The rising red supply chain in mainland China and the cross-strait cooperation

[TaiShang]

First cross-strait full-service securities firm to be launched
07 31 , 2015

TAIPEI -- The board of directors of Taiwan-based CTBC Financial Holding Co. on Wednesday approved a plan to partner two mainland companies in a joint venture in the China (Fujian) Pilot Free Trade Zone (FTZ).

The three parties will invest a total of 800 million yuan (130 million U.S. dollars) in what is likely to be the first cross-strait brokerage for mainland A-shares, operating as dealers and offering investment services.

Fujian Province in southeast China is a popular investment destination among Taiwan business people. With the free trade zone opening in April, the province is a core area of the 21st Century Maritime Silk Road.

CTBC will hold a 49 percent stake by contributing 392 million yuan of capital in the new venture. Its president Daniel Wu said the potential of mainland's securities market is huge, especially in margin trading, stock collateral loans and derivatives.

According to a plan released by the State Council, China's cabinet, Taiwan brokerage firms are allowed to set up two joint-stock securities companies that are granted a full-service license registered in the Fujian FTZ, with a 49 percent stake cap.

 

[AndrewJin]

First cross-strait full-service securities firm to be launched
07 31 , 2015

TAIPEI -- The board of directors of Taiwan-based CTBC Financial Holding Co. on Wednesday approved a plan to partner two mainland companies in a joint venture in the China (Fujian) Pilot Free Trade Zone (FTZ).

The three parties will invest a total of 800 million yuan (130 million U.S. dollars) in what is likely to be the first cross-strait brokerage for mainland A-shares, operating as dealers and offering investment services.

Fujian Province in southeast China is a popular investment destination among Taiwan business people. With the free trade zone opening in April, the province is a core area of the 21st Century Maritime Silk Road.

CTBC will hold a 49 percent stake by contributing 392 million yuan of capital in the new venture. Its president Daniel Wu said the potential of mainland's securities market is huge, especially in margin trading, stock collateral loans and derivatives.

According to a plan released by the State Council, China's cabinet, Taiwan brokerage firms are allowed to set up two joint-stock securities companies that are granted a full-service license registered in the Fujian FTZ, with a 49 percent stake cap.

 

[TaiShang]

Chinese mainland to issue electronic travel passes to Taiwan Province visitors

 

[AndrewJin]

i failed to get any of the tags lately, must be sth. wrong with the system.

anyways this is a very interesting topic. good thread Andrew!

Long time no see @Yizhi

 

[AndrewJin]

More to Taiwan's economic downturn than red supply chain
@TaiShang
Many have been nervous about the rise of China, with such sentiments rising sharply recently. Those who feel this way probably grew up in the generation which saw China grow economically, or have been misled by anti-China media. This can stem from a lack of sufficent propaganda on the part of China in order to promote itself.

First, we at China Times would like to discuss the claim that Taiwan's economy has relied too heavily on mainland China, and now with the emergence of China's red supply chain, this is threatened. We say that it is an unfortunate reality that as long as the country's economy continues to behave poorly, many will point their fingers at China as it is Taiwan's biggest export market, and also relaies on many Chinese exports. Some claim that if Taiwan pivoted its main export markets towards Europe, the United States or Japan, its economy would be better off. This, to us, shows a total a lack of knowledge on economic situations, and a lack of understanding in regards to the international division of labor.

Our editorials have mentioned several times that Taiwan and South Korea are parts of the East Asian chains of division of labor, with the two importing key parts and components, processing them into semi-finished products and exporting them to China which after some touches, exports these finished products to Europe, the US or elsewhere. Many big name brands, such as iPhone, HP, Nike, Zara and Uniqlo use just such a model. This is not related to politics, but the natural result of business evolution.

By the logic which we just presented, you will find that the notion of Taiwan's over-dependence on the mainland is a false issue, and the truth is that global manufacturing relies on the East Asian supply chain, which includes Taiwan, China, Korea and Japan. Thus we will now make a leap of reason here and say that if we want Taiwan's exports not to rely too much on the mainland, the first possibility is for global manufacturing not to rely on the East Asian supply chain at all. This outlandish idea is impossible in the near term, and would be bad for Taiwan regardless. A second option would be to ask Taiwan to break away from the East Asian supply chain, but this would be the equivalent of asking Taiwan to kill itself economically.

As China's industrial development has been maturing, some say it is approaching midstream to upstream status in the supply chain whereas it had always formerly been downstream, creating friction with Taiwanese businesses which have for a long time occupied that space and taking away their edge. Many taiwanese companies which had operated in China though, now, due to high labor costs and shrinking profits due to heavy-governemnt restrictions and are moving shop to Southeast Asia. Taiwan's exports have declined this year, with many blaming it on the rise of the red supply chain in China, but we feel that few have relfected on the reason why Taiwan, which was the leader of the four Asian Tigers 20 years ago has failed have research and development breakthroughs or upgrade its industry once it entered the high-tech manufacturing sector? Or why Taiwan failed to transform itself into a network service industry from the information and communication technology industry?

