Taipei: Jhen-Yi Chen and Hsiao-Han Su/ Shanghai: Yanting Pei
I.31 Policy Measures to Benefit Taiwan
On February 28, the Specific Measures Concerning the Promotion of Cross-Strait Economic and Cultural Exchanges and Cooperation, which is generally known as the 31 Policy Measures to Benefit Taiwan and of which Article 1[1] set forth the encouragement of participation in the Made in China 2025 program (hereinafter, “Made in China 2025”) by Taiwanese businesses investing in mainland China. Mainland China is proactively developing the smart manufacturing industry to enhance the quality of the manufacturing industry in mainland China and to improve production yields. Emulating the concept of Industry 4.0, first introduced by the German government, the central government of mainland China provides collective guidance with the Ministry of Information and Information Technology as the leading authority, which sets up the smart manufacturing engineering expert consultation taskforce in conjunction with ministries such as the National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Finance, the State Administration of Science, Technology and Industry for National Defense, the Chinese Academy of Engineering, and the Ministry of Commerce. In addition, the National Manufacturing Strategy Committee retains members and experts of the Chinese Academy of Engineering in relevant fields to amend the Green Paper for the Technical Innovation in Focused Domains for Made in China 2025 – Technical Roadmap every other year[2] and supplement key materials and important key technologies through the periodical review of the green paper and the revision of the development directions and objectives for Made in China 2025.
II.Smart manufacturing industry under Made in China 2025
Under Made in China 2025, the smart manufacturing program carries mainland China’s aspiration to upgrade and transform her domestic manufacturing industry. The Ministry of Industry and Information Technologies has successively promulgated the 2016-2020 Development Plan for Smart Manufacturing and the 2016-2020 Engineering Implementation Guide for Smart Manufacturing to provide more detailed guidance for smart manufacturing and explanation concerning the development direction of government support measures. Key technologies are focused on core and critical elements such as sensing, control, decision-making and execution and are reliant on smart factories in focused domains, the development of digitalized workshops and the smart transformation of the traditional manufacturing industry, and breakthroughs in equipment for five categories of critical technologies such as high-end CNC machine tools and industrial robots, additive manufacturing equipment, smart sensing and control equipment, smart detection and assembly equipment, smart logistics and warehousing equipment in order to carry out the development of the first set of equipment, enhance quality and reliability and realize engineering application and industrialization.[3]
The smart manufacturing policy under Made in China 2025 ultimately seeks to achieve the following objectives after obtaining key smart manufacturing technologies: distributed smart manufacturing, flow-based smart manufacturing, network collaborative manufacturing, large-scale personalized customization, remote operation and maintenance services and attainment of transforming and upgrading the manufacturing industry by leveraging innovative technologies such as the Industrial Internet and artificial intelligence. As to how to specifically carry out critical technologies, reference may be made to the Elements and Criteria for Smart Manufacturing Pilot and Demonstration Projects of 2018, which sets forth the practical criteria for becoming a demonstration enterprise for smart manufacturing. Through such demonstration enterprises, large, small or medium-sized enterprises which have not yet been transformed may emulate successful examples of smart manufacturing.
The government also supports third-party agencies to provide services such as analysis and diagnosis and innovation assessment, encourages systems integrators, equipment suppliers, and software suppliers to explore intelligent transformation solutions which are easy to implement for small and medium-sized enterprises based on the actual needs of small and medium-sized enterprise, and encourages large enterprises to open portals, data and information and computing power[4] to small and medium-sized enterprises. Cloud-based manufacturing platforms and service platforms can be built by integrating and leveraging existing manufacturing resources. Key industrial software and all kinds of model libraries can be provided to facilitate the coordinated development of large, small or medium-sized enterprises. In addition, large, small or medium-sized enterprises may be guided to promote collaborative and innovative modes of cooperation through professional division of labor, service outsourcing and order production[5]; small and medium-sized enterprises in mainland China are encouraged to develop externally; and the long-term development objective of attracting excellent foreign small and medium-sized enterprises will be attained.
