Industrial exports show rapid growth
Industrial exports are expected to continue growing at the high rate of 17.3% annually, compared with 8.2% for other commodities, resulting in export growth of 14% per annum.
This is the projection of the U.N. Economic Commission for Asia and the Far East (ECAFE) following a survey. In a 126-page report produced at the secretariat in Bangkok in September and distributed around the world in early October, ECAFE also said:
- The share of industrial exports in Taiwan's total exports is expected to increase from 60% in 1965 to 69% in 1970.
- Electronic products are expected to show a growth rate of 70% per annum. Exports of plastics, paper and pulp, window glass, stainless cutlery, electric bulbs, toys and chemical fertilizer are expected to increase at rates in excess of 20%.
- The 10 main export items (each with value exceeding US$10 million annually) in 1970 will be (in order) textiles and clothing, canned food, electronic products, plastics, plywood, wood shapes and products, cement, pulp and paper, iron and steel and machinery. These items will account for 79% of total industrial exports of around US$600 million in 1970.
C. Y. Li, deputy chief of ECAFE's Division of Industry and Natural Resources, called attention to the fact that from 1960 to 1965, exports of manufactures and semimanufactures from the Republic of China grew at an average annual rate of 37%, much higher than the 14% for unprocessed commodities. "As a consequence," Li said, "the share of industrial exports in total exports rose from 38% in 1960 to 60% in 1965, with a corresponding fall in the share of primary commodities from 62% to 40%."
Li pointed out that of total industrial export value of US$250 million in 1965, each of these 17 items (listed in order) had a value of US$2.5 million or more to account for 87% of the total: textiles and clothing, canned food, plywood, wood shapes and products, plastics, iron and steel, cement, electronic products, machinery, citronella oil, pulp and paper, aluminum, monosodium glutamate, rubber products, chemical fertilizer, wheat flour and wood manufactures.
The covering letter cited the importance of industrial exports in alleviating the payments difficulties of developing countries and noted that "although industrial exports are still much less important than primary exports as a source of foreign exchange earning for the developing countries, they are, however, growing at a much faster rate than primary exports".
For this reason, the ECAFE secretariat, in cooperation with the UNCTAD (United Nations Conference on Trade and Development) secretariat, is studying industrial exports of Thailand, the Republic of Korea, the Republic of China, Hongkong, the Philippines and Indonesia. Since its first session in 1964, UNCTAD has been conducting similar surveys in Africa and Latin America in cooperation with regional economic commissions there.
The joint ECAFE/UNCTAD report said Taiwan's exports during the 1961-65 survey period achieved the phenomenal growth rate of 25% per annum, reaching a total value of NT$17,789 million (US$450 million) in 1965 despite the drastic fall of the world market price of sugar, the country's No. 1 export. "This spectacular rise," the report noted, "was accomplished by a structural change in exports… Out of a total export value increment of US$300 million during 1960-65, industrial exports contributed US$212 million or more than 70%."
The report went on to say:
"Many factors are responsible for this rapid growth in industrial exports, of which the most important is the extension of the process of import substitution to export promotion, particularly for textiles and clothing, plywood, plastics and manufactures thereof, iron and steel, cement, fertilizer and wheat flour. These industries contributed 57% of the total industrial export value increment during the period under review.
"A second factor is the emergence of new export-oriented products such as canned mushrooms, canned asparagus, transistor radios, stainless cutlery and toys, which contributed around 19% of the industrial export value increment during 1960-65.
"A third factor is the increase in traditional industrial exports, including canned pineapple, canned bamboo shoots, wood products, citronella oil, hat bodies, bamboo manufactures and hair nets; these contributed 15%. The remaining 9% was contributed by minor items which are too numerous for individual enumeration.
"Seventeen items in group A (mentioned above), each having an export value exceeding NT$100 million (US$2.5 million) or 1% of the total value of industrial exports in 1965, accounted for 87% of total industrial exports in that year. Twenty-two items in group B, each with an export value above NT$18 million (US$450,000) but below NT$100 million (US$2.5 million), accounted for 8%. Group C, including 174 minor items, each with an export value below NT$18 million (US$450,000) in 1965, accounted for only 5%."
