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HP bets billions on Taiwan R&D

Taiwan nets $3.2 billion pledge from HP, others after China pact

Hewlett-Packard (NYSE: HPQ) and other companies have together pledged to invest over NT$100 billion (US$3.2 billion) in Taiwan after the island signed a landmark trade agreement with China, boosting business ties.

The Economic Cooperation Framework Agreement (ECFA) was a landmark preferential trade document signed by representatives from China and Taiwan in June that paves the way to increased trade and broader protection for Taiwanese businesses in China.

Business between the two had been growing for years prior to the signing of the ECFA, but political problems could have quickly put an end to that. China and Taiwan have been at odds ever since separating amid civil war in 1949, and China has vowed to take the island by force, if necessary.

Over the past decade, Taiwanese business people have been among the biggest investors in China, particularly in the technology sector, where they’ve taken advantage of low-cost labor to capture global contracts to produce gadgets including Sony PlayStations and Apple iPhones.

One aspect of the ECFA agreement Taiwan’s president has struggled with politically is criticism that the deal may cost jobs at home as Taiwanese companies increase their focus on mainland China. The meetings that led to the NT$100 billion investment pledge were meant to assuage those fears.

The investments will create over 12,900 jobs for Taiwanese workers, the island’s economics ministry said in a statement.

“There is a special significance to this [success] at the first high-level investment meeting in Taiwan after the June 29 signing of ECFA,” the ministry said.

Taiwan’s president had argued that ECFA would give foreign multinationals more reason to invest in Taiwan because of the improved relationship with China. Other initiatives between Taiwan and China over the past few years have also helped improve business, including direct flights between the two. Until a few years ago, people and cargo could not move directly to China from Taiwan or vice-versa. Instead, all had to stop at another location first, such as Hong Kong.

China also used to work hard to prevent Taiwan from hosting major events or winning international attention in any way.

The new batch of investments tallied by Taiwan’s economics ministry includes 27 deals. One of those is for HP to upgrade its regional research center in Taiwan to a global lab, according to the economics ministry.