III.Development opportunities for industries in Taiwan under Made in China 2025
Under this wave of Made in China 2025 and the 31 Policy Measures to Benefit Taiwan, Taiwanese businesses indeed have many critical technologies needed for the development of smart manufacturing in mainland China. The critical technologies currently controlled by Taiwan for the above-mentioned five categories of critical technologies and equipment are separately discussed below.
(1)High-end CNC machine tools and industrial robots
There are over 100 enterprises relating to the development of industrial robots in Taiwan. Providing mechanical modules, sensing modules, driver modules, control modules and whole machines, these enterprises constitute a comprehensive industry chain for industrial robots. To be specific, they control critical parts and components for mechanical modules such as bearings, linear guideways, lead screws and gripping jaws. With respect to sensing modules, they control visual, distance, mechanics and other sensing technologies. With respect to driver modules, they control key parts and components such as servo motors, reducers and drivers. With respect to control modules, they own key parts and components such as PC-based, programmable logic controllers (PLC) and industrial computers. Finally, there are different types of robots such as linear and cartesian coordinate robots, SCARA robots, Delta robots and articulated robots in terms of whole machines. In particular, the industry chains for linear and cartesian coordinate robots are the most comprehensive and internationally competitive.[6]
(2)Additive manufacturing equipment
The Industrial Technology Research Institute recently has built a 3D printing trial platform featuring 6000 Watt high-power laser metal deposition (LMD) and set up the Alliance for Laser Cladding and Surface Treatment in collaboration with six full metal manufacturers to enhance efficiency and product competitiveness through manufacturing processes using green additive materials.[7]
(3)Smart sensing and control equipment[8]
Taiwanese manufacturers have high-performance optical fiber sensors, MESE sensor technology, MCOs, image sensing technologies, temperature sensing technologies, electronic label barcode acquisition system and equipment technologies, components and equipment technologies required for image sensing, distributed control systems (DCS), programmable logical controllers (PLC), supervisory control and data acquisition (SCADA) systems, reliable embedded control systems and equipment, and server technologies.
(4)Smart detection and assembly equipment
This is primarily focused on visualized flexible (elastic) assembly technologies to achieve massive customization; digital non-contact precision measurement technologies, intelligent high efficiency and fatigue life testing and analysis equipment, and equipment life cycle health testing and diagnostic assembly, which reduce and prevent equipment failure rate in the production process.
(5)Smart logistics and warehousing equipment
Mainland China’s logistics costs remain high. Smart logistics technologies are highlighted by light ultra-high-speed/ultra-heavy super-heavy stackers, high-speed intelligent delivery vehicles, high-speed pallet conveyors, automated 3D warehouses, and shop floor assembly. Manufacturers in Taiwan need to provide relevant equipment. The policy objective is to have the manufacturers provide a supply system for comprehensive solutions so that logistics issues can be resolved at one stop.
Perhaps vendors in Taiwan may take into account relevant preferential tax rates and government/private investment policy measures with respect to the key technologies mentioned in mainland China’s guiding documents under Made in China 2025 and 31 Policy Measures to Benefit Taiwan. In case of any concern about technical protection, even if vendors that have key technologies in Taiwan do not invest directly in mainland China, they will still be eligible for tax exemptions because enterprises in mainland China need to procure necessary technologies and equipment externally in order to achieve smart manufacturing. Therefore, Taiwanese business may still benefit indirectly from the preferential policy measures.
IV.Measures for Implementing Economic and Cultural Exchanges and Cooperation Between Shanghai and Taiwan were promulgated by the Shanghai Municipality
Such measures specifically support the participation of Taiwanese businesses in industry project investment and construction which are open to external investors in China (Shanghai) pilot free trade zones. In order for the Shanghai Pilot Free Trade Zone to serve the “One Belt One Way” initiative of the China government, the Shanghai Municipal Government encourages local companies to actively work with international parties in the production of smart manufacturing equipment in order to deepen cross-area cooperation and development.
