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SECTION FOUR • Investment Ties
Prospects for Taiwanese FDI in California
and Los Angeles County
Taiwanese companies are currently investing heavily in East Asia,
and future investment flows are projected to occur in Mainland
China and Southeast Asia. Future Taiwanese investment is also
expected to grow in the U.S., with a large percentage taking
place in California and in Los Angeles County.
Taiwanese companies are looking to the U.S. as an attractive
area for investment for many reasons. First, the U.S. is the largest
domestic market in the world. Second, the U.S. market presents
few of the challenges that are major issues in other worldwide
markets, notably those related to the rule of law, transparency
and political risk. Third, setting up abroad allows companies to
avoid the obstacles associated with trade disputes. Finally, the
Taiwanese have an abundance of U.S. dollars in reserves.
With its location, its large population and large economic base,
California has the most to gain from the next wave of investment
as Taiwanese companies. With 18 million residents in it fivecounty
metropolitan area, no other county in the U.S. has a
larger regional consumer market than Los Angeles County. Los
Angeles County possesses other assets that will attract Taiwanese
investment, as well. The first is its transportation infrastructure,
which includes the ports, rails, intermodal resources, established
logistics and Los Angeles International Airport. The second is
the collection of world class universities and R&D talent pool
populated by thousands of Taiwanese students. Other factors
that should entice Taiwanese investors to L.A. County include
the largest established Taiwanese community in the U.S., the
local Taiwanese language capabilities and the cultural ties.
These should provide familiarity and comfort for concerned
investors. The key is to identify industry clusters in L.A. County
that will attract future Taiwanese investment.
Going forward informed observers believe investments will
be made in the green/clean technology industries like electric
vehicles, and renewable energy like solar & wind energy.
Biotechnology will be another key area. Also, medical devices
and pharmaceuticals have been targeted for investment by
both the government and private sector in Taiwan. Other key
industries that are likely to attract Taiwanese investment include
tourism, food, culture and creativity. In addition, other FDI
Prospects from Taiwan in LA County include: medical tourism,
logistics, and digital media.
According to most observers, Taiwanese investment will come
in the form of technology, sales and service, distribution centers
and research and development facilities. These investments are
expected to promote crucial innovation to remain competitive
with Korean and Japanese firms. Investment will have to
include sales and service offices in order to provide effective
customer service. Distribution centers are expected to draw
much attention by Taiwanese companies looking to expand into
the U.S., Western U.S., California and Southern California.
Finally, the FDI will also come in the form of regional headquarters
(U.S. or North American). This is already the case for several
Taiwanese companies, including Taiwan Semiconductor
Corporation, Brighton Best (Ta Chen International) and AXIOM
Technology.
Many industrial Taiwanese companies have been
successful in investing overseas. In fact, Taiwan has the
highest intensity of patents approved in the U.S. Patent
Trade Office, as measured by the number of U.S. patents
divided by the population of the country of origin. As such,
there are many opportunities for technological cooperation
between companies in Taiwan and Los Angeles County.
This is an important feature of the investment relationship
between Taiwan and Los Angeles County. It is incumbent
upon both sides to pay more attention to fostering this
existing relationship.
LOS ANGELES COUNTY ECONOMIC DEVELOPMENT CORPORATION 37