|| Small and Medium Enterprises (SMEs) are playing a key role in the economic development of every country in the world. The fast development and significant contributions of SMEs is one of the most important factors to the outstanding industrial and economic growth in Taiwan for the past fifty years. However, the SMEs in our country are gradually moving abroad and invest in Mainland China or other developing countries due to the drastic changes in the investment environment. Since the economic reform in 1978, due to the changes in the international investment environment, Mainland China has gradually recognized the importance of SMEs to the economic growth and is aggressively encouraging the development of SMEs. Such trend is indeed one of our major concerns.|
This study uses Historical Comparison Method and SWOT Analysis in an attempt to analyze the situation of cross-straight SMEs under macroscopic and regional investment environment since the late 1990’s till now and the opportunities and threats of SMEs after joining the World Trade Organization (WTO). Meanwhile, the strength, weakness, opportunity, and threat for Taiwanese SMEs to invest in Mainland China is also explored for the authority of Taiwanese SMEs in setting related policy and for the Taiwanese businessmen as a reference.
Firstly, in terms of macroscopic investment environment, the performances of both sides across the straight under general environment (including indices of political, legal, investment tariffs, and basic environmental evaluation) and overall economic environment (including indicators such as economic development, import and export trading, and luring of foreign capital, etc.) are better than before. Next, in terms of regional investment environment, the similarity between the places where cross-straight SMEs often gather – Industrial Parks in Taiwan (including Export Zones and Industrial and Science Parks) and Special Economic Zones in Mainland China (including Shenzhen, Zuhai, Xiamen, Shanghai, and Beijin) are in the superiority of the locations and with development potential, similarity in industrial structure, emphasis in investment right protection, and complete basic infrastructure. The differences are in that the Industrial and Science Parks in Taiwan adopt single operating window and efficient in approval, whereas the applications for investment in Special Economics Zones in Mainland China are still approved based on the amount of investment, technology cooperation, or joint-venture between Chinese and foreign companies, foreign proprietary enterprises that require longer period of approval operation. In addition, the tax incentive in Taiwanese Industrial and Science Parks is of functional attribute with very high rewarding threshold and significantly higher cost than the Special Economic Zones in Mainland China. The tax break and grace period for Special Economic Zone in Mainland China is of industry attribute. It’s tax break and grace period is obviously higher than Taiwanese Industrial park.
Lastly, summarizing the SWOT Analysis of this study, it is found that the investment environments of the cross-straight SMEs are all facing the difficulty of lacking of talents and shortage of capital as well as facing potential stiff competition after joining WTO. To this end, it is recommended that the government should strengthen the innovation incubator for SMEs, expand the channel of financing for SMEs, and provide accurate investment information. On the manufacturers side, the government should adjust the industrial structure of manufacturers, strengthen the R&D capability, training professional talents, adopt strategic alliances and value employee’s educational training in order to upgrade the international competitiveness of SMEs in our country.