LAPTOP TYCOON PESSIMISTIC ON TAIWAN'S FUTURE

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001583 SIPDIS SIPDIS DEPT FOR EAP/TC E.O. 12958: DECL: 05/04/2016 TAGS: ECON PREL EINV PGOV CH TW SUBJECT: LAPTOP TYCOON PESSIMISTIC ON TAIWAN'S FUTURE Classified By: AIT Director Stephen M. Young, Reason 1.4 d ¶1. (C) Summary: In a conversation with AIT Director Stephen Young on May 3, Quanta Computer Chairman Barry Lam described increasing arrogance in the PRC. He is glad to see the Mainland prosper, but stills sees Quanta as a Taiwan firm. Taiwan is a part of China, and its economic future depends on close links to the Mainland. However, Hong Kong does not provide a useful model for reunification, and there are obstacles to democratization in China. Lam was pessimistic that there could be any clear path to a unified China that preserves a separate Taiwan. End Summary. ¶2. (U) AIT Director Stephen Young met with Quanta Computer Chairman Barry Lam on May 3 to discuss Taiwan's economic prospects, relations with the PRC, and Taiwan's political future. Lam, whose family is from Shanghai, was born in Guangzhou, raised in Hong Kong, and has lived in Taiwan since 1965. Quanta, which Lam founded in 1988, is the world's largest manufacturer of laptop computers. Its customers include Dell, HP, Apple and Sony. It opened its first laptop assembly plant in the Mainland in 2001 and today manufactures all of its laptops in the PRC, while keeping all its research and development and overall management operations in Taiwan. Rising Arrogance in PRC -------------- ¶3. (C) Lam told the Director China's attitude has changed since Quanta had begun investing there six years ago. At that time, local officials in Shanghai were extremely solicitous and humble with Taiwan investors, according to Lam. They emphasized China's poverty and appealed to Lam as a native of Shanghai to help. Now they project a more arrogant attitude and act as though they are doing investors a favor by allowing them to invest. He pointed out that the central government exhibited the same attitude, citing the example of PRC efforts to develop its own mobile phone standard. Lam remarked that Beijing would not compromise with Taiwan, and said that even if Ma Ying- jeou becomes President there would still be problems in cross-Strait relations. Chinese Identity Rooted in Taiwan -------------- ¶4. (C) While expressing his own Chinese identity, Lam also emphasized that Quanta was a Taiwan company. He said that as a Chinese person he was glad to see the PRC grow economically, but at the same time felt concern that Taiwan was falling behind. Lam is pessimistic about Taiwan's economic future, but noted that Quanta's customers are international firms and its sales are not affected by conditions in Taiwan. Nevertheless, Lam underscored that Quanta would not move its core operations of sales, management and research and development to the Mainland. One China, but Not One Country -------------- ¶5. (C) Lam believes that Taiwan is a part of China. He commented that Taiwan cannot survive if it is economically separate from the Mainland. According to Lam, many of Taiwan's young people want to work in the Mainland because they see greater opportunities there. They are much less certain about Taiwan's economic future. He contrasted this with his own decision to stay in Taiwan after graduating from National Taiwan University in 1972 because he was excited about what was happening economically on the island. He added that Taiwan youth do not see the need for an independent Taiwan. ¶6. (C) Although Lam sees Taiwan as part of China, he explained that Hong Kong's model would never work for Taiwan. Because Hong Kong had been a British colony, Lam argued that it did not lose any freedoms after it was turned over to the PRC. He said that Beijing had no interest in allowing Hong Kong to become a democracy and just wanted it keep making money. Taiwan cannot be a TAIPEI 00001583 002 OF 002 colony because its mindset is too different. He claimed that Taiwan and China do not have to become one country. Instead, they can exist as two separate entities under a one-China umbrella. Democracy - Obstacles in PRC, Sacrifices in Taiwan -------------- -------------- ¶7. (C) When the Director asked if the PRC would have to change before the two sides could move toward closer unity, Lam commented that it would be difficult for the PRC to become more democratic for three reasons. First, the current generation of leadership that came of age during the Cultural Revolution had no understanding of traditional Chinese culture, implying that the Maoist mindset of these leaders makes it difficult for them to contemplate opening up the political system. Second, Lam noted that the country was divided between the wealthy coastal areas and the poor interior. Finally, he pointed out China's cities and countryside have very different interests and ways of thinking. Lam also argued that Taiwan had sacrificed a lot for the sake of democracy, including mutual trust and economic growth. He said that the PRC could not afford to risk an interruption of economic growth, as this is the party's only remaining pillar of legitimacy. Condemning Politicians Who Put Themselves First -------------- -- ¶8. (C) Lam criticized Taiwan's politicians for thinking of themselves first. He said he had supported James Soong in the 2000 presidential election, but was later disappointed. He was also disappointed in Chen Shui-bian after an initial favorable impression early in his first term. Lam observed that Chen puts his interests first. In contrast, Lam said he personally puts his country first, his company second and himself third. He noted that Chen will not face election again and looks to maintain the support of his deep-Green base. Su Tseng-chang, on the other hand, has his eye on the 2008 presidential election, and in Lam's opinion, how this conflict between Su and Chen's is played out interests will decide Taiwan's policies for the next two years. Comment - Obstructed Vision of Taiwan's Future -------------- - ¶9. (C) Lam's comments illustrate how a business like Quanta puts the challenges facing Taiwan into sharp focus. Quanta's future prosperity is tightly linked to the Mainland, and yet the firm is still strongly rooted in Taiwan. Lam is acutely aware of the many obstacles on both sides of the Strait that stand in the way of movement toward a unified China that doesn't sacrifice the benefits of a separate Taiwan. Lam is pessimistic because he knows there is no clear path to his vision of Taiwan's future. End comment. YOUNG