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Discussion
of Case Study Themes
At
a Glance
Both Guangdong and Taiwan are located far from Beijing,
China's cultural heart. For both areas, Hong Kong is
a major trading partner. Taiwan is financing operations
within SEZs and Open Coastal Areas in China and is one
of many international examples of investment in Guangdong
Province. Government planning has been crucial to the
continued development of both locations. Taiwan is encouraging
immigrants who have high-technology knowledge to return
and use that knowledge in science-based industrial parks.
Both Guangdong and Taiwan are linked to the world economy
through the global production system and international
trade. Both locations play a vital role in the continued
growth of economies in East Asia, Southeast Asia, and
the world.
Case
Study 1 -- Guangdong: Globalization in the Pearl
River Delta
Special
Economic Zones Boost Guangdong
International trade has become one of the most important
sectors of Guangdong's economy. Coastal and international
shipping routes link over one hundred large and small
ports in the province, of which Guangzhou and Shantou
have national significance. The importance of these
ports was emphasized in 1979, when the government
declared Shenzhen, Shantou, and Zhuhai as Special
Economic Zones (SEZ). The designation was part of
economic reforms that were implemented to realize
Deng Xiao Ping's policy of Four Modernizations.
SEZs are designed to take advantage of foreign capital
by allowing more economic freedoms. These include
duty-free trade, tax incentives, relaxation on foreign
investment restrictions, and permitting profits made
in China to be expatriated to the investors' home
countries. Guangdong Province -- with overseas links
forged through emigration, trade history, and proximity
to the international financial connections of Hong
Kong -- has helped these SEZs take advantage of their
status. The result has been tremendous economic growth
that at present drives the rest of China.
Production
Systems Go Global
The global production system maximizes efficiency
in the production process. The system is highly organized,
with numerous business activities proceeding simultaneously
in a variety of locations. As orders are being taken
at one site, components of the final product are being
made in a variety of other locations. The parts are
then shipped to a manufacturing facility that combines
the parts to make a finished product. The product
is then sent to a port for shipment to a distribution
center that delivers it to a retail location.
Local
Infrastructure Under Global Demand
A well-developed infrastructure is crucial to Guangdong's
continued economic growth. Without modern facilities
such as ports, highways, buildings, and telecommunications
networks, companies cannot compete in the world economy.
The delays and resulting expenses caused by poor transportation
systems threaten the cost advantages that lure industry
to these locations. Poor communications networks can
slow information transfer, causing problems in other
factories in the global production system.
Communications
Technology Allows Coordinated Production
Communications technology is central to the global
production system. This technology links geographically
diverse operations through the use of fiber optics
and faxes that monitor computerized inventories. In
the Nike example, bar codes that are read into a computer
in Hong Kong can be downloaded through telecommunications
lines to a central computer in Beaverton, Oregon,
where decisions regarding production and marketing
are made and products are tracked.
Case
Study 2 -- Taiwan: High-Tech Tiger
Growth
in the Taipei Basin
Taiwan's capital is the city of Taipei, located in
northwestern Taiwan. The city sits in one of the coastal
basins of Taiwan and is ringed by mountains. The rapid
economic development of Taiwan has produced a relatively
wealthy population.
Hsinchu
Science-Based Industrial Park Attracts Workers
The Hsinchu Science-Based Industrial Park (HSIP),
located 28 miles (45 kilometers) southwest of Taipei,
was developed by the government to give high-tech
entrepreneurs a place to conduct research and development
of new technologies as well as a haven in which to
start new businesses. This shepherding strategy differs
from other models of high-tech industry development.
Today,
HSIP is home to more than two hundred high-tech companies.
The industrial park, which is situated to take advantage
of the proximity of Taipei, the international airport,
and major seaports, is part of the Taiwanese government's
plan to lure more high-tech industries to Taiwan.
Local universities, the government-funded Industrial
Technology Research Institute, a new infrastructure,
and the high standard of living associated with the
industrial park all help draw new businesses and attract
highly trained workers to the island.
HSIP
has been so successful that it is running out of space
and the government has built other industrial parks
around Taipei.
Taiwan
Plans National Development for the Twenty-First Century
In order to stay ahead, Taiwan in 1980 embarked on
a program to develop more capital and technology-intensive
industries. The program was a response to competition
from other countries. The growth of Taiwan's newly
industrializing economy increased the cost of doing
business in export-oriented light industries such
as textiles. Taiwan's competitors took advantage of
this by producing goods at a cheaper rate. Facing
increasing competition, increasing dependence on raw
materials from abroad, and increasing salaries, Taiwan
looked to new strategies to reduce its vulnerability
to external economic conditions. Domestic investments
such as HSIP are one approach to advancing the economy
into a new stage.
Taiwan's Role as an Interface Region
Many of Taiwan's high-tech entrepreneurs studied for
advanced degrees in the United States and worked in
high-tech companies in California's Silicon Valley.
They returned to Taiwan with their knowledge and jump-started
Taiwan's high-tech industry. Today, they are expanding
their businesses into Mainland China, particularly
in Shanghai. Shanghai is home to a well-educated population,
has a long history of contact with foreign business,
and sits at the mouth of the Chang Jiang River, gateway
to Central China.
Taiwanese
geographer, Jinn-Yuh Hsu, presents the idea that Taiwan
operates as an "interface region." This
region represents how Taiwanese entrepreneurs, educated
in the U.S., act as a conduit for importing Western
technology into China. Geographer Hsu explains that
the strong cultural ties between Taiwan and China,
as well as Taiwanese familiarity with the Chinese
way of doing business, gives Taiwan an edge in facilitating
the development of China's high-tech industry, to
the benefit of both Taiwan and China.
However,
the future of this development may hinge on relations
between China and Taiwan. With the 1949 Communist
Revolution, Chinese Nationalists fled to Taiwan and
established the Republic of China. Since that time,
there has been continued tension between those who
believe Taiwan should be independent and those who
feel Taiwan should be reunified with China. Both points
of view exist in China and Taiwan. At times, China
has threatened the use of force in order to put down
a bid for independence and/or impose reunification.
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