Taiwan is located at the heart of the Asia-Pacific region. The average flying time from Taiwan to the seven major cities in Western Pacific is merely 2 hours and 55 minutes. And the average sailing time from Taiwan's largest international harbor Kaohsiung harbor to the 5 major Asia-Pacific harbors (Hong Kong, Manila, Shanghai, Tokyo and Singapore) is merely 53 hours. After the opening of cross-strait direct links, Taipei has become the hub of the dual golden routes in Asia-Pacific. The routes from Taipei go north to Tokyo and Seoul, west to Shanghai, south to Hong Kong, Singapore and the capitals of the ASEAN countries. Taiwan's location is of economic and military importance. It is the gateway between Europe, America, Japan and the booming Asia-Pacific markets. It is also the first choice for multi-national company headquarters in the Asia-Pacific region.
According to the definition of World Economic Forum, the development procedures of one country are divided into three stages: Factor-Driven, Efficiency-Driven, and Innovation-Driven based on GDP per capita, scored from low to high. Moreover, Innovation is the core value of competitiveness. In the end of 2011, Taiwan's per capita income to hit US$20,000. Meanwhile, the working population of service industry accounted for 58.6 percent of total employment in Taiwan in 2011 and the output value of service industry in Taiwan accounted for 67 percent of Taiwan's Gross domestic product. This indicates the service industry has become the main axes for creating industrial value in Taiwan, same as those developed countries.
Taiwan is closely adjacent to mainland China's market. It has geographical and language advantages. At the same time, Taiwan has high acceptability towards new technologies. Hence, it is in a position to become the R&D and test centers for products aimed at the global ethic Chinese markets. Taiwan enterprises are not only the first-class suppliers of the world's leading companies, but also capable of developing subsystems. In addition, Taiwan businesses have close connections with international brands, which enable the establishment of strategic alliance for R&D and innovation. Furthermore, Taiwan businesses in mainland China enjoy the language and cultural advantages, which help multi-national companies, invest and set up production facilities in mainland China. Through the linkage with the international market, Taiwan industry has become the development test-bed for Asian market or the Greater China market that paves the way for entry to the emerging markets in East-Asia. Moreover, foreign companies can make use of Taiwan's strength as the "World's First Class" components supplier cluster to set up their R&D centers in Taiwan. Practically speaking, Taiwan can be a living laboratory for developing various innovative products and services with its population of 23 million people. Companies can integrate professional ICT and services knowledge, and make use of Taiwan's advantages to test new innovations locally and copy successful experiences abroad. Taiwan can be a development base for various products and services and a marketing base for expanding business in ethnic Chinese market.
Taiwan and mainland China have signed 6 agreements since the cross-strait contact channels were reestablished in May 2008. Besides, to reduce tariffs and commercial barriers between the two sides, the governments of the People's Republic of China (mainland China) and the Republic of China (Taiwan) signed The Economic Cooperation Framework Agreement (abbreviated ECFA) on June 29, 2010, which was seen as the most significant agreement. It will boost the current US$110 billion bilateral trade between both sides. The cross-strait negotiations have stepped into a normal phase, which help Taiwan continue its role as a testing stone for global multi-national companies to enter Chinese market and also help local companies deploy their business globally.
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