Another Taiwan Firm to Drop "China" from Name

UNCLAS TAIPEI 000545

SIPDIS

SIPDIS

STATE PASS USTR
STATE FOR EAP/ TC, EAP/EP
COMMERCE FOR 3132/USFCS/OIO/EAP/WZARIT
TREASURY FOR OASIA/LMOGHTADER
USTR FOR STRATFORD, ALTBACH

E.O. 12958: N/A
TAGS: ECON PREL CH TW
SUBJECT: Another Taiwan Firm to Drop "China" from Name

Ref: Taipei 335
Taipei 325
Taipei 308


1. Summary: Another Taiwan firm has moved to drop references to
China from its name. China Steel follows China Petroleum, China
Shipbuilding and Chunghwa Post, which all changed names last month.
China Steel's situation is more complicated because it has been
privatized, and the Taiwan authorities hold only 22.6 percent of its
stock. The decision to change the name of a privatized enterprise
increases the likelihood Chunghwa Telecom and China Airlines could
be future targets. End summary.


2. Following China Petroleum Corp., China Shipbuilding Corp. and
Chunghwa Post Co. (now know as CPC, Taiwan; CSBC, Taiwan; and Taiwan
Post Co., respectively),China Steel Corp has become the next target
for "name rectification" to remove references to China. In a visit
to China Steel's headquarters on March 1, 2007, President Chen
Shui-bian pointed out to China Steel Chairman Chiang Yao-chung that
it took 8 days to change the name of Chiang Kai-Shek International
Airport to Taoyuan International Airport, and several other
enterprises had changed their names quickly and efficiently. Chen
reportedly hinted that if Chiang did not change China Steel's name
soon, he might be replaced.


3. China Steel took a first step toward a formal name change in
early March by changing the sign at the front gate of its
headquarters. It had previously read China Steel in Chinese
("Zhongguo Gangtie" in standard pinyin). Now it reads "Zhong Gang,"
an ambiguous abbreviation that could also mean "Central Steel." In
addition, letterhead and signs within the firm's factories have also
been changed to use the more ambiguous abbreviation. China Steel
reportedly wishes to maintain CSC in the English name and change the
Chinese name to either "Taiwan Zhong Gang" or Central Steel
("Zhongyang Gangtie").


4. China Steel's situation is more complicated than CPC, Taiwan;
CSBC, Taiwan; or Taiwan Post beci@}QQ"]zlders. Foreign investors own 33 percent
of the firm's stock.


5. The firm is supervised by the Ministry of Economic Affairs
(MOEA). MOEA Minister Steve Chen formally asked China Steel to
begin the process of changing its name as soon as possible. China
Steel estimated the cost of changing its name at NT$1 billion (US$30
million). A board meeting has been scheduled for March 28 to
discuss the issue. However, the final decision cannot be formally
approved until the next shareholders meeting in May.


6. Comment: The decision to change the name of China Steel, a
partially privatized enterprise, increases the likelihood Chunghwa
Telecom and China Airlines could also be future targets.

YOUNG