But such anti-China fear-mongering has led to the emergence of the China collapse theory. Some media have recently quoted comments made in the early 1990s by US scholars such as Paul Krugman, who believed the rise of Asian nations such as China and Taiwan, was in response to strong labor forces and capital accumulation, with limited actual progress in productivity, so that when labor costs become got too high, Asian nations' high growth would take a dive.

The said theory was quite popular during the Asian financial crisis, but the period after that proved the theory wrong. It later led to a number of debates, and after analyzing data and technological progress, the theory was proven incorrect, because scholars found that in the economic growth capability of Asian nations (including Taiwan), a large portion was contributed by technological progress.

Some in taiwan also say they fear mainland funds will buy out Taiwanese companies and China will buy out Taiwan, so that whenever Taiwan stocks go down, it represents as a good chance for the mainland to conduct mergers with or acquisitions of Taiwanese firms. We feel that such a thought shows a lack of understanding of Taiwan's current system, since first-of-all, acquisitions must undergo a screening processes in a bid to ensure key technology development is kept safe and that and Taiwan side's retains a leading position. Second, Taiwan has set a ceiling for mainland funds in acquiring Taiwanese shares, so that it's impossible for them to buy out major Taiwanese firms such as AU Optronics Corp and Innolux Corp.

If people really love Taiwan, they must recognize China's rise and try to find out ways to take advantages of Taiwan's self advantages and make plans to compete on the market. If so, Taiwan still has a bright future.

 

[AndrewJin]

Commentary: China DRAM industry set to rise

China's DRAM industry is set to take a big step forward as its state-backed technology conglomerate Tsinghua Unigroup has successfully raided a senior executive from Taiwan's DRAM industry.

Charles Kau, chairman of Inotera Memories and president of Nanya Technology, is expected to join Tsinghua Unigroup soon after leaving his current positions.

Kau will serve as executive VP of Tsinghua Unigroup's global operations, steering the development of China's home-grown DRAM and NAND flash technology and production capacity, as well as the build-up of a competitive talent pool for China's DRAM sector.

While confirming Kao's resignation, Nanya said Kao's new position will be facilitating the future cooperation among cross-strait DRAM industries and Micron Technology. The company is also looking forward to cooperating with Kau to enhance market presence in the Greater China region.

With immense financial strength and government support, Tsinghua Unigroup has recently offered to buy a stake in Micro for US$230 million, an attempt which has been turned down by the US-based DRAM chipmaker.

However, Tsinghua Unigroup's hiring of Kau, chairman of Micron's Taiwan-based subsidiary Inotera Memories, seems to place Kau in a perfect position to renegotiate with Micron for technology cooperation or a eventually tie-up between the two companies.

Given that the DRAM and NAND flash industries have been heading for a downturn recently and the prospects are likely to remain sluggish in 2016, the declining memory chip prices and rising production costs could force Micron to reach some sort of ally agreement with Tsinghua Unigroup.

Some indicate that Micron and Tsinghua Unigroup will build up a 12-inch joint venture fab, with the US-based chipmaker providing DRAM and NAND flash production technologies, while Tsinghua is responsible for building up memory production capacity.

In short, such a 12-inch joint venture fab will serve as a China version of Inotera Memories established by Kau.

Thus, Kau is actually to be in charge of integrating DRAM and NAND flash production capacity in the US, China and Taiwan, enabling Micron to take on Samsung Electronics and SK Hynix, while also helping China to establish its DRAM industry.

Tsinghua Unigroup，a subsidiary of Tsinghua Holdings Co., LTD, Tsinghua Unversity

Taiwan should prepare for new wave of tech talent poaching
With the Chinese government giving full support to the development of the country's technology industry, the growing demand for professional talent is expected to drive the next wave of poaching from Taiwan by Chinese IC and flat panel design companies, said Chen Yi-kuang, chair of Taiwan's First Securities Investment Trust.

Chen issued the warning amid rumors that Charles Kao, the man considered the godfather of Taiwan's DRAM industry and chair of Inotera Memories, has been recruited by China's Tsinghua Unigroup to head its DRAM business. Kao announced this week he is standing down as president of Nanya Technology.

Tsinghua Unigroup recently acquired US memory maker Micron, which contracted much of its DRAM manufacturing to Inotera.

The most recent wave of talent poaching has been mainly driven by the relatively low price-to-earnings (P/E) ratios of domestic technology companies in Taiwan's capital market, according to Taishin Securities Investment Trust chair Andy Wu.

