Taiwan considers opening arms to China for panel makers

The Taiwanese government has hinted that it will begin a review surrounding the tight policies panel makers face when it comes to making mergers, acquisitions or equity involvement in China.

Whispers are Taiwan’s Ministry of Economic Affairs (MOEA) says the policies are stumping the competitiveness of Taiwanese panel makers.

AU Optronics (AUO) and Chimei Innolux (CMI) are, according to Digitimes,  happy to see the government loosen up its position. AUO has been pushing for the government to speed up the review process, while CMI said it will withhold comment until actual results of the review are announced.

AUO received the green light from the government and will become the first Taiwanese panel maker to set up a 7.5G plant in China. However, it’s still struggling to keep up with the likes of Korea-based panel makers Samsung and LG  which are both soaring.

This is because the Taiwanese government requests production plants in China to be brand new, which eliminates AUO’s opportunity to gain a production plant through investment. AUO’s 7.5G plant was scheduled to start mass production in May 2012 but has now been delayed to the second half, or fourth quarter of 2011, which is far behind schedule compared to Korean competition.

Negotiations between Taiwan and China have always been long and complicated and it’s been difficult in the past for Taiwanese companies to make deals with those across the strait, on mainland China.

In September legislation saw both countries sign the Economic Cooperation Framework Agreement (ECFA), a bilateral trade agreement which would in theory  make Taiwan a new gateway to China. The ECFA, is the latest, and the most significant, instalment in a series of cross-strait agreements signed between Taiwan and China over the past few years. The idea is to foster closer economic relationships between either side of the Strait.

While panel makers claw toward Chinese investment, according to Taiwan Economic News,  the big bucks in Taiwan’s economy will be in the consumption and services industry,

Christina Liu, minister of the Cabinet-level Economic Planning and Development (CEPD) said that 2011 will be a year of consumption. As a result she urged companies to raise pay. She added that the service industry will be central to economic development, due to its ability to create the largest number of job vacancies.

She said that the government would fiercely  promote 10 focal service businesses, via high-profile events. The industries targeted include international medical treatment, music and digital content, Chinese-language e-commerce, global logistics, convention and exhibition, urban renewable, WiMAX, export of education, and “hi-tech and innovation” industries.