Wednesday, February 16, 2005

Taiwan Should Know China Manufacturing is Inevitable

One must bend like the willow and not be rigid like the oak.

- Chinese Proverb

This was a surprising move by the Taiwan government: Taiwan Government Raids UMC Offices Over China Fab Links
Taiwan's Ministry of Justice raided the offices of United Microelectronics Corp. on Tuesday, looking for information that might prove the company illegally invested in Chinese foundry Hejian Technology Corp.

Worried about the loss of its core foundry business to political rival China, the Taiwan government restricts investments in certain technologies, including semiconductor plants capable of processing integrated circuits on 200-mm diameter and 300-mm diameter wafers

Now, I am not a fan of the Red Chinese government. But Taiwan, like the rest of the world, has to realize that manufacturing is moving to China, and can get in on the game and make money at it, or fight it and be left behind. Taiwanese companies are uniquely suited to play the game since they are, well, also Chinese, so this is a way to bring in even more revenue to its island-based companies. Better their companies that those from other countries.

But this isn't just about making a buck. It is about exporting democracy. Rising standards of living and capitalism are precursors to starting a democratic movement (another way to establish democracy is to invade and set up a democratic government, like Germany, Japan, and...Iraq). After all, if you are making money and own property, the last thing you want is a government that can easily take it all away.

In addition, if your own people are making money hand over fist, the last thing they would want is to stop all that economic activity, which would happen if China invaded Taiwan. The economic engine in China would grind to a screeching halt as its biggest buyer - the U.S. - cut off all sales and blockaded its coast. How long do you think the Chinese government would last if millions of workers were suddenly idle?

So I think Taiwan should be encouraging economic partnerships between its companies and China. While there may be short-term economic issues, I think long term it is a benefit to the island nation.

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