Taiwanese tentacles. Following Japan, Taiwan builds factories in US
Taiwan is following in Japan's footsteps and committing vast sums in direct foreign investment to build factories, textile plants, and technology-based industries in the United States. This trend marks the second major push into North America after Tokyo-based multinationals began their headlong rush to invest billions in factories and in real estate during the early 1980s.
Although small by comparison, the Republic of China is turning its reserves of more than $80 billion into an opportunity to forge a relationship with America.
That new relationship is as much political as commercial. By creating goodwill around the United States, this prosperous yet diplomatically isolated island neutralizes some criticisms about formerly closed markets. Taiwan tallied a $15.8 billion trade surplus with the US in 1986, and final figures for 1987 should be higher.
The scope of the investment surge in the US includes textiles in Georgia, facilities owned by China Steel, Tatung electronics plants, and electricity-generating projects by the utility Taipower. There are 10 moderate-size Formosa Plastics factories. Petroleum industries are being considered. There is now more than $1.25 billion in direct investment from Taiwan in the US.
That amount will grow. The reason is that a parade of states, and some cities, are touring Taiwan - bypassing Japan as they seek investment from the Pacific Rim. Jimmy Lyles, president of the Corpus Christi, Texas, Chamber of Commerce, believes his city's growing bilateral ties are a natural evolution. To promote economic development, the chamber began an outreach effort last summer. ``Tangible results came pretty soon,'' Mr. Lyles recalls.
Other states are following the same tactic. The roster of states with headquarters in the towering Taipei World Trade Center includes Arizona, Colorado, Oregon, and Washington. Maryland and Illinois will establish offices there later this year.
At the same time, Taiwan is increasing its purchases of US goods, thereby attempting to foster company-to-company relationships. These can assist in forging joint-venture projects, especially in technology-related fields.
Since 1979, about $10.5 billion worth of ``Made In USA'' goods have been purchased in official ``Buy America'' missions. ``As Taiwan makes more concessions on copyrights and liberalizes to allow American companies to invest on reasonable terms,'' says Mark van Fleet, director of Asia-Pacific affairs at the US Chamber of Commerce, ``her investments here will rise.''
While some state officials privately insist that Taiwan is easier to work with than Japan, others disagree. ``They're good businessmen, they have savvy,'' says Gerald Wilson, chief of Florida's Bureau of International Trade and Development.
The impact of some investments is substantial. For example, one Taiwanese project is Corpus Christi's Project Bullwinkle - the world's largest offshore oil rig. An Wang, the computer magnate, has inaugurated a $500 million investment pool whose purpose is to investigate solid ``sunrise industry'' possibilities in both countries.
The boom in Mexico's maquiledora ``twin plants'' program has also lured Taiwanese investors. Incentives for setting up plants along the border are identical to those that attract American companies. Labor-intensive aspects of production can be handled on the Mexican side, with significant savings in certain sectors.
Costs in the electronics industry in the Rio Grande Valley range from $4.27 to $5.19 an hour, about double Singapore's $2.32, and more than twice as much as Hong Kong's $2.02 in comparable industries. Yet when electricity rates, rent, and freight charges are added in, savings range from 1 percent to 10 percent over those three nations, and over Taiwan as well.
