The Future Kinmen
Paradise or Mirage?
Chinese investors are making far greater inroads into the outlying island of Kinmen than Chinese troops did over half a century ago. But are their ambitious projects the real deal or simply a mirage?
Paradise or Mirage?By Shu-ren Koo
From CommonWealth Magazine (vol. 469 )
"This beach is pretty good! Isn’t it?" gushes property developer Wu Youhua, the president of Xiamen Huatian Group, snapping his camera as he talks on a three-kilometer-long white, sandy beach on the southern side of Kinmen’s main island.
That beach is the same spot on Liaoluo Bay where Nationalist forces braved heavy shelling by the Chinese Communists on Aug. 23, 1958 and maintained their hold on the island, just five kilometers to China’s southeastern coast. Today, the gunfire has long since ended, and in its place, Xiamen native Wu has brought renminbi, planning to build Kinmen’s first five-star hotel and leisure complex.
At NT$5 billion, Wu’s investment would be the biggest private-sector project in Kinmen’s history. It is not only being closely watched by people in the outlying island, but also in Taiwan and China, because its success or failure represents a key barometer of future Chinese investment in Taiwan.
Compared with other Chinese investors that have injected funds into the country, Wu is clearly a different breed.
Sharing the Chinese Tourist Gravy Train
When speaking Mandarin, Wu lacks the Beijing accent often associated with a Chinese native. Instead, his voice carries the inflections of the Minnan dialect of Fujian Province, similar to the accent in Taiwan. His outgoing, direct personality also contrasts starkly with the cautious, low-profile approach taken by most investors from China. Many of his counterparts come to Taiwan to buy technology and talent or cash in on the "Made in Taiwan" brand, but Wu is intent upon sharing Chinese tourist dollars with the people of Kinmen.
Wu made his fortune by developing property in Xiamen and Wuhan, and in recent years his Xiamen Huatian Gangaotai Commodity Shopping Co., Ltd. has opened duty-free stores in Xiamen that specialize in goods from Taiwan and Hong Kong.
Through that company, Wu invested NT$50 million in May 2010 to form a joint venture with a Kinmen investor called Yanming Development and Construction Ltd., the first Chinese investment in Taiwan’s leisure and hotel sector to be approved by the Ministry of Economic Affairs. Wu plans to invest NT$5 billion over the next five years to build a complex with a resort hotel and duty-free shopping and entertainment center, and condos for residential or commercial use.
The NT$5 billion sum represents a quarter of the total amount invested by private interests in Kinmen over the past two years. To see his ambitious vision through, Wu has recently commuted to the island on practically a weekly basis, often enough that immigration officials at Kinmen’s Shuitou Wharf all recognize the Xiamen boss.
A Paradise in 10 Years?
The economic potential of Chinese tourists and Kinmen’s relatively underdeveloped infrastructure convinced Wu that Taiwan’s Cold War bulwark presented an excellent opportunity. When the businessman visited Kinmen county commissioner Li Wo-shi for the first time last year, he said, "Mr. Commissioner, I have news for you. I’m in Kinmen because independent tourists will soon be coming, and Chinese visitors will be rushing in like the tide. Just think how high the tide rises."
Yet because of Kinmen’s limited accommodation and entertainment opportunities, many people have been skeptical about whether Chinese nationals, once allowed to visit Taiwan on their own rather than as part of tour groups, would really flow into Kinmen like tidal waters. Wu is not one of them.
"The reason I’ve taken a shining to Kinmen is because it doesn’t have anything," Wu states emphatically during an interview in his nearly 330 square-meter Kinmen office. "I’ve only come because there is nothing. If Kinmen already had everything, what would be the point of me coming? I’m here to invest. Kinmen is now at the point where it has to develop."
Wu explains that every year, 10 million Chinese people board ferries from Xiamen Port’s Heping Wharf to go to the Taiwan-held Dadan, Erdan and Little Kinmen islands that are part of the Kinmen island chain, where they inevitably take pictures of iconic Cold War-era signs screaming out in red lettering on a white background, "Unite China under the Three Principles of the People." It’s a trend he believes reflects the attraction Kinmen has for Chinese nationals.
If just get 700,000 people of those 10 million tourists – about 2,000 per day – visit the main island of Kinmen, Wu is convinced it will bustle with commercial life.
"In the next 10 years, Kinmen will become a paradise on the Taiwan Strait’s west coast," he says with confidence.
Wu is not the only entrepreneur excited by the potential of independent Chinese travelers visiting Taiwan, which Taiwan’s government said recently could begin by July 1. Taiwan Land Development Corporation has invested NT$3.7 billion to build a recreational park area with commercial facilities on a site about half the size of Taipei’s Chiang Kai-shek Memorial Hall just north of Kinmen’s Shang-Yi Airport.
