Introduction

Due to cheap Chinese labour, and Chinese governmental encouragement, Taiwanese businesses started to invest in China ¹ at the beginning of the 1980s. ² However, before the government of Taiwan lifted martial law in 1987, ³ business people were completely prohibited from investing in China. After lifting martial law, the Taiwanese government ⁴ gradually released the controls on investment in China. ⁵ Nevertheless Taiwanese business people still needed to transit through a third area or country, most of the time Hong Kong or Macau, to invest in China. Therefore, in this research, the starting point of Taiwanese investment in China is the milestone year of 1987. The types of Taiwanese investment around the end of the 1980s were mainly in traditional manufacturing. However, from the 1990s, Taiwanese investors in China no longer focused only on the advantages of cheap Chinese labour or natural resources. Increasing numbers of large Taiwanese companies came to China because a more sophisticated industrial environment had been created. ⁶ The end of the ‘Temporary Provisions Effective during the Period of Communist Rebellion’ ⁷ announced by then President Lee Teng-hui on 1 May 1991 also encouraged more Taiwanese investors to enter the Chinese market. ⁸