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Will Foxconn Billionaire Terry Gou’s COVID-19 Vaccine Deal Bring Taiwan Closer to China?

9 minute read

For 18 months, Taiwan was a model of COVID-19 prevention and President Tsai Ing-wen reaped the political benefits. Her approval rating surged to a record 73% in May 2020. Then, a year later, the island’s first major outbreak hit and it became clear that its COVID-19 defense was lacking one major component: vaccines.

As infections surged this May, Taiwan had just over 300,000 COVID-19 vaccines for its 23.5 million people. The government had ordered 20 million doses from overseas, but supplies were just trickling in.

Tsai, who has forged a close relationship with the U.S. and favors a more distant approach to China, blamed the shortage on interference from Beijing after a deal to buy vaccines directly from Germany manufacturer BioNTech fell apart in January. But finger-pointing didn’t stop her popularity from plunging as many Taiwanese people agonized over the lack of jabs. A poll in June showed her approval rating had dropped to just 43%.

It’s against this backdrop that 70-year-old billionaire Terry Gou became Taiwan’s vaccine hero. Gou, whose company Foxconn is Apple’s largest supplier, spearheaded a series of deals this month with Chinese state-owned Fosun Pharma—a pharmaceutical giant that holds the distribution rights for the Pfizer-BioNTech vaccines for China, including Taiwan. (Pfizer is the agent for the rest of the world.) The deals will bring 15 million doses of the Pfizer-BioNTech vaccine to Taiwan, with the first batches expected to arrive in September.

“Our government was too complacent with buying vaccines because we hardly had an outbreak,” Taipei resident Akane Lee says. “Gou’s vaccine purchase is like sending rain in a drought.”

The politics of sending COVID-19 vaccines to Taiwan

Taiwan Politics Daily
Taiwan President Tsai Ing-wen speaks at the presidential office following a surge of domestic COVID-19 cases in Taipei, Taiwan, on 13 May 2021.Ceng Shou Yi–NurPhoto/Getty Images

Gou enjoys close ties to Beijing and ran unsuccessfully in Taiwan’s 2019 presidential primary election for the opposition Kuomintang (KMT). His platform argued for the cultivation of a stronger relationship between the democratic self-ruled island and Mainland China, which views Taiwan as a breakaway province that must be brought back under its control—by force if necessary.

That the deal came via a businessman with billions of dollars in business interests in the mainland, and months after Tsai’s government failed to buy the same vaccines, indicates that Beijing put its finger on the scale, political observers say.

“I think [the Chinese government] encouraged Fosun Pharma to make concessions so the vaccines could be shipped directly from Germany,” says political scientist Spencer Yang of Taiwan’s Chinese Culture University. “The Beijing government might want to use this deal to humiliate the Tsai government.”

READ MORE: How a False Sense of Security Broke Down Taiwan’s COVID-19 Defenses

But the vaccine deal was fraught with political obstacles from the beginning. In May, when a COVID-19 outbreak started by cargo pilots spiraled into hundreds of daily cases and island-wide restrictions, Gou volunteered to buy five million doses of Pfizer-BioNTech vaccines for Taiwan—but the government took nearly a month to allow him to begin the process.

Why would Tsai hesitate to let a local billionaire foot the bill for its most desired import? “If Gou hadn’t run for president two years ago, it wouldn’t have been a problem,” says political scientist Arthur Ding of National Chengchi University. “But Gou gave the Tsai administration tremendous pressure. Tsai had to give in.”

When the Tsai government granted permission for Gou to purchase vaccines, it also gave the go-ahead to Taiwan Semiconductor Manufacturing Company (TSMC)—the world-leading microchip maker, which has closer ties to the government—to pursue a vaccine deal. TIME asked the Health Ministry to comment on the recent vaccine deals, but it declined.

On July 12, Gou’s Foxconn and TSCM announced a $350 million deal for five million Pfizer-BioNTech vaccines each with Fosun Pharma. The following week, the Tzu Chi Foundation, Taiwan’s largest charity, followed with a deal for another five million doses. The KMT has also offered to buy five million more, but Tsai has closed that door, saying no more doses were needed.

Gou, who declined to speak to TIME for this story, said on social media that the deal went through without influence from Beijing: “The mainland did not meddle or interfere in the vaccine procurement process,” he posted on Facebook.

Beijing’s Global Times quoted a mainland official as saying, “The signing of the vaccine purchase deal proved that previous rumors of the mainland preventing the island of Taiwan from accessing vaccines are unfounded.”

