One of Taiwan’s most popular business magazines recently had a dramatic cover – a young innocent sheep staring at a wolf with its jaws open and ready to attack.
The sheep represents the hapless Taiwan worker and the wolf the mainland manager or colleague who may soon be working beside him.
“The Cross-Straits Services Trade Agreement (CSSTA) will affect the 4.07 million working people in Taiwan,” said This Week. “It means that, in the future, Chinese can enter Taiwan as managers. Your boss and your colleague could be mainlanders. You do not need to cross the straits – the wolves are coming here!”
The agreement was signed by the two governments in June last year but has not been ratified by Taiwan’s parliament. It is a matter of bitter debate, with even members of the ruling Kuomintang party uncertain about voting in favor because of public opposition.
Opinion is deeply divided. On one side is President Ma Ying-jeou, his government, big business and the elite; they say the agreement will give Taiwan firms more access to the mainland market, with better terms in some sectors than foreign firms, and open the way to free trade agreements with other countries who are nervous of offending Beijing.
They argue that economic integration with China is the only long-term option at a time when the economies of its traditional export markets – Japan, the US and Europe – are weak and likely to remain so.
On the other side are the opposition Democratic Progressive Party (DPP) and thousands of small and medium-sized enterprises (SMEs) which fear they cannot compete with mainland firms that would be allowed in.
Under the agreement, Chinese firms can open hotels, travel agencies, joint venture hospitals, retail stores, hair and beauty salons in Taiwan. With an investment of NT$300,000, a Chinese firm can bring three workers.
A typical opponent is Wu Wei-tung, whose family has operated a Chinese medicine wholesale and retail business in downtown Taipei for 40 years. The shop, which employs Wu, his brother and father, imports most of its merchandise from the mainland.
If suppliers there can sell directly to shops in Taiwan, the shop will be driven out of business, Wu believes.
On paper, Beijing has been more generous, offering deregulation in 80 service sectors, against 64 by Taipei. In 2012, the services sector in China accounted for 44.6 percent of the nation’s GDP; so it offers more potential to grow. In Taiwan, the sector accounted for 68.2 percent, which should mean that companies there should be developed and competitive.
But critics say that it is not a level playing field. Mainland firms will be able to operate in a market governed by laws and regulations when they step into Taiwan; but foreign firms in China have to deal with complex rules, personnel networks and widespread corruption.
“I worked in the mainland for seven years, mainly in a software firm,” said a person named Lai Ming-hsiung. “It is a market ruled by men, not law. You make an arrangement with an individual. As long as he is there, things go smoothly. Once he is transferred or is dismissed, all bets are off. Once we lost 40 percent of the revenue of a contract when the new official in charge refused to honor an agreement made by his predecessor. Every day is a challenge.”
SMEs are especially weak since they do not have the money, influence or connections with local officials.
The theme of the article in This Week is that mainlanders aged between 20 and 40 are tougher and more ruthless than their Taiwan counterparts, because of the fierce competition in China’s job market and the modest circumstances in which most of them grew up.
Opposition to the agreement feeds into a wider anxiety over the flood of mainlanders since President Ma took office in May 2008. He has overseen an inflow of people, capital and investment never seen before in Taiwan.
Last year a record 2.83 million mainlanders visited Taiwan, up 11.2 percent over 2012 and accounting for 36 percent of all visitors. The mainland has overtaken Japan as the top source of tourists.
“We would like the government to limit the inflow of people and capital from the mainland,” said Lin Mei-ling, a Taipei hotel manager. “The loud and ill-mannered behavior of some is shocking and shows the big gap between them and us. They are all brainwashed into believing that Taiwan belongs to the mainland. You cannot discuss it, even with the educated ones. This flood is the historic tragedy of Taiwan.”
Beijing regards the legislative delay with anger and disdain and asks why the Taiwan government cannot implement the agreements it has signed. At the same time, it is negotiating a free trade agreement (FTA) with South Korea. If that deal is signed – without a corresponding one with Taiwan – it would give South Korean makers of semiconductors, petrochemicals and liquid crystal display panels a strong advantage over their Taiwan competitors.