For Taiwan, India's in the
slightly-less-hard
basket By Ting-I Tsai
TAIPEI - When Taiwan's economics minister
tried to promote investment in India by pointing
out that the first letters of India and Taiwan spell out "IT",
the same as the abbreviation for information
technology, numerous mainland-based Taiwanese
business leaders didn't even try to hide their
reservations.
"To us, India is not
attractive at all. We can't speak the language and
have a different lifestyle," said Tony Cheng,
chairman of the
Taiwan Merchants Association
based in Shenzhen, China. "India is so far away.
Will the idea work out? I doubt it."
As
part of the Taiwanese government's efforts to
dissuade Taiwanese businessmen from investing in
mainland China, where, according to China's
official figures, Taiwan-origin investments hit
US$41.7 billion by the end of 2005, it has
promoted the concept of investing in India since
the late 1990s. But language barriers, distance,
complicated regulations, underdeveloped
infrastructure and lifestyle differences have
turned most Taiwanese businessmen off, even though
closer India-Taiwan economic cooperation might
strategically benefit both sides.
By the
end of 2004, only 137 Taiwanese investments, worth
$116.04 million, had been made in India, while
fewer than 40 Taiwanese were based in India for
business. Bilateral trade reached $2.26 billion
between January and November 2005, a meager 0.67%
of Taiwan's total foreign trade during the period.
"[From what] I understand, there are only
32 Taiwanese based in India, and there is never a
33rd wanting to take [a] position there," joked
Fang Kuo-jen, former manager of Taiwanese
telecommunications company Dbtel, who noted that
he had traveled with instant noodles, medications,
and even bottled water to India for a seminar.
Setting a goal of raising bilateral trade
to $7 billion by 2007, Vijay Gokhale, director
general of the India-Taipei Association, said the
main obstacle was a matter of "mindset" rather
than any "physical one". Gokhale noted that
Taiwanese "tend to think India is very much the
elephant and snake charmer. We need to do more to
tell them we have our own satellite and [have]
launched our own rocket."
India became the
28th country to sign the Investment Protection
Agreement with Taiwan in October 2002. Taiwan's
Bureau of Foreign Trade initiated the "Proposal
for Enhancing Bilateral Trade with India" in 2004,
under which it cooperated with several civil
organizations in holding numerous seminars and
arranging investment delegations to India,
including a few led by deputy ministers of the
Ministry of Economic Affairs.
Last
Saturday, the government created a semi-official
Taiwan-India Cooperation Council to build up
information channels for Taiwanese businessmen.
Furthermore, the Institute for Information
Industry, a semi-official research institute, now
plans to set up a branch office in Chennai in May,
where it will recruit some 50 Indian software
engineers for research. Hoping to boost local
businessmen's interest in India, Taiwan's
state-run Chinese Petroleum Corp announced
recently it would buy 26% of India's Nagarjuna Oil
Corp Ltd.
Taiwanese investment in India
has followed a very different pattern from that in
mainland China, where Taiwan's small and
medium-sized enterprises have been investing since
the early 1990s. Taiwan's involvement in India has
typically been limited to branches of high-profile
tech companies such as BenQ and Acer, although
Foxconn had set up a mobile-phone production line
as of early this year.
According to a
Credit Lyonnais Securities Asia report published
last July, Acer is the third-largest
notebook-computer vendor in India, while BenQ is a
well-recognized brand for MP3 players, liquid
crystal display (LCD) TVs, projectors, mobile
phones and notebooks, after aggressive brand
promotions in 2003 and 2004. Dbtel once estimated
India would demand 110 million mobile phones by
2008, and has been planning to set up a production
line locally. Furthermore, D-link Corp, a maker of
wireless and Ethernet networking devices,
initiated a public offering in India in 2001,
becoming the first Taiwanese company to do so.
Reviewing BenQ's accomplishments in the
past four years, Ashish Bakshi, BenQ's country
manager in India, noted that localization is the
key, as India is still a maturing market.
"'Deliver what they want' has been the dictum
incorporated across our four product lines -
namely joybooks [a BenQ line of notebook
computers], mobile phones, LCD monitors and
projectors," he said.
Aside from Taiwan's
high-tech companies, Continental Engineering Corp
(CEC), one of Taiwan's leading construction
companies, concluded in 2002 that India would be
the company's crucial market for the upcoming
decade. The firm won an $86 million highway
construction project in India's Rajastan state
last July. According to Dennis Wu, manager of
CEC's overseas department, his company will bid
for projects to build metro lines and up to 7,200
kilometers of highways across India.
Reviewing the investment developments, Ted
Huang, chairman of the Chinese National
Association of Industry and Commerce, suggested,
"With more and more corporate enterprises locating
in India, the Taiwanese investment landscape in
India will be totally different in five years."
Whether Huang is right remains to be seen, but
more observers in the US, India and Taiwan are
expecting to see the benefits of closer economic
ties soon.
India was one of the few
nations that established official ties with the
People's Republic of China, rather than the exiled
Republic of China government on Taiwan, in 1950.
India's assistance to the PRC in winning
membership to the United Nations obstructed
Taiwan-India relations for more than four decades.
However, a rising China has made some
Indians uncomfortable. Prakash Nanda, editor of
India's Diplomatic Strategic Affairs, has argued
that it is an unrealistic dream for India to win
an endorsement from China for a UN Security
Council seat. Nanda hopes closer economic ties
will lead to cooperation between India and Taiwan
over security issues.
Nanda's argument is
echoed by Harvey Feldman, former US ambassador to
Papua New Guinea and the Solomon Islands, and now
a researcher at the Heritage Foundation. Feldman
has been promoting Taiwanese investments to India
in the past few years, believing closer ties
between the two nations would benefit them both.
Noting that China and India are both rapidly
rising powers in Asia, Feldman says he doesn't see
any threat of war between the two in the near
future, but "as China moves more aggressively into
the South China Sea, the Strait of Malacca, and
especially into Burma [Myanmar], that could change
quite quickly".
Commenting that China's
Tibet missile center and Chengdu military base
have created threats to Indian security, Antonio
Chiang, former deputy secretary general of
Taiwan's National Security Council, said Indians
have been eager to learn more about China, and
Taiwan is the easiest way.
"They hope
Taiwan can help, but what India can offer Taiwan
is limited," Chiang said, adding that Indians have
also sought to learn more about Pakistan's
US-built weapons by exploiting the fact that
Taiwan deploys many of the same systems, for
example, the F-16 fighter aircraft.
Mainland China, meanwhile, has closely
monitored interactions between India and Taiwan.
But it is still fully confident and optimistic
about future Sino-Indian cooperation, especially
since the two nations announced 2006 as
"China-India Friendship Year" during Chinese
Premier Wen Jiabao's visit to India. Ma Jiali,
research fellow at China's Institute of
Contemporary International Relations, noted, "The
two nations' relationship is moving forward in a
healthy direction."
Jiang Yili, a Chinese
South Asia expert, in the book The Taiwan
Issue under China's Foreign Relations,
explained, "As India is facing disputes with
Pakistan and the independence movement in its
northeast area, India would [tend to] be concerned
with our attitude and not go too far on the Taiwan
issue."
Concerning China's reactions,
Gokhale, director general of the India-Taipei
Association, emphasized that the current
promotions for economic interactions are based on
the idea that Taiwan needs a market to grow, and
India can be such a market, even if there is no
chance of official political interaction.
"Both sides have felt good about each
other but are still unsure about what to do," said
Antonio Chiang. "There is still a long way to go."
Ting-I Tsai is a Taipei-based
freelance writer.
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