Cross-Strait Economic Relations and China’s Rise: The Case of the IT Sector

This chapter discusses whether Taiwan can still maintain its existing position in cross-Strait economic relations within the new context of the rise of China’s economic power. This chapter argues that Taiwan’s OEM model of manufacturing is now facing a dual threat in the form of shrinking profit margins and the rise of Chinese domestic manufacturers. The OBM model of IT production is constrained by the lack of marketing and global logistics capabilities. Moreover, Taiwan’s domestic politics deter the interflows of advanced talent between Taiwan and China. The advantage of “made in China, by Taiwan” model of IT manufacturing is gradually diminishing. All in all, the China factor will be a key component for Taiwan’s global strategies of development. Understanding the risks and opportunities of the rise of China from a global instead of bilateral aspect will help illuminate the roadmap of Taiwan’s future growth and prosperity.