Taiwanese businesses that operate and invest in China face many risks—getting scammed, bullied, and beaten by local mafia, and getting ensnared in local political infighting—all this without any form of legal redress.
The latest hurdle comes in the form of restrictive environmental protection regulations that have suffocated businesses, forcing them to close down.
Since China enacted laws to open up trade and business with Taiwan in the 1990s, many companies from the island across the strait have capitalized on the opportunity in China’s sizeable market.
However, for some, the investments haven’t paid off.
Late last year, a leaked online document revealed that Kunshan City in Jiangsu Province—a hub for Taiwan businesses—had requested 270 factories to stop production from Dec. 25 to Jan. 10 because the local freshwater quality was not up to standard. About a half of the affected companies were Taiwanese, according to the BBC.
The directive was issued by a local government office dedicated to implementing the provincial authorities’ “263” project to improve air and water quality, which included measures to reach specific numerical benchmarks by the year 2020.
Chinese authorities are known to zealously execute policies in the name of achieving targets and scoring political points—from curbing air pollution through forcing citizens to use natural gas instead of coal, causing those in areas without the appropriate infrastructure to live without heat during the height of winter, to exaggerating local revenue numbers to appear more economically productive. The 263 project also includes goals to minimize coal-burning in the region.
Zhuhai City in Guangdong Province also announced in late December that due to anticipated weather conditions and the likelihood of air pollution, the provincial department of environmental protection requested 75 businesses—four of which were Taiwanese—to limit production from Dec. 26 to Dec. 29, according to United Daily News, a Taiwanese newspaper.
On Jan. 4, Taiwanese media reported that a factory belonging to Taiwanese furniture maker Lacquer Craft Manufacturing Co. Ltd. in Dongguan City, Guangdong Province issued a notice announcing its closure.
The company said severe environment regulations had caused major financial losses, leading to the decision to stop production beginning on Feb. 1. About 2,000 factory employees were laid off with severance pay, according to Taiwanese broadcaster Sanlih Television.
The factory started operating in 2005. According to Taiwanese newspaper Liberty Times, a local real estate developer wanted to drive out the factory because the nearby area was becoming a residential neighborhood. He thus repeatedly reported Lacquer Craft to the Dongguan environment protection office, claiming that the factory was producing waste with a strange smell. However, the office did not find any issue upon inspection.
The office said that according to their records, the factory had registered with them in October 2014 and passed an inspection in January 2016, the Liberty Times reported.
Taiwanese media Central News Agency reported that despite passing inspection, local authorities had listed the company as one of the “top 10 environmental pollution corporations in Dongguan” in 2015 and 2016.
Taiwanese companies are no stranger to government malfeasance leading to business losses. Kao Wei-Pang, founder of the Taiwanese Victims of Investment in China Association, told his own story of a Chinese venture he once invested in. The vice general manager not only drove him out of the venture but colluded with local bank officials to set up a rival company.
Kao’s organization publicizes cases of Taiwanese businesspeople who have been cheated, wrongly imprisoned, and even killed while conducting business in China. There are over 60,000 cases of victims registered in China, with total investment losses estimated to reach $30 billion, according to the association.