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D+C  e-Paper  December 2015 23 with China, but its legal system is completely inde- pendent. This special status is used very cleverly. Taiwan is not an independent state in the eyes of the People’s Republic, but many Taiwanese think it is. Economically, however, the two countries are very closely linked. Taiwanese firms started with invest- ments in China’s special economic zones, which were established in the 1980s on the mainland, right across from Taiwan and Hong Kong, and later expanded. Today, however, Taiwanese companies are starting to withdraw from classic low-wage indus- tries, having realised early on that their business model is no longer as effective as it once was because labour costs are rising in mainland China. How did China’s opening up affect Taiwan and Hong Kong? Prior to China’s opening up, both Hong Kong and Taiwan were themselves engaged in cheap mass production for the world market. In the 1960s, many mass-produced goods came from Taiwan. But this business model soon reached limits – for the simple reasons that Taiwan is small and wages kept rising. Moreover, higher skilled workers no longer wanted to carry out simple tasks. Many companies took advantage of China opening up and were thus able to maintain their business models. They outsourced labour-intensive production to mainland China, and kept doing more profitable and expertise-based things such as design and marketing in Hong Kong and Taiwan. What impact does that have on China today? The Chinese no longer want their country to only do the labour-intensive parts of the value chain because that is not very profitable. Companies get the highest profits from research and development, product design, trademarks et cetera. The regime wants Chinese companies to take on other segments of the value chain – and they are increasingly doing that. These are companies that have become major exporters and are expanding abroad. Successful Chinese manufacturers are already producing goods in countries like Vietnam, Cambodia or Bangladesh, where wages are lower. How do Chinese companies perform in regard to social and environmental standards? It’s impossible to make a statement that would apply to all of China. China has the dimension of a con- tinent and is investing all over the world. The gov- ernment is continuously tightening environmental standards for large companies. It is also strengthen- ing social standards, but they are more difficult to implement. Studies show that companies from coun- tries with high environmental and social standards also maintain higher standards in the production facilities they use in China. The trade unions in these companies’ home countries do their best to make sure that managers do not pursue social dumping strategies abroad. And if consumers are used to cer- tain standards in their home countries, brand manu- facturers must fulfil certain requirements in China as well unless they want to jeopardise their brand’s image. In China, however, there are no strong trade unions that would insist on social standards being met abroad. As for environmental protection, many sensible laws have been passed, but implementa- tion tends to be difficult. Chinese companies are not that used to meeting environmental standards. Still, Workers making Haier refrigerators in Qingdao, China. picture-alliance/dpa