Ever since the State Council issued Regulations on Encouraging the Investment from Taiwan Compatriots and Notice on the Issues Concerning the Implementation of the Regulations on Encouraging the Investment from Taiwan Compatriots, the work of attracting Taiwan investment in Shanghai has undergone a new round of development under the joint efforts of all the relevant departments. Till the end of this September, altogether 103 Taiwan enterprises have already obtained the Approval Certificates issued by the Municipal Government and gained the approval of the relevant districts, counties, and bureaus on starting new projects. The contracted fund have reached over $226million,and that from Taiwan investment is over$100million.Among that 55 projects have a total investment of over $1million, 94% enterprises are export processing oriented; 25 enterprises have completed construction and gone into operation and 16 enterprises have started export trade. From January to October this year, the number of Taiwan compatriots that travel, visit relatives or conduct business in Shanghai has reached 140000, more than that of the last whole year. Earlier the Taiwan manufacturers that come to Shanghai to acquaint themselves with the investment environment were mainly owners of small or medium-sized enterprises and were on separate travel, now they are organized by the Craft Union according to the location and the business scope of their enterprises and then come in groups to have communication with their Shanghai counterparts in the same business circle. The investment range has also expanded from light industry and textile to electronics and raw materials; the investment forms have developed from joint ventures to ventures exclusively with Taiwan manufacturers¡¯ investment. Currently owners of some large enterprises have made investment, set up enterprises and entered the negotiation of cooperative projects in Shanghai. The main problems in the work of attracting Taiwan investment are as follows: many departments haven¡¯t fully realized the significance of the work, and thus can¡¯t carry out it in a balanced way. The weak points that need to be remedied and improved exist in the sectors including reception, consultation service, investment guidance and management of the already existing Taiwan-invested enterprises. The following opinions are given for further conducting the work of attracting Taiwan investment:

 1.       We should fully realize the significance of the work of attracting investment from Taiwan and include it on the agenda.    

The work of actively expanding the economic and technological cooperation between the mainland and the Taiwan area and attracting Taiwan compatriots to make investment in the mainland will play a significant role in strengthening the contacts between the Chinese people across the Taiwan Strait, in enhancing the warm feelings of Taiwan compatriots towards the mainland, in cracking down on the tendency of separation inside the Taiwan Island, in promoting the mutual prosperity of both the mainland and Taiwan economy and in pushing forward the Peaceful reunification of China. Although Taiwan authority still stick to the Three No's policy of ¡° no contact, no negotiations and no compromises¡±, an increasing number of Taiwan manufacturers who have already invested in the Southeast Asia or the Middle and South America come to the mainland to explore the investment market due to the erosion of the investment environment, the lack of labor and the growth of cost inside the Taiwan Island. By comparison many of them think that the mainland is geographically close to Taiwan and is possessed with the unique investment conditions in language, customs, and the tie of blood, and that shanghai is unmatched in its comprehensive advantages in industry, technology and labor quality. Therefore, great potential exists in expanding economic and trade relations between Shanghai and Taiwan. According to the estimation of Taiwan manufacturers, the next one to two years will be the prime period to expanding outside-investment. All the relevant departments should, under the guidance of the spirit of the 5th full session of the 13th Party Congress, seize this favorable opportunity, intensify the direction on the work of attracting Taiwan investment, continue to accumulate experience, and timely tackle the problem involved so as to better serve the drive of promoting the peaceful unification of China, of pacing up the rise of Shanghai and of enhancing the development of the export-oriented economy.   

2. We should strengthen the centralized management and manage work division and cooperation.

The work of attracting Taiwan investment is policy-concerned and wide-ranging, all the relevant departments must earnestly implement the principles and policies made by the Central Party Committee and the State Council on the Taiwan issues, strengthen cooperation, and make joint efforts to conduct the work in accordance with their share of duties. The Municipal Planning Committee, the Municipal Foreign Investment Committee, the Municipal Foreign Economic Relations and Trade Committee and the Municipal Office on Taiwan Issues should respectively designate a department with department director to take charge of this work. All these designated departments, with the Municipal Office on Taiwan Issues taking the lead, should exchange information, elaborate on the current situation and work out countermeasures. Also the cadres involved in this field should obtain the related policy and work training on attracting Taiwan investment.

