Across China: Taiwan firms' confidence in mainland market

After less than a year of preparation, Taiwan's baking ingredient producer Namchow Group has entered the final stage of setting up a new branch in Chongqing.

It will be the company's sixth branch on the Chinese mainland, but the first in the western regions.

Founded in 1952, Namchow Group, which produces and sells oils and fats, cream, frozen dough, and other ingredients, first waded into the mainland market in 1996. It has set up five branches in Tianjin, Shanghai and Guangzhou, all in coastal areas.

SEIZING OPPORTUNITIES

Since the Belt and Road Initiative was proposed by the country in 2013 to build a trade and infrastructure network connecting Asia with Europe and Africa, inland regions have sped up the building of infrastructure.

In mid-May 2016, the Association for Relations Across the Taiwan Straits arranged a business delegation from Taiwan to visit Sichuan, Chongqing and Guangxi. The mazes of cranes and concrete -- all signs of Belt and Road Initiative construction -- astonished the 20-some representatives from Taiwan's business circles.

Chen Cheng-Wen, vice president at Namchow Group, said the trip strengthened his confidence in investing in western regions.

"Here I saw with my own eyes that western regions are on the rise and more and more areas have shaken off poverty. Cities hustled and bustled just like those in coastal areas," Chen told Xinhua.

"The Belt and Road Initiative has made the western regions the new frontline in opening up, offering great opportunities," said Chen.

Namchow Group decided to set up a new branch in Chongqing. Chen's confidence in the decision was not only built on what he saw during his tour but also on careful calculations.

Over the past several years, southwestern regions on the mainland have taken the lead in regional economic performance amid economic downturn pressure, and Chongqing has maintained double-digit growth for four consecutive years.

Last year, with its GDP reaching 1.76 trillion yuan (around 254.36 billion U.S. dollars), Chongqing posted a 10.7-percent growth.

However, sales in the southwestern regions accounted for merely 12 percent of Namchow Group's total on the mainland, according to Chen. "There is huge untapped market potential in the western part of the mainland, especially in Chongqing."

Location was another top factor for Chen and his company when choosing the city. Situated along the upper reaches of the Yangtze River, Chongqing is a transport hub with an extensive network of railways, highways, and inland waterways.

In 2016, the Yuxinou (Chongqing-Xinjiang-Europe) Railway opened to connect Chongqing and Duisburg in Germany, which, along with other transportation projects launched under the Belt and Road Initiative, aims to support business and trade along the new silk road.

The Yuxinou Railway will carry Namchow's raw dairy materials from European producers to the inland area in around 14 days, compared to more than a month through the existing land-and-sea route.

The railway will save the company time and money while helping keep dairy products fresh and improving efficiency, Chen explained, adding that authorities in western regions have offered services that are as good and as professional as their counterparts in coastal areas, if not better.

A logistics warehouse for Namchow Groups's Chongqing branch has opened and a technology center has also been set up. The company is also considering building its first factory in western regions in Chongqing.

"The Chongqing branch will serve as a pivot for our group in expanding business in the western regions," Chen said.

CONFIDENCE AND DETERMINATION

Namchow Group's decision to enter the mainland's western market came when Taiwan's Democratic Progressive Party came to power and refused to recognize the 1992 Consensus, which embodies the one-China principle -- a refusal that has sabotaged cross-Strait exchanges and cooperation.

"Political factors won't change the fact that the economies of both sides of the Strait are highly interdependent," said Chen, adding political change on the island will not shake Namchow Group's confidence and determination to invest in the mainland.

"The mainland market, which has contributed more than half of our total business and profits, is too enormous to be ignored," he said.

Chen said the current Democratic Progressive Party administration has encouraged local enterprises to invest in southeast Asia. "We cannot part with the mainland even if we invest in southeast Asia," said Chen.

"Even though Namchow Group set up factories in Thailand in 1989, it has always been the mainland market that matters most to us," said Chen.

Chou Chien-fu, general manager of TXC (Chongqing) Corporation, was also upbeat about his company's future in the mainland as it had increased investment in western regions.

"Mainland has, as always, facilitated Taiwan companies' development here, and helped solve difficulties," Chou said. "We will not give up the mainland market."

According to official figures, 81 enterprises with financing from Taiwan were established in Chongqing last year, a year-on-year increase of 58.8 percent. The used investment from Taiwan stood at 200 million U.S. dollars, up 29 percent from 2015. Endi