President Capital Management chair Park Li said the exodus of talent from Taiwan to China is due to the weak performance of Taiwanese companies and China's policy of investing huge capital and resources in the development of its semiconductor industry. Li said Chinese companies are likely to lure more Taiwanese tech talent in the future, given Taiwanese companies' lack of international perspective and comparatively low wages, and the huge size of the Chinese market.

Responding to the rumors of Kao's imminent move to China, Nanya Technology confirmed Oct. 5 that it had approved his request for retirement. It remains to be seen whether Kao will also resign from his post as chair of Inotera Memories and work to forge cooperation between Tsinghua Unigroup and Micron to help Tsinghua increase its global DRAM market share. South Korea at present holds 70% of the world DRAM market.

 

[cirr]

China's Tsinghua Unigroup Might Buy SanDisk And Toshiba

Jan David Perianes

First Posted: Oct 11, 2015 07:08 PM EDT

Sandisk's new portable solid state drives are displayed at the Sandisk booth during the 2015 Computex exhibition at the TWTC Nangang exhibition hall in Taipei, Taiwan, June 2, 2015. Credit:REUTERS/Pichi Chuang

Both giant storage manufacturers SanDisk and Toshiba are likely targets of Chinese state-owned mammoth corporation, Tsinghua Unigroup according to reports. The two veteran companies currently jointly create NAND flash technology, although reports suggest that each company have been shaky in terms of financial status. Furthermore, a subsidiary of the Tsinghua Unigroup is about to acquire a 15% stake in another storage manufacturer, Western Digital for $3.8 billion.

The news comes to a couple of months after the Tsinghua Unigroup attempted to buy American NAND manufacturer Micron but was stopped by the U.S. government in its tracks. However, the group still isn't done attempting to conquer and purchase NAND patents that are owned by storage manufacturers such as SanDisk and Toshiba as China attempts to establish a homegrown industry of NAND flash memory technology and storage devices.

The Tsinghua Unigroup has shifted their eyes towards the likes of storage manufacturers Toshiba and SanDisk is relatively simple -- both companies are now easy targets to prey on. Both companies deal in NAND flash storage manufacturing, with Toshiba recently passing through serious financial issues due to a major corruption scandal that had its CEO and its entire upper staff removed from the company.

This has resulted for Toshiba to end its TV and PC businesses to save on its financial resources. However, as the Japanese company still owns nuclear plant technologies in Japan, the Tsinghua Unigroup could be facing a bit of a fight ahead if it wants to purchase the entirety of the company.

On the other hand, the Tsinghua Unigroup seeks to build a solid NAND and DRAM industry on China through any means necessary. According to reports, The Tsinghua Unigroup offered Micron a massive amount of $23 billion in order to secure the acquisition. However, the deal was stopped ultimately by the Committee of Foreign Investment in the United States (CFIUS) due to national security concerns.

China's Tsinghua Unigroup Might Buy SanDisk And Toshiba : Gadgets & Robots : iTech Post

Tsinghua Unigroup Says It's Close to Buying Chinese Chip Company

Bloomberg News

October 11, 2015 — 8:49 AM EDT

Updated on October 12, 2015 — 1:07 AM EDT

Tsinghua Unigroup Ltd., the state-backed Chinese firm that recently agreed to buy a $3.8 billion stake in Western Digital Corp., is close to acquiring Tongfang Guoxin Electronics Co., a person familiar with the matter said.

Tsinghua Unigroup Chairman Zhao Weiguo said in an interview Sunday he was closing in on an acquisition of a chip company he founded and where he served as its first general manager, though he declined to name the target. Tongfang Guoxin, which makes oscillators and resonators that go into electronic products, fits that description.

The companies also have ties. Tongfang Guoxin’s biggest shareholder is Tsinghua Tongfang Co., a unit of Tsinghua Holdings Co. and an affiliate of closely held Tsinghua Unigroup. Shares of both Tongfang Guoxin and Tsinghua Tongfang were suspended from trading in China on Monday. Based on its last close, Tongfang Guoxin had a market value of 19.8 billion yuan ($3.1 billion).

Tongfang Guoxin said in a statement to the Shenzhen stock exchange that its controlling shareholder plans a major event involving Tsinghua Tongfang. Representatives at Tsinghua Tongfang and Tsinghua Unigroup either didn’t immediately respond to queries or declined to comment.

Emerging Dealmaker

The business arm of China’s famed Tsinghua University is emerging as one of the most acquisitive companies in the technology hardware industry. If the Western Digital deal is completed, it would be China’s biggest tech acquisition. Earlier this year, Tsinghua Unigroup expressed interest in buying U.S. memory chipmaker Micron Technology Inc., people familiar with the matter have said.

Tsinghua Unigroup accounted for two of the three largest semiconductor deals in China, acquiring Spreadtrum Communications Inc. in 2013 for $1.44 billion and RDA Microelectronics Inc. for $769.8 million the same year, according to data compiled by Bloomberg. A state-backed fund with investment from China Development Bank bought Sanan Optoelectronics Co. for $779.5 million this year, according to the data.