These export values are expected to be reached in 1970 by the 10 major items:
Textiles and clothing - US$110,175,000
Canned food - US$95,017,500
Electronic products - US$89,350,000
Plastics - US$43,150,000
Plywood - US$42,650,000
Wood products - US$22,150,000
Cement - US$19,650,000
Pulp and paper - US$19,125,000
Iron and steel - US$18,275,000
Machinery - US$12,750,000
The report contained these other highlights:
To induce private investment in industry in general and export industries in particular, the government of the Republic of China is making tremendous efforts to create a favor able investment climate through provision of adequate and low-cost infrastructural facilities such as power, transportation and education.
To identify investment opportunities, the Industrial Development and Investment Center has conducted a number of industrial feasibility studies independently and in cooperation with foreign agencies.
The Kaohsiung Export Processing Zone, which incorporates the functions of a free trade zone and an industrial estate, was inaugurated in December of 1966. Annual exports of the zone are expected to reach US$72 million by 1969.
Research activities in technology, management and marketing have been intensified by government and semi-government organizations.
Measures to increase the profitability of industrial exports have succeeded. The adoption in 1958 of a realistic unitary exchange rate has assured export manufacturers of stable foreign exchange earnings. Tax incentives including exemption from business tax on exports and from import duties on raw materials to be processed for exports, as well as low-interest loans applicable only to exporters and export manufacturers, have strengthened the price competitiveness of Taiwan products in international markets. Schemes such as retention of foreign exchange earnings in the accounts of exporters and direct subsidies from the common fund contributed by members in the same industry, though applied to only a few industries, have stimulated the manufacturers concerned to be more export-minded.
The measures for export promotion include unified and joint marketing of exports, simplified procedures in export declarations, export credit insurance, consolidation of government and private trading agencies, intensified export inspection and quality control, and participation in international trade fairs. Some of them have been effectively carried out and have contributed to the big push in industrial exports.
Among the external policies and measures for promoting industrial exports from Taiwan, the encouragement of foreign investment and joint ventures in export-oriented industries are the most important. Bilateral agreements concluded with some developed countries on self-regulated exports of cotton textile products and rubber shoes have helped to avoid the unilateral imposition of import quotas on these products. Technical assistance and overseas investment in Southeast Asia, Africa and Latin American countries, as well as industrial cooperation with the Republic of Korea, though still at the initial stage, will benefit exports of capital goods and industrial intermediates from Taiwan in the near future.
In order to achieve the further development of industrial exports, additional measures are suggested. Consolidated efforts based on the country's comparative advantages should replace fragmentary efforts in export promotion merely for the purpose of achieving foreign exchange earning or saving, thus helping to eliminate the small and inefficient plants for wheat flour, pulp and paper, and also steel industries whose production in the past was more for domestic consumption than for export. For other export industries whose development and export has been made possible by protective measures such as import bans, foreign exchange retention and direct subsidies, it is now time to examine closely their weaknesses and introduce programs for their rationalization so as to increase their competitive position in world markets and put a stop to the practice of subsidizing industrial exporters by charging a higher domestic price.
Other countries are developing labor- intensive industries and will compete with Taiwan for the world market. Taiwan wages will go up. So it is important to introduce new industrial exports for which larger capital and superior techniques may be required.
These new industrial exports, the report added, may comprise such sophisticated manufactures as electronic products, cameras, watches and clocks, scientific instruments, furniture, travel goods, toys, games, etc., on the one hand, and on the other, heavy industrial products requiring large capital investment, including iron and steel and petrochemical industries.
Green takes over as biggest tea seller
Taiwan green tea is taking over the top position in world sales as a result of declining Japanese and Chinese Communist exports.
This was noted by the Taiwan Regional Tea Processors' Association following discussions in late August with members of the four major tea producing districts: Miaoli, Hsinchu, Taoyuan and Taipei of northern Taiwan.
Oolong was once synonymous with Taiwan tea. Then came Paochung, then black tea. Now the era of green tea has dawned.
Quality improvement can make black tea more competitive. But green tea has an even brighter future because:
1. The quality of Chinese mainland green tea is deteriorating.
2. Japanese are consuming more green tea at home and have little left for export.
In time to come, say authorities on tea cultivation, the Taiwan plants must be replaced with new growth. Plantations are aging.
Experts from Ceylon and other tea-growing areas have made such recommendations after surveying the island plantations, which are mostly located in foothill areas where the weather is highly favorable to the aromatic shrub.
