Taiwan Finally Gets BioNTech Shots Through China, Via Big Tech

(Bloomberg) -- For months Taiwan had struggled to buy millions of Covid-19 vaccines from Germany’s BioNTech SE, in part because President’s Tsai Ing-wen’s administration sought to go around a Chinese company that holds distribution rights for the Greater China region.

The government in Taipei last year attempted to bypass Shanghai Fosun Pharmaceutical Group Co. and deal directly with BioNTech, insisting it had a sovereign right to get the vaccines without going through China. But Beijing objected, accusing Taiwan of violating “business rules and trust.” Taipei blamed China for the collapse of the deal.

Pressure on Tsai to relent began to build over the past few months as cases rose in Taiwan, prompting one-time presidential hopeful Terry Gou -- founder of Hon Hai Precision Industry Co., the main assembler of Apple Inc.’s iPhones -- to offer his personal help in securing vaccines. With her popularity taking a hit, Tsai last month decided to meet with Gou and Mark Liu, chairperson of global chip giant Taiwan Semiconductor Manufacturing Co., to reach a deal on vaccines.

Those efforts paid off over the weekend, with the two companies signing agreements for a combined 10 million doses of BioNTech’s vaccine set to arrive in Taiwan in September. They will donate the vaccines to the government to bolster its inoculation efforts, according to a joint statement on Monday.

“Hon Hai and TSMC are like ‘white gloves,’ an intermediate buffer, so that Taiwan government doesn’t need to deal with Fosun directly and thus solving the sensitive political issues,” said Chen Ho-min, a professor at National Taiwan University. “The deal would definitely boost Gou’s chance in the 2024 election. This wasn’t an ideal option for the government, but it had no choice.”

Taiwan’s need for vaccines has become much more acute over the past two months. While health authorities managed to keep the coronavirus outbreak largely under control throughout 2020, cases rose rapidly among a population with little immunity and few inoculations after an outbreak in late April. Taiwan has registered around 14,000 domestic cases and 740 deaths, the vast majority of which since the beginning of May.

Since Beijing and Taipei are still technically at war, all official contact is tightly regulated. As neither side formally recognizes the other as legitimate, government contact must be made via semi-official intermediary organizations, meaning Taiwan Centers for Disease Control was unable to sign a deal directly with Fosun, which had rights to distribute the shots in mainland China, Hong Kong, Macau and Taiwan.

Taiwan cabinet spokesperson Lo Ping-cheng on Monday dismissed reports that the government had hampered a deal by refusing to allow Fosun’s involvement.

‘Untrue and Unfair’

“If government had wanted to block the deal, why did health minister Chen let enterprises to buy and donate the vaccine?” Lo said at a briefing Monday. “Why did we set up a project on June 18 to help companies to get those vaccine? Why did we rush to sign two contracts in half a month? The results we achieved today prove the government’s attitude and behavior, showing that these rumors are untrue and unfair.”

But Monday’s statement from TSMC and Hon Hai downplayed Fosun’s involvement, emphasizing the vaccines will be shipped directly to Taiwan from Germany and making no mention of the Shanghai-based company. Fosun, however, confirmed in a filing to the stock exchange Sunday that one of its units was one of the signatories on the agreement.

China cut off ties with Taiwan after the 2016 election of Tsai, whose Democratic Progressive Party supports independence. Gou, who launched and then abandoned a presidential campaign in 2019, has been associated with the more China-friendly political groups.

Beijing has steadily ramped up military and economic pressure on Taipei in recent years in an effort to reinforce its assertion of sovereignty over the island. The government in Taipei rejects China’s claim.

Taipei and the German company had in December already reached an agreement, even getting so far as drafting a press release, only for the deal to fall apart at the last minute. Health minister Chen Shih-chung claimed “external forces”, widely seen as a reference to the Chinese government, were the reason the deal failed.

Zhu Fenglian, a spokeswoman for China’s Taiwan Affairs Office, called those accusations “fabricated out of nothing.”

©2021 Bloomberg L.P.