Identifier
Created
Classification
Origin
05TAIPEI3048
2005-07-15 08:56:00
CONFIDENTIAL
American Institute Taiwan, Taipei
Cable title:  

TAIWAN IT INDUSTRY DISCUSSES STANDARDS WITH PRC

Tags:  ECON ECPS EINV ETRD PREL CH TW 
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C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003048 

SIPDIS

DEPT FOR EAP/TC
DEPT PLEASE PASS AIT/W

E.O. 12958: DECL: 07/14/2015
TAGS: ECON ECPS EINV ETRD PREL CH TW
SUBJECT: TAIWAN IT INDUSTRY DISCUSSES STANDARDS WITH PRC

Classified By: AIT Director Douglas H. Paal, Reason 1.4 d

Summary
-------

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003048

SIPDIS

DEPT FOR EAP/TC
DEPT PLEASE PASS AIT/W

E.O. 12958: DECL: 07/14/2015
TAGS: ECON ECPS EINV ETRD PREL CH TW
SUBJECT: TAIWAN IT INDUSTRY DISCUSSES STANDARDS WITH PRC

Classified By: AIT Director Douglas H. Paal, Reason 1.4 d

Summary
--------------


1. (C) A delegation led by opposition politicians but
composed mainly of Taiwan information technology (IT)
manufacturing executives visited Beijing July 5-6 to
discuss industry standards with PRC officials and
executives. The discussions yielded few concrete results.
However, Taiwan firms agreed to help the PRC test its third
generation mobile telecommunications (3G) standard. The
group traveled under the auspices of the Sinocon Industrial
Standards Foundation (SISF),a new industry organization
with close ties to the opposition Kuomintang (KMT) and
whose goal is to enable Taiwan high- tech firms to
participate in the PRC's efforts to develop its own
industrial standards. To date the Taiwan government has
not objected to these discussions. Although the results of
these discussions have only minor implications for U.S.
security and commercial interests, the formation of a new
Taiwan industry organization with the mission of
cooperating with the PRC on industry standards is an
important development. This trip also highlights the
continuing efforts of the KMT to erode support for the
ruling Democratic Progressive Party (DPP) by portraying
itself as the party that can do business with the PRC. End
summary.

Standards Discussions Yield Few Concrete Results
-------------- ---


2. (U) A delegation composed mainly of Taiwan information
technology (IT) manufacturing executives visited Beijing
for the July 5-6 "Cross-Strait Technology Standards Forum
for the IT Industry." The delegation traveled under the
auspices of the Taiwan-based Sinocon Industrial Standards
Foundation (SISF),a Taiwan industry organization whose
chairman is Kuomintang (KMT) Vice Chairman Chiang
Ping-kun. As part of the visit, Chiang and other
delegation members met with PRC Vice Premier Wu Yi and
Vice Minister of Information Industry Jiang Yaoping.


3. (C) In the forum, Taiwan executives discussed four
different types of IT industry standards with Mainland
business and government representatives. Most press
attention has focused on discussion of third generation
(3G) mobile telecommunications standards. The PRC is
trying to promote its own 3G standard -- TD-SCDMA -- which
would compete with CDMA2000 (developed by U.S. firm
Qualcomm) and W-CDMA (the standard supported by Europe and
Japan). Some Taiwan media reports portrayed the forum as
having reached a consensus whereby Taiwan firms would
assist the PRC in promoting TD-SCDMA. However, Taiwan
Electrical and Electronic Manufacturers' Association
(TEEMA) Executive Director Luo Huai-jia, who attended the
forum and whose organization played a leading role in
organizing the visit, described the results to AIT/T as an
agreement that Taiwan firms would assist in testing the TD-
SCDMA standard.


4. (C) The forum also addressed industry standards for the
compression, decompression and manipulation of audio and
video digital data. The PRC is developing an audio visual
coding standard (AVS) in this field. However, according to
Luo, development has not advanced as far as development of
the 3G TD-SCDMA standard and the discussions in Beijing
were less conclusive. He told AIT/T that the discussion
amounted to little more than an exchange of information
about the potential for standard development. He also
described discussions on thin-film transistor liquid
crystal display (TFT-LCD) flat panel display testing
standards and memory card standards as mainly information
exchanges.

