Taiwan Today

The Taiwan market offers North America bountiful business opportunities.After a slow start, U.S. states and Canadian provinces are picking up on the action.

The ROC and the United States have maintained close, sub­stantive relations in trade, in­ vestment, and cultural exchange although formal diplomatic rela­tions ended on January 1, 1979. Figures illustrate the impressive growth in trade. Before derecognition, the total amount of trade between Taiwan and the U.S. amounted to approximately US$7.3 bil­lion. The figure increased fourfold to reach US$31 billion by 1987. And after some U.S. states set up their own trade offices in Taipei in 1988, total trade climbed to US$36 billion. Of that total, U.S. exports to Taiwan accounted for US$13 billion, a more than 70 percent growth over the US$7.6 billion regis­tered the year before. But the figures also show a growing trade imbalance in Taiwan's favor, and this is one problem that current trade negotiations are trying to address.

There are many reasons for the rapid development in trade relations between the two countries, such as the ap­preciation of the NT dollar, the liberali­zation of Taiwan trade policies, and market circumstances. Rut the role the state trade offices and the American Trade Center (ATC) in Taipei play in opening opportunities and ironing out difficulties cannot be ignored.

"The purpose of the ATC is very simple: to promote U.S. exports to Taiwan," says Craig Allen, the center's manager. According to Allen, the main function of the American Trade Center, which is located at the Taipei World Trade Center, is to provide the Ameri­can business community with services aimed at increasing exports to Taiwan. These services include assisting U.S. businessmen in exploring for opportuni­ties to market their products, carrying out market research and analysis, and reporting on the specific industries and markets that offer the greatest potential for expanding U.S. exports to Taiwan.

The ATC provides U.S. suppliers with information on major projects, and works with U.S. firms in ensuring fair treatment during the bidding process. It organizes its own trade shows for Ameri­can products seeking a market in Taiwan and for local agents of American prod­ucts, as well as coordinates and provides support to U.S. trade missions and delegations.

A small commercial library at the ATC office is open to the public, and contains a variety of reference materials pertaining to American exports to Taiwan. The library is a valuable aid to American firms seeking agents or licens­ing arrangements with Taiwan firms. It compiles basic information on specific companies-size, products, prices-and reports on public and private tender opportunities in Taiwan to U.S. firms on a timely basis.

Aside from providing information services, the A TC holds many promo­tion campaigns, seminars, and trade and catalogue shows. "We sponsored or cosponsored thirty-two of them last year," says Allen. "We work across the whole spectrum of industries, everything from aircraft to chemicals, toiletries to can­ dies. In every area, we try to provide ef­fective promotion services for American exporters. "

While the ATC covers a broad range of services and industries, the U.S. state trade offices focus on areas directly relevant to their residents. These may include any or all of the vari­ous sectors of trade, investment, tour­ism, education, and cultural exchange. Each state trade office has its own fields of expertise or emphasis. The Colorado Trade & Investment Office, for example, highlights its high-tech industries in medicine and science, and in aerospace. The Washington State USA Trade Development Office also emphasizes its ex­pertise in aerospace, while the Oregon Trade and Information Center points out its strengths in wood resources and high-tech industries related to environ­ mental protection.

Ties between the state offices and the ATC are close. "We work with them in many ways," says Allen. "Besides sharing market information, we sponsor seminars and trade shows, and encour­age them to participate." This encouragement comes in the form of A TC­ covered costs for the rent of trade booths, as well as advertising. According to Allen, the center also has programs designed to include all the state trade of­fices in such ATC shows as those exhibit­ing food products and pollution control equipment.

