Financial Linkages Between China and Taiwan

by Hua Zhang, August 24, 2010
Industry Trends
Asia-Pacific

Abstract

The financial markets in mainland China and Taiwan are radically different in scale, but increasingly interconnected. Any relaxation or tightening of regulation will bring substantial opportunities or risks to firms in both countries.

Investments by Taiwanese enterprises in mainland China reached US$49.5 billion in 2009. In a new report, Financial Linkages Between China and Taiwan, Celent examines investments and trade between the two regions, as well as regulations affecting the relationship between China and Taiwan.

Taiwan has a small but highly competitive market, while the Chinese market is less competitive but has stricter financial supervision. This environment is encouraging the Taiwanese financial industry to actively penetrate the mainland Chinese market, but progress is slow due to regulatory restrictions. There are currently more than 900 Taiwanese listed companies (73% of Taiwan’s total) investing in mainland China.

“Taiwanese enterprises in mainland China account for more than 20% of new loans and 60% of net interest income for the Taiwanese banking industry,” says Hua Zhang, analyst with Celent’s Asian Financial Services group and author of the report. “If Taiwan's financial firms successfully conduct their business in China, there is potential for significant benefits.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Economic and Trade Links Between China and Taiwan

4

 

Investment by Enterprises

4

 

Imports and Exports

6

 

Regulations

7

Financial Industry Linkages

9

 

Banking

9

 

Securities Industry

11

 

Insurance

16

Outlook

18

Leveraging Celent’s Expertise

19

 

Support for Financial Institutions

19

 

Support for Vendors

19

Related Celent Research

20

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