Abstract This thesis is focus on exploring the effect that domestic manufacturing vendors investing in Mainland China vs. Taiwan domestic employment issue. That the trend of the Taiwan unemployment rate gradually increasing these years is whether not related to the domestic vendors investing in Mainland China is the main topic of what we are discovering from the research. We have been observing the yearly tendency toward investing in other countries and change of the domestic labor demand and supply. According to the labor demand theory and other factors of labor demand affected we simultaneously consider one real model is built. Afterwards, we have divided manufacturing into 15 industries that categorizes labor intensity and capital intensity depended on industry characteristic. Based on the 1991-2202 pooling data calculated by OLS, we proceed to get the real evidential analysis of the domestic labor demand effect by investing in China. The result found: labor intensity of manufacturing who invest in China have outstandingly negative effect on the Taiwan domestic labor demand that means the employment opportunity in Taiwan is dramatically decreasing. The higher the investment percentage is, the lower the domestic labor demand is. Capital intensity of manufacturing, however, have positive effect that is not that outstanding at this moment. Therefore, the reason of unemployment rate yearly increasing in general is the manufacturers¡¦ enthusiastic investing behavior to Mainland China that only happened in labor intensity of manufacturing. Beside the factor of labor manufacture, the domestic economy downside is decreasing labor demand that is one of the reasons for unemployment rate increasing.