The Taiwan Reshoring Plan: Case Study of Innolux Corporation

Abstract

Since the administration of Taiwan had been transferred back to the Republic of China (ROC) after the Japanese occupation, cross-strait political relations with mainland China have remained complex and tense. Nevertheless, over the years the two political entities, the ROC and the People's Republic of China (PRC), have developed economic connections and even some level of cooperation, fostering trade and investments across the strait. China’s goal was to strengthen business ties with the island so to discourage formal independence, while Taiwan’s objective was mainly to take advantage of the mainland’s cheaper labor costs, real estate and huge market. This study aims at analyzing the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” that incentivizes manufacturers to repatriate from China with benefits such as preferential loan terms, land concessions, and tax breaks and it covers financing, water, electricity, and manpower in a single service window. The policy was adopted when Taiwanese manufacturers started gradually to diversify their overseas production bases and relocate back to Taiwan to adjust their production locations amid the US-China trade dispute and by fear of economic coercion. At the end of the analysis, it will be presented the case study of the Innolux Corporation, the fourth largest LCD panel factory in the world. In 2019, the Ministry of Economic Affairs has approved its relocating investment case, which brought a NT$70.1 billion investment to Taiwan.