The Department of Investment Services (DOIS) of the Ministry of Economic Affairs (MOEA) held a "China Investment Experience Exchange Seminar" at the International Convention Center of National Taiwan University Hospital (NTUH) on Jul. 1, with a total of 120 people attending. In addition to the sharing of practical experiences among attendees and the offering of recommendations on how to settle disputes, the seminar also featured two Taiwanese businessmen operating in China who talked about their experiences settling disputes and resolving investment disputes by using the mechanism provided under the Cross-strait Bilateral Investment Protection and Promotion Agreement (Cross-strait BIA).
Mr. Hong Yang, Deputy Director General of DOIS, noted that the number of administrative coordination cases handled from the signing of the Cross-strait BIA through May this year had reached 137, of which most involved land-use rights, compensation for expropriation, and administrative measures. Following DOIS's coordination with related Chinese agencies, 56% of the cases have achieved results; these include 68 cases for which the resolution assistance procedure had been completed and nine with limited room for administrative assistance because of the Taiwanese investors' lack of familiarity with local regulations or judicial judgements, while the remainder of the cases were under negotiation by the relevant Taiwanese companies and Chinese government agencies. This resolution procedure is especially important in view of the fact that 90% of the dispute cases involve Taiwanese companies that are in the category of small and medium enterprises and thus have limited resources. The dispute assistance mechanism provides SMEs with a money- and time-saving means of resolving their investment disputes. Deputy Director General Yang emphasized, however, that the Cross-strait BIA is not a panacea, and that Taiwanese investors should still respect and comply with the laws and judicial systems on both sides of the Taiwan Strait. When the differences between the two sides are too great, or when determination of facts is required, then the matter should be resolved by judicial means.
Yang also stressed that the platform provided under the Cross-strait BIA offers a stable and institutionalized assistance mechanism not only for settling individual disputes but also for reflecting common problems encountered by Taiwanese investors to the Chinese government. For instance, right after the Chinese government issued Notice 62, with a severe impact on the established legal rights of Taiwan-invested enterprises, DOIS immediately reflected the views of Taiwanese investors on the matter to the Chinese government through the Investment Working Group of the Cross-strait Economic Cooperation Committee and the coordination mechanism of the Cross-strait BIA. Thanks to the joint efforts of DOIS, the Mainland Affairs Council, the Straits Exchange Foundation, and six major industry groups, China responded positively and issued Notice 25, explicitly protecting the interests of Taiwanese entrepreneurs.
Shi-lang Duan, a CPA with PricewaterhouseCoopers (PwC) Taiwan, points out that in the face of the changes that are taking place in China's investment policy, Taiwan-invested companies operating there should guard against future losses by ascertaining the legality of incentives offered by local Chinese governments. Local incentives that lack a legal basis or do not have the permission of the State Council of China will no longer be allowed. Regarding the labor disputes that Taiwanese investors in China have encountered so frequently in recent years, a Taiwanese attorney working with a legal office in Shanghai shared his practical experience in concluding and terminating labor contracts. Two Taiwanese entrepreneurs attending the seminar's discussion of successful dispute-assistance cases emphasized that in the event of investment disputes in China, the fulfilment of contract obligations, the retention of written contracts, and the maintenance of space for flexibility in negotiations are crucial for the settlement of the disputes. The resolution assistance mechanism of the Cross-strait BIA provides for active communication and follow-up by the Taiwanese government and the mainland Chinese contact window, and this has a key effect in stimulating the Chinese government to resolve problems.
The investment climate in mainland China has become increasing tough in recent years, and Taiwanese entrepreneurs there are facing growing challenges year by year. Foreign companies, including Taiwanese ones, will have access to less favorable investment incentives in the years ahead. Helping Taiwanese companies to learn about China's latest regulations, and encouraging them to return and invest in Taiwan, is one of the most important tasks that DOIS will pursue in the future.
Spokesperson of the Department of Investment Services:
Mr. Bennet Wen-bin Chen, Deputy Director General
Telephone: (02) 2389-2111 ext. 810
Mobil Phone: 0978-619-241
E-mail: wbchen@moea.gov.tw
Contact person:
Ms. Yen-Hsun Chang, Section Chief
Tel: (02) 2389-2111 ext. 510
Mobil Phone: 0932-016-687
E-mail: hschang@moea.gov.tw