The bustling streets of Kunshan once told a different story. Bustling Taipei-style shopping streets, majestic temples to the island’s deities and thriving factories dot the eastern Chinese city of Kunshan, for years a hub for Taiwanese businesses. This eastern Chinese city, just an hour from Shanghai, represented the pinnacle of cross-strait economic cooperation for over three decades.
Taiwan’s entrepreneurs in China, known as “Taishang” in Mandarin, built an economic empire that helped transform mainland China into the world’s second-largest economy. Taiwanese entrepreneurs — known as Taishang in Mandarin — poured billions into mainland China since ties began improving in the 1990s, playing an important role in its rise to become the world’s second-largest economy.
But the winds of change are blowing hard across the Taiwan Strait, and Taiwan’s entrepreneurs in China are feeling every gust.
The New Reality: Safety First, Profits Second
The relationship between business success and political stability has never been more apparent than in today’s cross-strait environment. But now those firms are feeling the strain from cross-strait tensions that have stoked safety fears among them.
What started as isolated concerns has evolved into a fundamental shift in how Taiwanese businesses view their mainland operations. The once-comfortable assumption that economic ties would remain separate from political disputes has crumbled under the weight of escalating tensions.
These safety fears aren’t just about physical security. They encompass a broader anxiety about regulatory changes, sudden policy shifts, and the potential for being caught in the crossfire of international sanctions or trade restrictions.
Kunshan: A Microcosm of Bigger Changes
An hour’s drive from economic powerhouse Shanghai, Kunshan has been a key hub for Taiwanese-owned industry in China since the 1990s. The city became a symbol of successful cross-strait economic integration, with its Taiwanese-influenced architecture and business practices creating a unique hybrid culture.
Today, Kunshan serves as a case study for how quickly business confidence can erode when geopolitical tensions rise. The factories that once hummed with activity now operate under a cloud of uncertainty, as Taiwan’s entrepreneurs in China grapple with questions they never had to consider before.
Will tomorrow bring new restrictions on Taiwanese investment? Could cross-strait relations deteriorate to the point where doing business becomes impossible? These questions keep many Taishang awake at night.
The Great Migration: Southeast Asia Beckons
Safety fears have led many Taiwanese manufacturers to turn to less politically sensitive locales such as Vietnam and Thailand. This geographic diversification represents more than just a business strategy – it’s a survival mechanism for companies that can no longer rely on the stability of cross-strait economic relations.
Vietnam has emerged as a particularly attractive alternative, offering many of the same cost advantages that originally drew Taiwanese businesses to mainland China. The country’s growing manufacturing sector, improving infrastructure, and political stability make it an appealing destination for Taiwan’s entrepreneurs seeking to reduce their China exposure.
Thailand, with its established industrial base and favorable investment policies, has also become a magnet for Taiwanese companies looking to hedge their bets. The Southeast Asian nation offers Taiwan’s entrepreneurs in China a way to maintain their regional presence while reducing political risk.
The Economic Stakes: More Than Just Business
The movement of Taiwan’s entrepreneurs away from China carries implications that extend far beyond individual company balance sheets. These businesses have been crucial bridges between the two sides of the Taiwan Strait, creating personal relationships and economic interdependencies that helped maintain relative stability even during political tensions.
According to a survey conducted by the Center for Strategic and International Studies (CSIS) in 2022, over 70 percent of Taiwanese companies stated that Taiwan needed to reduce its economic dependence on China. This sentiment reflects a broader recognition that economic integration, while profitable, has created vulnerabilities that political tensions can exploit.
Challenges Beyond Politics
Taiwan’s entrepreneurs in China face multiple pressures beyond cross-strait tensions. Companies also faced rising costs for inputs, including labor and electricity. These challenges were further exacerbated by the COVID-19 pandemic, during which China’s zero-COVID policy forced companies and individuals to navigate substantial logistical and financial barriers.
The combination of political uncertainty and economic challenges has created a perfect storm for Taiwanese businesses. Rising operational costs, supply chain disruptions, and regulatory uncertainty have all contributed to the decision by many Taiwan’s entrepreneurs to look beyond China for future growth.
The Human Cost of Political Tensions
Behind every business decision lies human stories. Taiwanese entrepreneurs who spent decades building their lives and businesses in China now face difficult choices about their futures. Some have children who consider China home, while others have established deep community ties that transcend politics.
The emotional toll of potentially abandoning decades of investment and relationship-building cannot be measured in financial terms alone. For many Taiwan’s entrepreneurs in China, the current situation represents not just a business challenge but a personal crisis that forces them to choose between economic opportunity and security.
Looking Forward: An Uncertain Future
The trajectory of Taiwan’s entrepreneurs in China will largely depend on broader geopolitical developments. The dynamic between the two sides is becoming more openly confrontational, exacerbating an already precarious dynamic in the Taiwan Strait.
As political tensions continue to escalate, Taiwan’s entrepreneurs find themselves at the intersection of economic opportunity and geopolitical risk. Their decisions about where to invest and expand will serve as a barometer for cross-strait relations and could influence the broader economic relationship between Taiwan and mainland China.
The story of Taiwan’s entrepreneurs in China is far from over, but it’s clear that future chapters will be written against a backdrop of increased uncertainty and heightened political tensions. The businesses that thrive will be those that can successfully navigate not just market forces, but the complex currents of cross-strait politics.
For now, the message from many Taiwanese business leaders is clear: diversification isn’t just smart business strategy – it’s essential for survival in an increasingly unpredictable geopolitical environment.