Cultivating relations between the state trade offices and the ROC is the special concern of the China External Trade Development Council, also known as CETRA. Cosponsored by the ROC government and private business, CETRA is helping develop global mar­kets for Taiwan products and encourag­ing expansion of the Taiwan market to accommodate more imports. Under its encouragement, seventeen American states, one city, and one territory main­tain trade offices at the Taipei World Trade Center. They are: Alaska, Arizo­na, Arkansas, Colorado, Idaho, Indiana, Louisiana, Maryland, Mississippi, Mis­souri, Montana, Nevada, Oregon, Texas, Utah, Washington, Wyoming; the territory of Guam; and the city of Tucson, Arizona. Due to lack of funds, the Minnesota Trade and Investment Office closed in February 1991. That same month, a trade delegation from Tulsa, Oklahoma, visited Taiwan, and has made plans to establish an Oklahoma trade office in July. Kansas and Georgia do not have their own trade offices, but their interests are represented in Taiwan by locally designated trading companies.

In 1987, Arizona became the first state to establish a trade office, the State of Arizona, U.S.A. Asian-Pacific Trade Office. It is also the largest of all the U.S. trade offices. Its main focus, according to director Eric Chow, is attracting investors to Arizona. But this is not its only concern. "When we began, our main function was to sell our products to Taiwan. Now, we provide services cover­ing a much wider range that includes in­ vestment, cultural exchange, and educa­tion consulting services." For example, the office organizes visits by Taiwan high school students during their winter vacation to selected Arizona universities. Similar programs also bring in Arizona high school students to Taiwan in the summer. The office also provides educa­tion counselling to high school or college graduates wishing to pursue degrees in Arizona.

The trade office wants to modify Arizona's cactus-in-a-desert image for the sake of attracting more tourists. "Many people here have the impression that there is nothing but deserts and rocks in Arizona," says Chow. "It's true we have deserts, but we also have for­ests, rivers, lakes, and golf courses. Most people would find it amazing that there are even places in Arizona where you can ski in the winter." The office is earnestly trying to change what Chow feels is the state's negative image. "Who would want to go to the middle of a desert to sightsee or set up factories and branch offices?" Chow says. Thus, the trade office hands out to visitors a bro­chure printed by the Arizona Office of Tourism that shows off the extraordinary beauty of the state. The Grand Canyon is there, but also featured prominently are the pleasures of boating, fishing, playing golf, and skiing in Arizona.

The State of Texas Office, Taipei, set up in 1989, is dealing with the same kind of image problem. For many people in Taiwan, Texas is a land of cowboys and oil fields. Says director Tobin L. Alexander, "Very often when I walk into a room or attend a meeting, I have the feeling people had expected me to look and talk like John Wayne." He adds that the trade office wants people in Taiwan to know that Texas is highly in­dustrialized, and that there is a lot more than cowboys and oil derricks to see. "We encourage people to visit our state," Alexander says. "We have been contacting some Taiwan travel agencies, and we have been working on direct flights between Taiwan and Texas."

On the other hand, the Oregon Trade and Information Center, another very active U.S. trade office which was set up in late 1987, is worried that the state's name draws a blank in Taiwan. "Ninety-nine percent of the tourism in Oregon is domestic," says James A. Boyle, the center's director. "We are working on improving this situation. There is still a long way to go, but we have had some success." Count as one success the three-part television series aired in July 1990 by the Chinese Televi­sion System. The series introduced busi­ness and tourism opportunities in Oregon, and presented the history of the state's Chinese immigrants. Also count Boyle, who has lived in Taiwan for fif­teen years and speaks fluent Mandarin and some Taiwanese. In his own words, "Whenever I get the chance, I invite people to visit Oregon and see the place for themselves."

Developing trade and increasing investments are the major ac­tivities of the state trade of­fices. Chow, Alexander, and Boyle agree that the future for an island like Taiwan lies in external trade and in­vestment, and that Taiwan is a good place for doing business. Boyle of the Oregon trade office points out that Taiwan is now Oregon's sixth largest export market. Total exports amount to about US$223 million, almost forty per­ cent higher than the 1988 figure. He says, "We see great opportunities in doing many kinds of business with Taiwan."

The Oregon trade office shows par­ticular interest in opportunities related to environmental protection. "People in Oregon are conscious of the quality of life," Boyle says, "because we ourselves had pollution problems. We had to clean up our rivers and air many years ago, and we can share our experience with Taiwan." Wood and lumber products are another basis for the many trade ties the office has put together since Taiwan imports most of its lumber. The Oregon office is also interested in promoting construction materials, food products, and machinery.

