwanese businesspeople complained, the expo organisers told them that all booths had been randomly assigned to exhibitors, and that those from the same country or region were grouped together.

“The location this year – our fifth year attending – was the worst, and foot traffic was weak,” the employee added.

The number of Taiwanese exhibitors continued to hover at low levels in recent years. More than 100 attended in 2019, but their numbers dwindled to 20 last year and 19 this year, according to the CIIE’s exhibitor list.

The Taiwan External Trade Development Council opted not to send a delegation for the second straight year.

In total, 3,400 exhibitors from 154 countries and regions attended the expo this year.

Meanwhile, Taiwanese firms aspiring to expand their business across the strait face uncertainties from a probe that Beijing launched this year into Taiwan’s “trade barriers” that affect 2,455 mainland products.