It is a sizzling day in July. Inside the human resources office on the 4th floor of the Fubon Property Insurance Company in Xiamen, new employees are receiving training on insurance services from Taiwan lecturers.

Expecting to start its business this year, Fubon is the first property insurance enterprise admitted into Chinese mainland from Taiwan.

The Xiamen municipal government declared officially this July that the city is to construct a regional financial service centre for the Straits, attracting more financial enterprises from Taiwan to Xiamen. For such a newly expanded special economic zone like Xiamen, this is an important step for the city to become head of the economic zones on the west coast of Taiwan Straits, after ECFA (Economic Cooperation Framework Agreement of Chinese mainland and Taiwan) was signed by both sides.

In addition to the financial industry, Xiamen made another breakthrough by introducing insurance corporate bodies from Taiwan. Xiamen Construction & Development Inc founded King Dragon Life Insurance Co Ltd, a joint venture insurance company with Taiwan Life Insurance Co Ltd, in 2008. It took only one year to start business of King Dragon from applying for official approvals. Xiamen Insurance Regulatory Bureau introduced Fubon Financial Holding Co from Taiwan to build headquarters of property insurance company in Xiamen.

According to Zeng Fanjing, general manger of Cathay Insurance's branch in Fujian, Fubon's property business in Xiamen can be officially started after it passes the check of Xiamen Insurance Regulatory Bureau. By then, it will be the first Taiwan-owned property insurance cooperate body in Fujian province.

Led by Xiamen, financial cooperation between Fujian and Taiwan has started gradually. The Fuzhou Commercial Bank was renamed Straits Bank in December 2009. It is expected to develop into a regional or even national bank through expansion of its branch networks and strategic cooperation across the Straits.

Chen Yuejin, vice-director of Financial Office of Xiamen municipal government says: "We have been thinking of establishing a financial cooperation test site for the Chinese mainland and Taiwan for a long time. Relevant surveys and academic researches have been ongoing for some years."

According to plans of the Xiamen municipal government, the guiding principle of building the financial service centre is that the test site will be expanded on the basis of individual cases to explore the possibilities of launching further concrete financial reforms, including setting up the first RMB settlement service for trade across the Straits, building a counter trade market and promoting financial business for Taiwan.

Tang Yonghong, vice-director of the Economic Research Office of the Taiwan Research Institute, Xiamen University, indicates that the number of financial agencies from Taiwan and their performance have increased phenomenally since free financial policies were implemented. The competition on the island results in a shrinking share of profit for each. Jumping out of the island has thus become an internal requirement of the development for Taiwan financial business.

Regarding the regional financial service centre being constructed in Xiamen, Zeng Qinzhao, chairman of the Association of Taiwan Investment Enterprises says financing has long been a problem for small and medium Taiwan enterprises in Xiamen. Financial industry from Taiwan should take the lead in providing financial support for Taiwan businesses in Xiamen, helping them overcome difficulties.

Professor Li Fei, vice-director of Taiwan Research Institute of Xiamen University says: "Some medium and small businesses turn to underground finance when they cannot get enough financing services from legal financial institutions." He also reveals that the annual nongovernmental borrowing amounts to 40 billion yuan (US$5.9 billion) in Fujian, by the conservatively estimated 4 to 5 percent of legal financed businesses.

(China Daily September 7, 2010)