Taiwan cracks down on illegal firms in China

31 March 1997 00:00  [Source: ACN]

TAIWANESE chemical companies found investing illegally in China may be fined and even be forced to pull out from the Chinese market if they fail to register their businesses with the Taiwanese government.

While the move is targeted at stemming the outflow of investment capital by large conglomerates into the mainland, it is also expected to hit small downstream producers, such as plastic producers, eager to exploit China's cheaper labour.

Taiwan will impose fines of NT$3m-15m (US$110-550 000) until the companies comply with the regulations or are forced to abandon their stake in China, said Ministry of Economic Affairs Investment Commission deputy executive secretary Huang Chin-tan.

However, the government is considering lowering the fines to NT$1m-5m because of complaints that current fines are too high.

The move reflects Taiwan's growing concern that Taiwanese business interests will be vulnerable to Beijing pressure. But analysts mocked the move and expect the government to find it difficult to track down such companies, especially if Beijing stops revealing details of Taiwanese companies with mainland investments.

Government officials estimate there are 35 000 Taiwan-based companies in China with about US$15bn of investments. However, only 11 000 have registered their investments, worth US$6.7bn.

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