A worker packs bathroom fittings in a factory of the Taiwanese-owned LCM Group in Kunshan, in China’s eastern Jiangsu province, June 20, 2025. (Photo by GREG BAKER / AFP)
KUNSHAN, China — Bustling Taipei-style shopping streets, majestic temples to the island’s deities and thriving factories dot the eastern Chinese city of Kunshan. For years, Kunshan has been a hub for Taiwanese businesses.
But now those firms are feeling the strain from cross-Strait tensions that have stoked safety fears among companies.
Taiwanese entrepreneurs — known as “Taishang” in Mandarin — poured billions into mainland China since ties began improving in the 1990s. They play an important role in China’s rise to become the world’s second-largest economy.
But their numbers have dwindled in recent years. The number of Taiwanese working in China dropped from 409,000 in 2009 to 177,000 in 2022. This is according to estimates provided to AFP by the Straits Exchange Foundation, an unofficial intermediary between Taipei and Beijing.
China’s economic slowdown and mounting trade tensions with Washington are partially responsible, the organization says.
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But James Lee blames “politics.” Lee is a 78-year-old Taiwanese industrialist who was forced to close his business in Guangdong in 2022. He ran a cable and electrical outlet factory in the southern province.
“You have to be very careful when you speak,” Lee told AFP. “We Taiwanese businessmen are afraid.”
Bolstered by their mastery of Mandarin and business acumen, Taishang have prospered as wily intermediaries between international markets and China’s vast industrial manufacturing base.
Perhaps the most famous of them is Terry Gou, founder of Foxconn whose vast factories in China churn out iPhones. These factories have helped make it the world’s biggest contract electronics manufacturer.
No guarantee of safety
Kunshan is an hour’s drive from economic powerhouse Shanghai. It has been a key hub for Taiwanese-owned industry in China since the 1990s.
“Back then, it was a rice field,” recalls Annie Wang, an industrialist from the island who arrived in 1996.
“Taiwanese companies were fortunate to coincide with the 30 most glorious years of Chinese manufacturing,” she said.
Now, Wang heads an electronics subcontracting manufacturing plant, a small technology park and a coffee utensil brand.
At the height of the boom, Kunshan was home to more than 100,000 Taiwanese, according to unofficial figures from local associations.
READ: Taiwan accuses China of doing ‘provocative’ military patrol near island
But the number of Taiwanese companies in the city has shrunk from more than 10,000 a decade ago. There are now fewer than 5,000 today, according to the data.
And the Taishang have felt the squeeze as relations between Taipei and Beijing plunge to their lowest depths in years.
The Chinese Communist Party — which claims Taiwan as its territory but has never controlled it — has hardened its stance against alleged “Taiwanese independence activists.” It even called for the death penalty for alleged secessionism.
New rules, which also encourage citizens to report alleged pro-independence activities, have had a chilling effect on Taiwanese businesses in mainland China.
“We are not sending Taiwanese employees (to China) because we don’t know how to guarantee their safety,” said industrialist Lee.
“The initial favorable conditions have disappeared, and now there are many additional risks,” Luo Wen-jia told AFP. Luo is vice chairman of the Straits Exchange Foundation.
China’s economic woes and rising production costs are adding to the problems.
Taiwanese caught in crossfire
“When we first went there, we thought that China’s economy would continue to improve because its market is so large and its population is so big,” said Leon Chen. Chen is a Taiwanese businessman who worked at a battery component factory in the southeastern province of Jiangxi.
“But we haven’t seen this materialize because there are some issues — there is the US-China trade war and there was the pandemic,” he added.
In response, Taiwanese manufacturers are turning to new, more profitable — and less politically sensitive — locales.
“Some went to Vietnam, and some went to Thailand, Indonesia and the Philippines, and some returned to Taiwan,” Luo said.
Between 2016 and 2024, Taiwanese investments in Vietnam approved by the Ministry of Economic Affairs in Taipei soared 129 percent. This went from US$451 million to more than US$1 billion.
Over the same period, those to mainland China fell 62 percent, according to the same source.
This decline could deal a blow to Beijing’s “united front” strategy. This has seen Beijing lean on Taishang communities to promote Taiwan’s political integration and, ultimately, unification.
And as Beijing launches military drills practicing a blockade of Taiwan and Taipei cracks down on Chinese spies, Taishang risk being caught in the crossfire.
In October 2023, Foxconn was placed under investigation by Chinese authorities. This was a move widely seen as linked to a bid for the Taiwan presidency by its founder.
“There is no way to compare it with the heyday but we can still make ends meet,” said Chen.
“If the environment for doing business in China becomes worse and worse, we would have no choice but to leave.”