Yang Nan-ping, the chairman of Taiwan-based game and gaming machine developer Astro Corp., and Shenzhen-based land developer Fantasia Holdings Group Co., which has applied to list Taiwan depositary receipts on the Taiwan stock exchange, are planning a NT$5 billion joint venture to develop a tourist resort in Kinmen.
And then there’s the Xiamen Tourism Group, which intends to invest NT$320 million to renovate the aging Golden Treasure Hotel on Kinmen’s west coast.
Wu’s vision, however, goes beyond the tourism and leisure sector. He plans to set up a ranch with 5,000 heads of cattle that will produce fresh and processed beef products for sale to Taiwan and China, and a rent-a-car business with a fleet of 500 electric cars to rent to tourists. If all of his plans materialize, they will create 2,000 jobs – about 20 percent of Kinmen’s existing workforce if civil servants and teachers are excluded.
At the end of March, Wu’s Xiamen Huatian Gangaotai Commodity Shopping secured 1.1 billion renminbi (about NT$5 billion) in financing from China Development Bank for its Kinmen projects, solidifying Wu’s status as a Kinmen VIP warmly welcomed by the Kinmen County government, county councilmen and many local residents.
Last November, during his first trip to Xiamen to solicit investment, County Commissioner Li said bluntly that in Taiwan’s existing political environment, waiting for the central government to allocate funds to localities was fruitless, so the county had to resort to its own devices.
"The role Chinese investors can play in Kinmen is as an additional source of development funding. Chinese companies have deep pockets," Li says.
There are those, however, who are not nearly as enthusiastic about the Chinese invasion. One local entrepreneur surnamed Chen, whose family has run a wholesale and retail business in Kinmen for more than 30 years, openly doubts a positive outcome from Chinese investment in Taiwan. "Quite a few Kinmen people feel it has nothing to do with us. It’s just a small minority of connected people who will benefit," he says.
Chien-min Chen, a professor in National Quemoy University’s Department of Tourism Management, explains that such a reaction is not surprising. The direct transportation and trade links between Kinmen and Xiamen that opened to great fanfare in the early 2000s benefited shuttle bus operators running between the airport and the ferry terminal, and souvenir vendors, but did little for most Kinmen residents.
"To have Chinese investment help stimulate Kinmen’s economy would be a good thing. But in the initial phase, Chinese investors are just looking around and weighing their options, while the price of land has already been driven higher through speculation," Chen contends.
Benefits Concentrated in the Hands of a Few?
In fact, many uncertainties remain in determining whether or not Kinmen can truly emerge as an island paradise.
Taiwan currently bars the use of Chinese workers and does not allow Chinese contractors to handle construction jobs, two restrictions that Wu believes could hinder the smooth progress of development projects.
"Right now, all of China is watching how I do things here. If I struggle, then other Chinese investors wanting to invest in Taiwan, well...," Wu says as he throws his hands up in resignation.
Some people in Kinmen hope the county can be fully demilitarized and turned into a special administration area with greater autonomy.
"The situation in outlying islands is different (from Taiwan proper). There is an urgent need to loosen a number of regulations on Chinese investment (here)," County Commissioner Li insists.
Even before the ambitious development projects have broken ground, real estate prices in the county have already risen dramatically, pushed higher by speculation that Kinmen could become a tax-free economic zone and independent Chinese travelers could be allowed to visit. Many people in the county see the price rises as a mixed blessing.
According to the Ministry of the Interior’s latest "Urban Land Price Index" for Taiwan, with prices in March 2008 used as the baseline, the index for Kinmen County rose 8.5 percent in 2010, the third highest in the country behind only New Taipei City and Taipei City. Over the past year, 10 real estate brokers, including Taiwan Realty Co., Century 21, and Evertrust Rehouse Co., have all set up offices in Kinmen, an unprecedented trend.
"What kind of place is Kinmen that so many real estate brokers want to come?" asks one local resident sarcastically.
The small outlying county has carefully preserved the unmistakably tranquil look of traditional Minnan village life and culture that originated in southern Fujian Province, but that could soon change. Though Kinmen’s economy was dealt a serious blow when most of the military forces stationed there were pulled out, policies liberalizing economic ties with China have created a big economic pie for Kinmen in the future. Many Kinmen natives, Chinese, and Taiwanese have made moves there to carve out as big a piece of the pie as possible.
But the question remains, is this pie real or simply a mirage? National Quemoy University’s Chen believes, "It completely depends on cross-strait relations and the Taiwan government’s cross-strait policy."
To Wu, the answer lies much closer to home. "How Kinmen changes will depend on Kinmen’s people. I can’t change the situation, but I can be a catalyst to get it started."
Translated from the Chinese by Luke Sabatier