KMT Capitalizing on Economic Concerns of IT Industry
-------------- --------------


5. (SBU) The Sinocon Industrial Standards Foundation
(SISF),which sponsored the trip to Beijing, was first
proposed in August 2004 with the goal of allowing Taiwan IT
firms to participate in the PRC's efforts to develop its
own industrial standards. SISF formally began operations
in February 2004, and this trip to China is its first major
activity. It has close links to the Pan-Blue coalition.
The Chairman of SISF is KMT Vice Chairman P.K. Chiang.
Former People First Party (PFP) legislator Pang Chien-kuo is
also an active member of SISF.


6. (SBU) Because of strong economic interests in closer
ties with the Mainland, Taiwan's IT firms are generally
more supportive of Pan-Blue positions on cross-Strait
issues, regardless of the personal political preferences
of executives in the industry. Taiwan's IT sector relies
heavily on the PRC as a production base for hardware
manufacturing. TEEMA currently estimates that 72 percent
of IT equipment produced by Taiwan firms is manufactured in
the PRC. Recent moves by prominent IT executives to
distance themselves from the Chen Shui-bian administration
have underscored the political effect of cross-Strait
economic interests on leaders in the industry. Chi-Mei
founder Hsu Wen-lung and Acer founder Stan Shih have both
within the last six months chosen to decline additional
terms as Senior Presidential Advisors. (Note: United
Microelectronics Corporation (UMC) Chairman Robert Tsao
made a similar announcement last month. However, he
claimed that the reason he would decline another term as a
Senior Presidential Advisor was to reduce the effect of
political influence on the handling of the investigation of
UMC's relationship with PRC semiconductor manufacturer He
Jian. End Note.)

MAC's Silence
--------------


7. (C) Although the Mainland Affairs Council has called on
the KMT-dominated Taiwan Provincial Farmers Association to
explain its discussions with PRC officials on fruit
exports, the Taiwan government has not yet condemned or
questioned the appropriateness of the SISF sponsored
visit. According to Mainland Affairs Council (MAC) Senior
Secretary Lee Li-Jane, MAC has no objections to the

SIPDIS
discussions. TEEMA representatives briefed MAC officials
before the trip. According to Lee, TEEMA explained the
visit as focusing on discussions of "commercial
specifications" not national standards. As a result, MAC
does not believe that the discussions involved issues of
national sovereignty.

Comment - Standards and Cross-Strait Politics Intersect
-------------- --------------


8. (C) The actual results of these latest discussions
appear to have few implications for U.S. commercial and
security interests. Only the TD-SCDMA discussions led to
any sort of concrete results. It does not appear that the
agreement by Taiwan firms to assist in testing the TD-SCDMA
standard will be decisive in helping it compete with W-CDMA
and CDMA2000, which have much broader support at this
time. However, the formation of a new organization with
the mission of including Taiwan's powerful IT firms in the
PRC's efforts to develop industry standards is an important
development. If SISF shows the ability to mobilize Taiwan
industry in effective support of PRC standards and to shape
those standards to the advantage of Taiwan manufacturers,
it could have a significant effect on U.S. interests.


9. (C) KMT involvement in this initiative is another
example of the opposition party attempting to use the PRC's
willingness to discuss economic issues with KMT
representatives to appeal to different segments of Taiwan
society. The SISF trip has drawn less criticism from the
Taiwan government and the media than KMT efforts related to
fruit exports. This is probably because the IT industry
does not represent a source of traditional Pan-Green
support like southern Taiwan's farmers. In addition, high
levels of investment in the Mainland have made Taiwan's IT
manufacturing firms subject to PRC economic pressure for
several years now. The efforts of SISF may not yield new
political controversy, but they do illustrate the
continuing efforts of the KMT to portray itself as the
party that can do business with the PRC on more than one
front. End comment.
PAAL