The Arizona trade office emphasizes investment opportunities in the state, which Chow says makes up 90 percent of his work. "You can find products made in Hong Kong or Macao in some hinter­ land states, but not Taiwan products," he says. "These states are all potential markets waiting to be cultivated, and Arizona is a good place to start." Chow explains that Arizona is in the heart of the southwest United States, and not too far from ports in California. Efficient highways and transport systems have made it possible to move goods from Arizona to its surrounding states over­ night. Labor costs in Arizona are also lower than in Taiwan. In terms of technology development, the state has much to offer. Phoenix is ranked the third largest high-tech center in the U.S., after Silicon Valley and Boston. And it is the second-largest producer of semiconductors. "We have some of the best engineers," says Chow, "and we en­ courage Taiwan to invest in our high­ tech industries because it will be helpful to the development of Taiwan's own high-tech industries."

The investment ventures the Arizo­na trade office has helped put together in the state are diverse in nature. Last year, for example, it brought in two investors in the manufacture of computer cables in Yuma. One of Taiwan's investment companies bought a hotel in Mesa, and upgraded it as part of a five-star hotel chain. A cosmetic company is also con­sidering setting up a factory in the state.

The Texas trade office has helped put together various kinds of businesses or investments that range from pollution control equipment and machine tools, to electric motors and bowling balls. "Last year, we helped six Taiwan companies establish factories or branch offices in Texas," says Alexander. Although both the Arizona and Texas trade offices en­ courage small and medium-sized Taiwan enterprises (SMEs) to set up factories, branch offices, or warehouses in their states, they make it clear that it is not their intention to help these SMEs escape from Taiwan. Chow says: "If these SMEs do not have factories or branch offices in the States, they may have to face higher tariffs on their prod­ucts." Both Chow and Alexander agree that the next natural step is for Taiwan enterprises to diversify their markets.

The state trade offices are strongly supported at home. "State representa­tion is equally or more effective in trade promotion than other types of more centralized trade promotions, " says Allen of ATC. "They are closer to the businesses, and are effective at educating their grass roots about exporting to Taiwan."

But there are problems as well. Says Allen: "We are trying to get more U.S. exporters interested in the Taiwan market. But many people in the U.S. don't understand the size of this market. They don't understand the importance of this market for them as a company or exporter."

The state trade offices are generally small in size and staff, with one or two show rooms and two employees. Their smallness belies their important role as the bridge between Taiwan and their state. "There are no actual statistics to show the success of the state trade of­fices," says Allen. "But if you look at the trade figures, you can see their strong in­fluence. The beauty of having these state offices is they take what is important from a particular geographical area and match it effectively in another geographi­cal area. Ultimately they participate in the balancing of trade between Taiwan and the U.S., and they do this effectively and efficiently."

Just north of the border lies Canada, perceived by Taiwan immigrants and businesses as a land of milk and honey. Canada severed formal diplomatic relations with the Republic of China in 1970, but two­ way trade, and cultural and educational exchanges have continued. Total trade in 1970 amounted to approximately US$68 million, but by 1989, the figure had made a steep climb to US$2.75 bil­lion. Canada is now the ROC's seventh largest export market, while Taiwan ranks as Canada's eighth largest trading partner.

In view of expanding trade relations, in late 1986 the Canadian government set up the Canadian Trade Office, now located at the Taipei World Trade Center. Similar in function to the Ameri­can Trade Center, the Canadian Trade Office offers Canadian businesses with vital information on opportunities in Taiwan, as well as promotes and intro­duces Canadian products to the Taiwan market. In 1988, British Columbia (B.C.) set up its own provincial trade office, and in 1989, Alberta followed suit. Both offices are at the Taipei World Trade Center as well.

The Canadian representative organi­zations serve functions not limited to the areas of trade and investment. Says Michael K. Craddock, director of the Representative Office of British Colum­bia, Canada, "We are involved in five major areas: immigration, investment, trade, tourism, and education." Com­pared to the Alberta representative staff and is therefore more able to pursue a wider range of activities. The office promotes tourism, offers educa­tional consulting services, and immigra­tion assistance.

