Economic Analysis On Taiwanese Investment In Mainland China And Its Parent-Subsidiary Relationship

Over the past 20 years, Taiwanese business people have entered the Chinese mainland on a large scale. The Cross-Strait economic ties have entered a new stage of mutual benefits, which has produced positive impact on the economic development of both sides. Given the limits of existing data, we design and implement the data mining of Taiwanese investment in Mainland China In order to observe the relationship between the Taiwan parent company and its subsidiary in mainland China, and to further pave the way for measuring the efficiency and profitability of the investment.This paper supplies a brief economic history of Taiwan investment in Mainland China, and examines its profitability based on a decision tree data-mining framework. The process consists basically of steps that are performed before carrying out data mining, such as data update and modification, pre-processing of raw data, decision-tree and association rule techniques including ID3,Apriori algorithm. The financial results of the data mining indicate that, as the numbers and types of entities grow, Taiwan enterprises have stepped up investments extensively in mainland China and their profitability and efficiency have been improved significantly. Meanwhile, the industry average profitability, which shows a tendency of convergence, depends largely on the return on asset. Yet, the inherent industry characteristics are still the important consideration to evaluate the required rate of return.The data mining experiment also includes the related party transactions among parent company and subsidiaries. The results indicate that the paid-in capital of the subsidiaries does not have an obvious correlation with the revenue of the parent companies.