Opening the doors

The Chinese mainland has been Taiwan's largest trading partner since 2003, with the annual volume of trade surpassing $100 billion, according to the Ministry of Commerce.

Since June 2009, mainland companies have been allowed to invest in 100 areas of the island economy - 64 in manufacturing, 25 in the service sector and 11 in infrastructure.

Ren Yuanlin, chairman of Yangzijiang Shipbuilding Ltd, giving an interview following the company's listing on the Taiwan Stock Exchange on Sept 8, 2010. [Photo/ Xinhua]

At the time, investors from the mainland were allowed to buy shares in Taiwan businesses, but their holding was not allowed to exceed 10 percent of a listed company's total share value.

In March 2011, Taiwan's economic administration began receiving applications for investment in 42 other sectors, ranging from semiconductors to LCD manufacturing, from the mainland. There were no restrictions on sectors such as dyes, batteries and wind power equipment.

A third wave of opening-up came at the end of March, when Taiwan opened 97 percent of its manufacturing and more than half of its services and infrastructure sectors to investors from the mainland.

Under the new directive, mainland investors are allowed to hold a maximum 50 percent stake in five key industries, including liquid crystal displays, integrated circuit assembly and testing, and machinery used for the manufacture of electronics and computer chips.

As of Oct 30, the mainland authorities had approved investment in 133 enterprises and projects in Taiwan, valued at $722 million, said the Ministry of Commerce.

In the past three years since Taiwan opened the doors, businesses from Fujian province have taken the lead in injecting funds in Taiwan, said Shi Zhengfang, an associate professor at the Taiwan Research Institute at Xiamen University.

Fujian Newland Computer - a division of the information-technology manufacturer Fujian Newland Group - based in Fuzhou, the provincial capital, became the first mainland enterprise to invest in Taiwan, when the Ministry of Commerce approved its acquisition of a 58 percent stake in Digital Professional Asia Ltd in July 2009.

Meanwhile, Xtep International Holdings Ltd, a sportswear manufacturer based in Jinjiang, became the first sports brand to enter the Taiwan market when it opened a franchised store in Hsimenting, one of Taipei's busiest shopping districts in May 2010.

Of the 133 mainland-invested enterprises and projects in Taiwan approved by the mainland authorities, 34 are based in Fujian, with Taiwan-bound investment from the province reaching $97.5 million, according to the data from the provincial department of foreign trade and economic cooperation.

"Companies from Fujian have a number of advantages when it comes to investing in Taiwan," said Shi, referring to the province's close proximity and the similarities in language and culture.

Special economic zones in Xiamen and Pingtan mean Fujian now boasts increasingly close trade ties with Taiwan, she added.

"A variety of activities such as the Cross-Straits Forum, an annual event for grassroots exchanges between people from the mainland and Taiwan, mean businesspeople from Fujian have greater access to information about the investment environment in Taiwan and are more likely to give it a shot," said Shi.