   The Municipal Planning Committee is responsible for directing the plan of attracting Taiwan Investment. The investment of Taiwan manufacturers and the counterpart funding should be put in to the plan of fixed assets investment and the plan of credit and loan respectively. 

The Municipal Foreign Investment Committee and the Municipal Foreign Economic relations and Trade Committee are responsible for the relevant management, examination and coordination on the projects of Taiwan investment including negotiation, project starting, contract signing, contract examining, contract honoring, and centralized management. The Municipal Office on Taiwan Issues are responsible for supervising the implementation of the principles and polices on Taiwan issues and the identification verifying of Taiwan investors, for accumulating and analyzing the information on Taiwan investment on a regular basis, for making research on the investment polices to the mainland made by the Taiwan authority and on the credit of Taiwan investors, for participating in the decision-making process of the investment on key projects, and for making suggestions to be approved by the Municipal Party Committee and the Municipal Government after discussing with the related departments .   

When report the Taiwan enterprises for approval, all the relevant departments should present the report to the examination and approval departments concerned, dispatch them to the related administrative departments and also send the duplicates to the Municipal Office on Taiwan Issues at the same time. All the departments are asked to inform the Municipal Office on Taiwan Issues of the progress and the feedback of the reception work of Taiwan manufacturers. 

3. We should earnestly conduct the consultant service and make efforts to improve the investment environment

For a long time, many Taiwan manufacturers hold misgivings about investment in the mainland due to the anti-the-Communist-Party propaganda by the Taiwan authority. Even those who have already made investment and set up enterprises in the mainland still take a cautious move. Therefore, the successful management of consultant service plays an important role in improving the investment environment. It becomes increasingly urgent to assure Taiwan manufacturers of investing in the mainland in a time when the Taiwan authority go all out to spread rumors to degrade the images of the mainland since the Beijing anti-revolutionary riot and regional turmoil happened. 

We should work hard to dispel Taiwan manufacturers¡¯ scruples that we would change our policies frequently and would not act in accordance with the contract. We reiterate that the Party¡¯s Taiwan Policy of ¡°peaceful reunification and one country, two system¡± will remain unchanged, the economic and trade policies towards Taiwan remain stable, and all the polices to promote the exchange of visit and communication across the Taiwan Strait will be the same as before. All the departments involved in the reception work should be devoted, considerate, civilized and honest. They should, in accordance with the relevant policies, provide convenience for Taiwan investors including familiaring them with the investment environment, and helping them find suitable partners so as to display our spiritual and moral advancement. 

In order to help Taiwan investors out of the partner-searching toil we have asked the Consultant Service Center for Taiwan Investors at Yongfeng Trade Development Corpration (publicly called as Yongfeng Service Center for Taiwan Investors) to be in charge of the consultant work according to the different requirements of the Taiwan investors. The center should work together with the related economic and trade departments at the local districts, counties, and bureaus, the functional departments on Taiwan issues, as well as the related societies including the Enterprise Management Society to construct the information network, timely offer the information on the investment intention of Taiwan investors so as to smoothly carry out the investment-attracting work.

All the departments, such as personnel, labor, financial, fiscal, taxing, industrial and commercial, energy, communication, public securities, customs, commodity inspection, foreign transportation, insurance, and judicial, should include the work of attracting Taiwan investment in their work scope. They should ensure qualified service, uplift efficiency, and adopt the equal-treatment policy so as to achieve more in attracting Taiwan investors to Shanghai.

4. We should carefully conduct the identification verifying work of Taiwan investors in accordance with the provisions made by the State Council.

Notice of The State Council on the Issues Concerning the Implementation of the Regulations on Encouraging the Investment of Taiwan Compatriots points out that the Taiwan investors include companies or enterprises set up by Taiwan compatriots inside Taiwan or abroad, joint ventures set up by Taiwan compatriots or Foreign manufacturers inside Taiwan or abroad, and the Taiwan compatriots who live in Taiwan or abroad and invest in their own names.

