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Technology

Taiwan's millennial entrepreneurs cool on mainland China

Ineffective incentives lead more to think twice before crossing strait

Winners of a contest for startup projects last May: Establishing the groundwork for entrepreneurs to flourish is crucial in Taiwan.  (Photo by Shuhei Yamada) (Photo by Shuhei Yamada)

TAIPEI -- Taiwan's entrepreneurs appear to have lost interest in starting businesses in mainland China in recent years, as promises of generous government support made by Beijing have reportedly failed to pan out.

"The mainland touts all these incentives, but we didn't see a big benefit in real life," said a Taiwanese man who launched a business in Shenzhen.

Since 2008, the Chinese Communist Party has offered incentives for young Taiwanese to study and start businesses on the mainland. Many incubators at mainland startup hubs like Beijing and Shenzhen bear names implying cross-strait cooperation, though activity at these offices seem to have tapered off.

There is no official data showing a decrease in Taiwanese starting businesses on the mainland. But a sharp decline in applications for internships, which often attract would-be entrepreneurs, suggests a waning interest in China.

Nearly 2,000 people from Taiwan, Hong Kong and Macao applied in 2018 for 50 internships slots through the China Internet Development Foundation, which places applicants at prestigious employers like Alibaba Group Holding. That figure dropped to about 1,300 last year.

Excluding political considerations, this shift stems from the lack of government support and a growing pool of mainland talent, according to 10 young Taiwanese who have worked or started a business on the mainland and spoke to Nikkei.

China offers incentives to Taiwanese entrepreneurs through the Taiwan Affairs Office. But "the money the office has is not sufficient," said a woman who runs a technology company in Shanghai. She said many of China's measures were not helpful, and ended up raising the money she needed from the private sector.

"Being Taiwanese is no longer an advantage in and of itself," said another woman who owns a restaurant chain in Shenzhen. Chinese companies rolled out the red carpet for Taiwanese workers in the past, but mainland residents are now able to fill positions in the business sector.

Yet the shift away from mainland China has not led to increased entrepreneurship in Taiwan. The island had no unicorns, or startups worth at least $1 billion, as of the end of last year, according to CB Insights.

Most of the interviewees seemed to have voted for President Tsai Ing-wen in the latest presidential race. She could risk losing her younger supporters if she cannot lay out effective incentives for new businesses in her second term.

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