A high-new technology enterprise registered in Shanghai and invested by a Taiwanese business (e.g., smart sensors) is governed by relevant requirements where the preferential policy of weighted pre-tax deduction of research and development expenses applies, and its enterprise income tax will be levied at a rate of 15%. Under the tax policy for equipment procurement by a research and development institution, technological development items imported by a qualified Taiwanese-invested research and development center in Shanghai are free from import duties and import-related value-added taxes and consumption taxes, and the value added taxes for procurement of equipment in mainland China will be fully refunded. For a Taiwanese business participating in major research and development projects in strategic and new industries and domains in Shanghai, the support policy concerning special funding provided by the China government should apply pursuant to relevant requirements. To cultivate Taiwanese-funded small, medium, micro and start-up enterprises, Shanghai supports policy-based financing guarantee funds and strengthens cooperation with Shanghai financial institutions to provide financing guarantee services to qualified small, medium and micro enterprises and young entrepreneurs.
V.Caution concerning Section 301 of the US Trade Act
It should be noted that the US concluded that since mainland China had invaded the US economy according to the results of an investigation conducted in accordance with Section 301 of the Trade Act, a trade sanction would be imposed on mainland China. A recommended list was subsequently announced on April 3 to slap a 25% tariff on approximately US$50 billion import from mainland China. On April 5, the US indicated that it was considering if to increase the scale by US$100 billion.[9] In this regard, Taiwanese businesses seeking to invest in mainland China, particularly the production of end products in mainland China before their sale to the US or export of parts and components and semi-finished goods to mainland China for assembly, are advised to take special caution.
[1] Article 1 of the Specific Measures of the People’s Republic of China Concerning the Promotion of Cross-Strait Economic and Cultural Exchanges and Cooperation: “Policies that apply to mainland China’s enterprises shall equally apply to the participation in the Made in China 2025 program by enterprises in mainland China which are invested by Taiwanese compatriots (hereinafter, the “Taiwanese Enterprises”). Support shall be provided to Taiwanese Businesses for setting up enterprises engaging in advanced manufacturing, smart manufacturing, and green manufacturing and establishing regional headquarters and research, development and design centers in mainland China, and such Taiwanese Businesses shall be eligible for support policies relating to tax revenues and investment.”
[2] Meeting in which the Green Paper for the Technical Innovation in Focused Domains for Made in China 2025 (Version 2017) was announced and a speech was given (January 29, 2018). Ministry of Industry and Information Technology of the People’s Republic of China. Please visit:
http://www.miit.gov.cn/n1146290/n1146397/c6037938/content.html
[3] 2016-2020 Engineering Implementation Guide of the People’s Republic of China for Smart Manufacturing
[4] 2016-2020 Development Plan of the People’s Republic of China for Smart Manufacturing
[5] Made in China 2025 of the People’s Republic of China
[6] Yi-shan Chen (2017), Full-scale Activation of Artificial Intelligence – Industrial Revolution Taiwan Cannot Afford to Miss, The Common Wealth Magazine, May 11, 2018, URL: http://topic.cw.com.tw/cw2000_2017/
[7] New Weapon for ITRI’s 3D Printing Technologies – Establishment of the Alliance for Laser Cladding and Surface Treatment Trials in Collaboration with the Industry to Deploy for Next Generation Manufacturing (August 29, 2016). Taipei: Department of Industrial Technology. May 11, 2018, URL: https://www.moea.gov.tw/MNS/doit/achievement/Achievements2.aspx?menu_id=5390&ac_id=256
[8] Key to Intelligence Application Is Sensors with Stocks Associated with such Concept Including…(September 5, 2017), CNYES, May 11, 2018, URL: https://news.cnyes.com/news/id/3909964
[9] Central Bank (April 17, 2018), US-China Trade War and Relevant Assessments on Impact to Taiwan and Coping Strategies. 11th Plenary Session of the Foreign Affairs and National Defense Subcommittee of the 5th Session of the 9th Term Legislature. May 11, 20-18, URL:
https://www.cbc.gov.tw/public/Attachment/841914173671.pdf