A Taiwan investor who makes investment in the mainland in the name of a company or enterprise should present one of the following certificates:

1.         A duplicate of his business license;

2.         The certificate issued by a Chinese embassy or consulate abroad;

3.         The related certificate issued by a foreign government;

4.         The certificate issued by a notary organ;

A Taiwan compatriot who invest in the mainland in his own name should present one of the following certificates:   

1.       The registered residence card

2.       The identification card or other document that is the proof of his identification

In order to break the restriction of the Taiwan authority, currently many Taiwan manufacturers set up enterprises in a third area and then invest in Shanghai with their identification in that area. Therefore, to prevent any fraudulent conduct, the departments responsible for attracting Taiwan investment should carefully conduct the testing work by keeping a close eye to the issuing time of Taiwan investors¡¯ certificates and the performance of their enterprises based in Taiwan or abroad. Meanwhile, they should ask Taiwan investors to present their statements of assets and liabilities for the past two years. The Municipal Office on Taiwan Issues should offer help in this regard. All these related departments should, when reporting projects to be approved by the higher authorities, present the materials proof of the companies or enterprises and personal identifications given by Taiwan investors.

5. We should direct the investment orientation appropriately by selecting favorable investors and avoiding blind act.

The departments responsible for the investment-attracting work should act in line with the state industrial policies and the related rules on investment orientation. The behavior of drawing all the investment without serious consideration and blindly pursuing the quantity should be avoided. These departments should incorporate the work with economic restructuring, old-enterprises transforming, and export development so as to maintain a self-balancing foreign currency reserve. Priority should be given to the projects that can enhance the product standard and can expand export, the projects that can introduce the advanced technology and management, the projects that are in need of raw materials and the projects that possess two of the above-mentioned features.

All the related departments should conduct the cooperative projects involved in the municipal industrial system according to the Opinions on the Restructuring of the Municipal Industrial System in This Year and Next Year made by the Municipal Planning Committee, the Municipal Economic Committee and the Municipal Economic Research Center. As to the projects restricted or forbidden by the state or regional governments, they should not sign the agreements of the investment intention in case that that could not be approved by the higher authorities and would misinterpreted by Taiwan manufacturers as ¡°The mainland¡¯s policies are in constant change.¡± 

Many owners of the small and medium-sized enterprises¡¯ from Taiwan are now making short-term investment in Shanghai. When cooperating with us, they raise the price of the invested equipments and of the import raw materials while force down the price of the export products. So when signing the contracts all the related departments should make enquiry and compare the price carefully to avoid making hasty decision.

6. We should successfully manage the already existing Taiwan-funded enterprises to set models for further investment- attracting work.

All the related departments should earnestly implement the state laws and rules on encouraging the investment of Taiwan compatriots and help Taiwan-funded enterprises solve their problems, offer service for production management as well as for their daily life, and also provide immigration convenience. Except the tax required by the state, any behavior of collecting tax and fee from or imposing arbitrary charges on Taiwan manufacturers in various names is not allowed. The departments involved should practically safeguard the personal and property security, the legal rights and the normal business function of the Taiwan manufacturers who invest or are engaged in other legal activities in the mainland. Any department or person that breaks the above-mentioned policies will be found out and punished.  

Any Taiwan manufacturer who wants to invest in Shanghai should stick to the policy of equality and mutual benefit. All the exclusively Taiwan-funded enterprises, equity joint ventures and cooperative joint ventures should, apart from implementing Regulations of the State Council on Encouraging the Investment of Taiwan Compatriots, act by reference to Law on Wholly Foreign-owned Enterprises, Law on Sino-Foreign Equity Joint Ventures and Law on Sino-foreign Cooperative Joint Ventures, and enjoy the correspondent treatment for foreign-funded enterprises. Also if the condition permits, Taiwan investors are allowed to apply to establish associations for the Taiwan manufacturers in Shanghai according to the rules of the State Council.

