Taiwan Businesses in Dongguan: Well Organized and

UNCLAS SECTION 01 OF 02 GUANGZHOU 030900

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SENSITIVE
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STATE FOR EAP/CM

PACOM FOR FPA

E.O. 12958: N/A
TAGS: ECON PREL CH TW
SUBJECT: Taiwan Businesses in Dongguan: Well Organized and
Politically Neutral


(U) This message is sensitive but unclassified. Please handle
accordingly.


1. (SBU) Summary: Dongguan's Taiwan Business Association (TBA)
leaders told Econ/Poloffs September 26 that their focus was on
business and community issues, not politics; like other Taiwan
businesspeople in China, they prefer to keep their politics to
themselves, even declining to comment on a recent meeting between
China and Taiwan on cross-strait flights. The association, with
over 3,500 member companies, is China's largest. Stricter
enforcement of environmental regulations, however, has already
forced some Dongguan-based Taiwan businesses to move into China's
interior. In the absence of a Taiwan official presence on the
mainland, the association provides important consular-related
services locally, including prison visits and death case assistance.
End summary.


2. (SBU) Econ/Poloffs met on September 26 with Samuel Kuo, President
of the Dongguan TBA, who is also Chairman of Samson Group, the
largest China-based exporter of furniture to the United States.
Samson's two factories (located in Dongguan and Shanghai) employ
approximately 13,000 people and manufacture OEM under the name
Lacquer Craft. Also attending the meeting were Mohammed Amini,
President of Lacquer Craft, and Hawk Chiu, Kuo's Executive
Secretary.

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Large and Well Organized
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3. (SBU) Dongguan has one of the highest concentrations of Taiwan
citizens on the mainland, with an estimated 120,000 Taiwan citizens
and 6,000 Taiwan firms. According to Kuo, the Dongguan TBA was
established in 1993 and now has 3,500 member companies, making it
almost twice as large as the next largest TBA, located near Suzhou
in Jiangsu Province. The main office has one full-time Taiwan
employee, 12 Chinese staff, and one liaison from the Taiwan Affairs
Office. In addition, each of Dongguan's 32 districts has a small
TBA office with one or two local staff.


4. (SBU) Kuo said China has a total of 99 TBAs, 50 percent of which
have less than 100 members. Chinese officials oversee the
activities of the smaller TBAs. However, the TBAs in the Pearl
River Delta cities of Guangzhou, Dongguan, and Shenzhen, and
Fujian's Xiamen have a greater level of independence, as
demonstrated by the Dongguan TBA meeting with Econ/Poloffs without
Foreign Affairs Office approval. The Dongguan TBA was instrumental
in creating a school (kindergarten through 12th grade) for 1,500
Taiwan students, which has co-certification by mainland authorities
and the Taiwan Department of Education.

Close Relations with the Local Government
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5. (SBU) Kuo said the Dongguan TBA has "very good relations" and
almost daily communication with city officials. Dongguan TBA
leaders meet two-or-three times a year with the city's Party
Secretary and Mayor. Since there is no official Taiwan political

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presence on the mainland, the Dongguan TBA provides services
normally rendered by a consulate. For example, the Dongguan TBA
assists in handling death cases of Taiwan citizens, including
internment of the body and communicating with family members. (Kuo
said five or six Taiwan people died in Dongguan in 2006). The
Dongguan TBA also visits Taiwan citizens who are in Dongguan
prisons. The representatives one or two Taiwan businesspeople had
been kidnapped in Dongguan last year; they blamed this on the fact
"the men were not TBA members."

Taiwan Businesses Moving Out and Branching Out
-------------- -


6. (SBU) The representatives said authorities in Dongguan and other
PRD cities have been more stringently enforcing environmental
regulations during the past year, and have not renewed business
licenses for highly polluting factories. As a result, some Taiwan
companies have moved to northern Guangdong or interior provinces,
where enforcement is more lax - a fact that might explain why the
number of Dongguan TBA member companies has not changed since 2004.
In addition, Taiwan businesspeople are branching out into service
industries, such as real estate and financing, as China's eases its
restrictions on foreign investment.

Cross-Strait Politics: Keeping Quiet
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GUANGZHOU 00030900 002 OF 002




7. (SBU) In response to a question about Dongguan TBA's dealings
with the Chinese government on cross-strait issues, such as tourism
and trade, Kuo was noticeably reticent. Kuo said he attended a
mid-September Beijing conference between representatives from
Taiwan's KMT and China's CCP, but described it as nothing more than
a political showcase. (Note: The two-day meeting was co-chaired by
Chiang Ping-kun, a KMT Vice Chairman, and Chen Yunlin, the Director
of China's Taiwan Affairs Office. The press reported that six TBAs
had attended meetings to discuss cross-strait flights.) He added
that, because Hong Kong is only one hour from Dongguan by vehicle,
local Taiwan people are not very concerned about the lack of
cross-strait direct flights. Kuo refused to be drawn into any
discussion about the future of Chen Shuibian or cross-strait
relations.

GOLDBERG