Tsinghua Unigroup Says It's Close to Buying Chinese Chip Company - Bloomberg Business

 

[AndrewJin]

China's Tsinghua Unigroup Might Buy SanDisk And Toshiba

Jan David Perianes

First Posted: Oct 11, 2015 07:08 PM EDT

Sandisk's new portable solid state drives are displayed at the Sandisk booth during the 2015 Computex exhibition at the TWTC Nangang exhibition hall in Taipei, Taiwan, June 2, 2015. Credit:REUTERS/Pichi Chuang

Both giant storage manufacturers SanDisk and Toshiba are likely targets of Chinese state-owned mammoth corporation, Tsinghua Unigroup according to reports. The two veteran companies currently jointly create NAND flash technology, although reports suggest that each company have been shaky in terms of financial status. Furthermore, a subsidiary of the Tsinghua Unigroup is about to acquire a 15% stake in another storage manufacturer, Western Digital for $3.8 billion.

The news comes to a couple of months after the Tsinghua Unigroup attempted to buy American NAND manufacturer Micron but was stopped by the U.S. government in its tracks. However, the group still isn't done attempting to conquer and purchase NAND patents that are owned by storage manufacturers such as SanDisk and Toshiba as China attempts to establish a homegrown industry of NAND flash memory technology and storage devices.

The Tsinghua Unigroup has shifted their eyes towards the likes of storage manufacturers Toshiba and SanDisk is relatively simple -- both companies are now easy targets to prey on. Both companies deal in NAND flash storage manufacturing, with Toshiba recently passing through serious financial issues due to a major corruption scandal that had its CEO and its entire upper staff removed from the company.

This has resulted for Toshiba to end its TV and PC businesses to save on its financial resources. However, as the Japanese company still owns nuclear plant technologies in Japan, the Tsinghua Unigroup could be facing a bit of a fight ahead if it wants to purchase the entirety of the company.

On the other hand, the Tsinghua Unigroup seeks to build a solid NAND and DRAM industry on China through any means necessary. According to reports, The Tsinghua Unigroup offered Micron a massive amount of $23 billion in order to secure the acquisition. However, the deal was stopped ultimately by the Committee of Foreign Investment in the United States (CFIUS) due to national security concerns.

China's Tsinghua Unigroup Might Buy SanDisk And Toshiba : Gadgets & Robots : iTech Post

Tsinghua Unigroup Says It's Close to Buying Chinese Chip Company

Bloomberg News

October 11, 2015 — 8:49 AM EDT

Updated on October 12, 2015 — 1:07 AM EDT

Tsinghua Unigroup Ltd., the state-backed Chinese firm that recently agreed to buy a $3.8 billion stake in Western Digital Corp., is close to acquiring Tongfang Guoxin Electronics Co., a person familiar with the matter said.

Tsinghua Unigroup Chairman Zhao Weiguo said in an interview Sunday he was closing in on an acquisition of a chip company he founded and where he served as its first general manager, though he declined to name the target. Tongfang Guoxin, which makes oscillators and resonators that go into electronic products, fits that description.

The companies also have ties. Tongfang Guoxin’s biggest shareholder is Tsinghua Tongfang Co., a unit of Tsinghua Holdings Co. and an affiliate of closely held Tsinghua Unigroup. Shares of both Tongfang Guoxin and Tsinghua Tongfang were suspended from trading in China on Monday. Based on its last close, Tongfang Guoxin had a market value of 19.8 billion yuan ($3.1 billion).

Tongfang Guoxin said in a statement to the Shenzhen stock exchange that its controlling shareholder plans a major event involving Tsinghua Tongfang. Representatives at Tsinghua Tongfang and Tsinghua Unigroup either didn’t immediately respond to queries or declined to comment.

Emerging Dealmaker

The business arm of China’s famed Tsinghua University is emerging as one of the most acquisitive companies in the technology hardware industry. If the Western Digital deal is completed, it would be China’s biggest tech acquisition. Earlier this year, Tsinghua Unigroup expressed interest in buying U.S. memory chipmaker Micron Technology Inc., people familiar with the matter have said.

Tsinghua Unigroup accounted for two of the three largest semiconductor deals in China, acquiring Spreadtrum Communications Inc. in 2013 for $1.44 billion and RDA Microelectronics Inc. for $769.8 million the same year, according to data compiled by Bloomberg. A state-backed fund with investment from China Development Bank bought Sanan Optoelectronics Co. for $779.5 million this year, according to the data.

Tsinghua Unigroup Says It's Close to Buying Chinese Chip Company - Bloomberg Business

China is moving up in the supply chain, and the cross-strait cooperation is stronger than ever!