q6ew5du

SECTION FOUR • Investment Ties
Taiwanese FDI Outflows
Between 2000 and 2012, Taiwan’s outbound investment
amounted to $165 billion, more than four times the level of
inbound investment ($40 billion). Taiwan’s role in global supply
chains has had a great impact on its FDI outflows over the past
10 to 20 years. Due to an increase in domestic land prices and
wages, Taiwan began to move production to other countries in
Southeast Asia and into Mainland China. The major transition
into Mainland China ensued roughly 15 years ago as Taiwan
attempted to take advantage of Mainland China’s rapid growth.
Global consumer demand for Taiwanese goods was also
growing significantly, particularly from the U.S. and Europe as
part of the lead up to the Great Recession.
Since 2000, U.S. trade data with Taiwan has been greatly
distorted by Taiwanese FDI outflows to Mainland China. The
trade relationship between the U.S. and Taiwan should be viewed
as a three-way relationship that also includes Mainland China,
because so much Taiwanese computer production has moved
to Mainland China in recent years. This has had a significant
impact on U.S.-Taiwan, California-Taiwan and most importantly
on Los Angeles Customs District-Taiwan trade ties. Data from
Taiwan’s Ministry of Economic Affairs supports this premise. The
export order figures from Taiwanese manufacturers and traders
demonstrate that orders are much larger than the reported
level of annual U.S. imports from Taiwan. For example, U.S.
imports from Taiwan in 2013 were roughly $38 billion while
U.S. companies placed export orders from Taiwan worth over
$107 billion. This has been the trend for over the past decade.
The largest component of U.S. imports from Mainland China
is computers products and parts, a large percentage of which
originates from Taiwanese firms that have invested into
Mainland China. Over the past 14 years this has become quite
commonplace. U.S. companies such as Dell, HP, and Apple are
the big buyers of ICT products made by Taiwanese firms. For
example, most of Apple’s products are assembled in Mainland
China by Taiwanese companies using imported parts. Based
on the most recent data from the Taiwanese government,
the percentage of Taiwanese export orders that were related
to overseas production occurring in Mainland China increased
from only 13% in 2000 to nearly 52% in 2013.
Having the largest Taiwanese community and consumer
market in the U.S., the likelihood of Taiwanese investment in
Los Angeles County is high. In addition, the region is leading
the way in transforming itself into a “green economy”. Taiwan
has become keen on green industries and should find many
investment opportunities in Los Angeles County.
Currently, Taiwan’s FDI in the U.S. is disproportionately small
relative to the amount of its trade with the U.S. This could change
in the coming years as the Taiwanese have an overabundance
of reserves that will most likely end up in the U.S. and other
developed economies. The Los Angeles area has developed
into Taiwan’s gateway to the U.S. and the U.S.’s gateway to
Taiwan. As highlighted above in the Trade Ties section, the
Los Angeles Customs District’s fourth largest trading partner
is Taiwan. LAEDC research suggests that Taiwan ranks as one
of the top ten leading sources of foreign direct investment
into Los Angeles County. This ranking has moved up over the
past few years and it should continue to move higher in the
coming years.
Majority of Taiwanese Investment Originates
from the following Special Municipalities:
• Taipei-Keelung Metropolitan Area – includes
Taipei, New Taipei and Keelung -- capital and
home to the largest metropolitan area in Taiwan
– largest economy in Taiwan – political, economic
and cultural center of Taiwan
• Kaohsiung – 2nd largest economy in Taiwan and
economic center of Southern Taiwan
• Taichung City – 3rd largest city in Taiwan –
includes an Industrial Zone in Xitun District –
major manufacturer of bicycles and sporting goods
• Tainan City – oldest city in Taiwan – population
of roughly 2 million – the establishment of the
Southern Taiwan Science Park in 1995 transformed
the region into a major high-tech industrial hub
Taiwanese FDI Outflows to California
Taiwan has made more investments into California than any
other state in the U.S. In fact, more than 800 Taiwanese
companies have some sort of investment in the state. Of course,
a large percentage of that investment is related to the linkages
between the Taiwanese ICT industry and the Silicon Valley.
California has attracted Taiwanese investment from multiple
sectors over the past 30 years. The most significant amount
of investment has come from technology companies such
as Taiwan Semiconductor Manufacturing Company, Foxconn
Technology Group and Acer. Foxconn plays a substantial role
in the production of Apple products such as the iPad, iPhone
and the iPod. While investments related to the ICT industry
LOS ANGELES COUNTY ECONOMIC DEVELOPMENT CORPORATION 35