"We do not actually handle immigra­tion applications," says Craddock, "but we playa role in it." Immigration applica­tions from Taiwan are processed in Hong Kong, but according to Craddock, they are passed on to the provinces for approval. The B.C. office in Taipei en­courages the immigration of entrepre­neurs who will invest money in existing companies or in new ventures. Establish­ing factories and branch offices in B.C., says Craddock, will create job opportuni­ties and help the economy. He adds that at least 70 to 80 percent of all Taiwan immigrants to Canada opt to live in Van­couver, B.C.'s largest city.

In the field of education, the B.C. office was the first foreign organization in Taiwan to offer educational consulting services. "There were some consulting offices that charged high prices, but of­fered few services or the wrong information," says Craddock. "That wasn't fair to those who wanted to study in Canada, and not fair to Canada either." Educa­tional consulting services are provided free of charge. The officers handling the program have received their professional training from the British Columbia Edu­cation Ministry. In 1990, the office re­ceived 1,200 applications from student, and 400 were approved.

The representative office is also working to build a more enthusiastic tourism market for the province's renowned scenic spots, such as its beauti­ful coastlines and the Rocky Mountains. It is now working with the Canadian Trade Office and one of the largest Taiwan travel agencies on designing a Canadian tour that will cover areas in the province that Taiwan tourists seldom visit.

But similar to the U .S. state trade of­fices, the most important function of the B.C. representative office is to promote trade between Taiwan and the province, and attract Taiwan investment. Accord­ ing to Craddock, initial investments from Taiwan in British Columbia cen­tered on residential real estate, and later moved to include commercial real estate. Now there is investment activity as well in industrial real estate. "Like all other state or provincial trade offices, we play the role of a matchmaker," says Craddock.

One example of the trade office's matchmaker role is in housing construc­tion. British Columbia is the world's larg­est supplier of softwood. The office noted that there are few wood-frame houses in Taiwan, and so introduced a softwood supplier to a Taiwan enterprise. As a result, two builders from British Columbia are now in Taiwan to train local builders in the construction of six show houses in the new suburban com­munity of Taipei New Town in Hsintien, Taipei county. The venture has a prece­dent. One of British Columbia's soft­ wood suppliers introduced the wood­ frame construction to Japan ten years ago, and now builds about five thousand houses every year. "Compared to cement constructions, wood-frame houses are more comfortable to live in, quicker to build, and are perhaps even cheaper," says Craddock.

Despite the absence of dip­lomatic relations, the U.S. state trade offices and the Canadian trade representative offices have been able to build a strong relationship with both government and private organizations in Taiwan. For example, they work with the Ministry of Foreign Affairs in order to bring in and arrange programs for visiting delega­tions. They also work closely with the Industrial Development and Investment Center under the Ministry of Economic Affairs because all local or foreign invest­ments have to be reviewed by the center. "They have been very helpful," says Boyle of the Oregon Trade and In­ formation Center. "They provide us with information, and help us in contact­ing local companies or industries."

The U.S. and Canadian offices are also developing working relationships with local trade organizations such as CETRA, the Chinese National Federa­tion of Industries, the Taipei Electric Technicians Association, and the Taiwan Import and Export Association.

Taiwan's vibrant economy has been a great incentive in furthering relations between the ROC and other countries; relations that can survive and thrive without getting embroiled in politics. The U.S. state trade offices and the Canadian representative trade offices have done much to contribute a dimen­sion that goes further than trade. As Craddock of the British Columbia Representative Trade Office says, "Our biggest achievement is being able to give B.C. a little bit of profile, so that people recog­nize us not so much for Vancouver, but as British Columbia."

Craig Allen, manager of the Ameri­can Trade Center, might as well be speaking about all the North American trade offices when he says of the U.S. state trade offices: "They have had a much greater role in increasing under­ standing at the grass roots level. And that is of equal, and perhaps even greater importance than the strictly economic relationship that they contribute to so effectively."