7. We should strengthen the political education among the mainland employees at Taiwan-funded enterprises in order to prevent the political infiltration of the Taiwan authority.

The vast majority of the Taiwan manufacturers who invest in the mainland conduct normal business, and only a few of them, arranged and incited by the Taiwan authority, come here with the aim of collaborating with our enemies to instigate rebellion or are engaged in other illegal activities in the mainland. Nevertheless, we should be clearly aware of the fact that with the expanding communication across the Taiwan Strait, the Taiwan authority, by making use of the public and legal communication, tries every means to infiltrate us politically and spread the so-called ¡°Taiwan experience¡±, for which we should be always on the alert. We should enhance the anti-infiltration and anti-corruption education among the employees at Taiwan-funded enterprises, be on guard against all forms of espionage of the spies sent by the Taiwan authority including collaboration, rebellion instigation, psychological war, information collecting as well as other illegal activities conducted by means of religion or secret societies, and also vigilantly prevent the Taiwan authority from spreading the so-called ¡°Taiwan experience¡± by means of the correspondence between Taiwan and Taiwan-funded enterprises based in the mainland. Therefore all the related departments should choose the cadres who are both politically and professionally strong-minded to be the representatives for our side. They should, in developing cooperative relations with Taiwan manufacturers, stick to the principles while flexibly using the strategies; safeguard the legal rights of Taiwan investors in the mainland while making sure that they obey our laws and rules concerned.

All the Taiwan investors that make direct investment in Shanghai with Taiwan trade names cannot use the name of ¡°the Republic of China¡± in signing agreements and contracts. The names of the units in cooperation can be used for both parties in Shanghai and Taiwan.

All the related departments should take over the ¡°psychological war materials¡± that brought into Tai-wan funded enterprises by Taiwan manufacturers and send them to the public security departments without delay instead of hiding or circulating them. Any crime or violation of law committed by Taiwan manufactures should be reported to the departments in charge promptly for the further investigation and handling in accordance with law.

8. We should further stick to the principle of ¡° do and don¡¯t say it¡± so as to ensure the securities of the Taiwan manufacturers that invest in Shanghai.

Currently as the Taiwan authority impose various restrictions on the Taiwan manufacturers that invest in the mainland, we should further stick to the principle of ¡° do and don¡¯t say it¡± in order to protect the Taiwan manufacturers that make invest in Shanghai from being investigated and punished by the Taiwan authority.

 (1) Without the approval of the Municipal Office on Taiwan Issues, no journalistic departments are permitted to report any information on the investment and on the technological cooperation with Taiwan manufacturers in shanghai (including information of the projects, capital and names of Taiwan manufacturers), also leaders of all levels should not publicize the investment information of Taiwan manufacturers in their public speeches.

 (2) Except the related economic and trade departments, departments in charge of Taiwan issues and both parties in an equity joint venture or a cooperative joint venture that need the certificates of Taiwan investors to conduct examination and approval work, all the other departments are not permitted to ask for credit materials from Taiwan manufacturers. 

     (3) The industrial and commercial departments are not allowed to publish in newspapers the name of the registered Taiwan-funded enterprises, the name of the Taiwan manufacturers and the registered capital.

 (4) The departments that will set up relevant cooperative institutions with Taiwan fiscal and financial circles should carefully carry out the confidential work.

9. We should strengthen the investigation and research work and strictly maintain the report system.

All the departments should earnestly implement Regulations of the State Council on Encouraging the Investment of Taiwan Compatriots. Should any new situation or problem arise, especially that about investment field or investment style, the related departments should promptly report it to the authorities concerned instead of acting out of their own will. The request and report system should be standardized. Meanwhile the authorities concerned should, according to the investigation and research they have made and the experience the Shanghai Government has accumulated in the work of attracting Taiwan investment, voluntarily report the relevant information and their suggestions to the related departments in charge under the State Council.       

If all the opinions given above are appropriate, please grant them approval and send them to the governments of all the districts and counties, and all the governmental committees, offices and bureaus to be implemented.

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