The private purchase of vaccines has highlighted recent public discontent with Tsai and her party. When Tsai announced on her Facebook page that the deal resulted from “the hard work of the government and private sector,” most people left scathing comments. “Has our government fallen asleep? They can’t even buy vaccines. They need to use the private sector to do so,” one user said.

The Global Times, too, was quick to criticize Tsai’s “self-aggrandizing attitude,” while highlighting that it was not her government that completed the vaccine deal.

Meanwhile, people have flooded Gou’s Facebook page with expressions of gratitude: “Thank you CEO Gou!” said one user. “Your initiative and goodwill led to TSMC and Tzu Chi following suit, and the saving of 15 million lives in Taiwan.”

Deal undercuts Taiwan’s other vaccine sources

Part of the reason for Taiwan’s vaccine shortage was that Tsai’s government banked on producing its own vaccines, and said at least one of two jabs under development would be available by July. “Tsai promoting them so eagerly and so early definitely hurt her popularity,” says Ding.

Taiwan’s drug regulator authorized the use of the first domestic COVID-19 vaccine, from Medigen Vaccine Biologics, on July 19. However, instead of using large-scale Phase III trials to test its efficacy, regulators accepted “immuno-bridging” studies that measured antibody response levels in people who had gotten the Medigen shots.

Officials say Taiwan is the first place to use such methods in regulatory authorization, but the methodology has proved somewhat controversial. Only 20% of people said they were willing to get jabbed with Taiwanese vaccines in a recent My Formosa survey, and 82% said the vaccines should go through Phase III trials before getting approved.

Luckily for Tsai, six million vaccine doses began arriving from the U.S. and Japan in June, allowing Taiwan to start its mass inoculation campaign. Currently, more than 24% of Taiwanese people have received one dose. “When people in Taiwan were desperate for vaccines, the donations by the U.S. and Japan really bailed Tsai out,” Ding says.

For Gou, this could be a political beginning

The Gou-led purchase of 15 million doses from BioNTech—enough to vaccinate nearly one-third of the island’s population—means that Taiwan will now have much less need for either additional donations from allies or its own domestically developed vaccines. But the deal has sparked some skepticism in Taiwan.

“It’s fine for Gou to buy vaccines but he didn’t have to buy BioNTech,” says Vivian Yu, a legal counsel who specializes in cross-Strait commercial ties. “There’s always a political risk of going through Shanghai’s Fosun Pharma.”

Tensions with Beijing have been at their highest in years. Taiwan sees Chinese warplanes fly into the island’s Air Defense Identification Zone (ADIZ) on a regular basis, with a record high of 28 warplanes encroaching on one day in June.

READ MORE: Foxconn Founder Terry Gou Wants to be Taiwan’s President—and a Go-Between for U.S. and China

Has Beijing earned new loyalty during Taiwan’s vaccine woes? Ding believes China gained ground—but to a larger extent, Tsai and her pro-West Democratic Progressive Party (DPP) lost it. A Taiwanese Public Opinion Foundation poll released in July indicates that in the past three months, Tsai’s ruling DPP lost 15% of its supporters.

However, the defectors haven’t switched to the more China-friendly KMT. Most people, 48%, are non-partisan and some now support smaller parties, like the new Taiwan People’s Party (TPP) led by Taipei Mayor Ko Wen-je, who takes a more pragmatic tone with Beijing than Tsai. After losing the presidential primary for the KMT, Gou called for supporting candidates from the TPP and other small parties in the 2020 election.

Gou has earned a place in Taiwanese hearts for his determination to provide Pfizer-BioNTech vaccines, a brand that has topped local surveys of the jabs people favor. There is also no doubting his philanthropic credentials. He donated over $635 million to build a state-of-the-art cancer research and treatment center in memory of his first wife and brother, who both died of cancer. When he remarried in 2008, he and his new wife pledged to give 90% of his $6 billion fortune to charity.

Will such generosity translate into enough support for another presidential run?

“The next presidential election is three years from now, so it’s far too early to call,” says Lev Nachman, postdoctoral fellow at Harvard University’s Fairbank Center for Chinese Studies. “But I don’t think he will quietly bow out from politics. His public involvement in securing vaccines, his general presence in the KMT and TPP, show future political ambitions from Terry Gou.”

And while Beijing’s earlier vaccine overtures to Taiwan were rejected, by staying out of the BioNTech vaccine deal with Fosun (at least publicly), it may have achieved some political aims in Taiwan. “To some extent, China has won points,” says Yang at Chinese Culture University, “but Chinese planes remind us that Beijing is still hostile towards Taiwan.”

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