This paper explores the efficiency performance of individual Taiwanese manufacturing enterprises in China and Chinese tax incentives impact. Applying data envelopment analysis (DEA) to operations data for 3,506 firms over the four year period (2004 to 2007), the study finds that Taiwanese firms located in the special tax incentive zones benefit from tax incentives than their counterparts in the other zones along with better efficiency performances with statistical significance. In addition, the productive technology industry enjoys better tax incentives but the efficiency performance worsens due to the higher capital requirements and greater operating risks. The average investment years of Taiwanese manufacturing enterprises in productive technology industry are shorter and the payback period is longer rather than other industries. The major production type of the technology industry is original equipment manufacturer (OEM) with lower margin rate, compared with the upstream value chain of the high technology sector. Finally, the study demonstrates that Taiwanese firms with the smaller size and higher sales growth exhibit better efficiency performance.