Taiwan exported US$11,116,000 worth of tea in 1966, compared with US$9,719,000 in 1965, US$8,426,000 in 1964 and US$8,014,000 in 1963. Despite the steady increase, tea exports are not keeping up with the sharp upward trend in Taiwan exports. The 1963 value was 2.27 per cent of total export value of US$357,524,000. This dropped to 1.82 per cent (out of US$463,110,000) in 1964, went up slightly to 1.99 per cent (of US$487,959,000) in 1965, then down to 1.95 per cent (of US$569,425,000) in 1966.
Tea exporters are hopeful of gains despite the decline in black tea sales. Black tea exports in the first seven months of last year were some 6 million pounds less than in the comparable period of 1966. Green tea was expected to do better in the last five months of the year.
Black tea prices were down in the world market. But green tea prices were steady, ranging from 15 to 30 U.S. cents a pound and averaging 24 to 25 cents.
All teas come from the same leaves; it is processing that makes the difference. Tea is to the Chinese as fine wine is to the French - flavor, aroma and something akin to vintage must be present and appreciated.
Tea plants grow on the cooler slopes of hills in northern Taiwan. Tea pickers are young girls. Only their delicate, agile fingers are considered careful enough not to damage the fragile plants.
Picking generally starts before dawn while the dew still shines on the leaves. The early morning sun must still be reckoned with, however.
Most of the girls wear cloth-shrouded conical bamboo hats, arm bindings and gaiters to protect their skins. They sing of the love they expect to find as they move between the rows.
Farm demonstration team sent to Chile
Free China sent a six-member farm demonstration team to Chile to help that South American country grow paddy rice and soybeans.
The agreement was signed in Santiago recently by Chinese Ambassador to Chile Li Ti-tsun on behalf of the Council for International Economic Cooperation and Development of the Chinese Executive Yuan (cabinet). The Dominican Republic, Brazil and Ecuador had already entered into agricultural technical cooperation with China.
Negotiation with Chile started some two years ago. Concrete measures were worked out when Chinese Vice Foreign Minister Sampson C. Shen visited South America last spring.
Madagascar market worth cultivating
The Malagasy Republic should be a good market for Taiwan textiles, handicrafts, fertilizer and electric appliances, according to an overseas Chinese businessman from the Indian Ocean island republic.
Liang Kwang-cheng, board chairman of the Sino-Malagasy Commercial Enterprise Ltd., told a roundtable discussion in Taipei recently that Taiwan exporters can sell goods to Madagascar if they can find sales agents there.
Liang told the meeting sponsored by the China Productivity and Trade Center that Taiwan exported about 40,800,000 Malagasy francs worth of merchandise to the island in 1966 and that the amount could reach 60 million in 1967.
The Chinese Communists sold goods to Madagascar in 1966, Liang said, but the Malagasy Republic now has banned imports from the Chinese mainland. This improves the prospects for Taiwan sales.
Liang said some free Chinese traders are not enthusiastic about trade with Madagascar because it is far away. He pointed out that the United States, West Germany and Hongkong have been seeking Madagascar orders regardless of geography.
Cathay Pacific increases Far Eastern flights
Cathay Pacific Airways added Okinawa to its Far East network and increased service between Hongkong and four Japanese cities from 15 to 21 flights a week effective October 1.
Hongkong-Seoul service was placed on a daily basis. Flights were started between Osaka and Seoul and between Bangkok and Phnom Penh. CPA also flies to Tokyo, Nagoya and Fukuoka in Japan.
The Hongkong-based airline has 33 international flights in and out of Taipei weekly.
Top CPA officials gave a reception at the Grand Hotel in Taipei recently. Hosts included Regional Manager Chester Yen and General Sales Manager Duncan Au from Hongkong. CPA's Taiwan agent is the China Express, headed by Robert Niu. The Taiwan district sales manager is S. S. Lu.
Wood and bamboo catalog available
The Joint Commission on Rural Reconstruction has prepared an English-Chinese catalog of Taiwan's wood and bamboo exports.
Copies were made available at a forestry industry exhibition in Taipei recently.
Sponsored by the Forestry Association of China, the exhibition had 10 departments covering everything from forest resources and protection to furniture and woodworking.
Major export items on display included wood panel products, plywood and composition boards, wood pulp, sawn wood, wood and bamboo manufactures and treated wood and bamboo products.
Special exhibition at Display Center
The Chinese Display Center in Taipei has a special exhibition of Asian trade materials and Taiwan export products.
There are regular displays of products from 160 Taiwan factories on the 5th, 6th and 7th floors of the center, located in the city's busy theater district. The 8th floor space is now used for category-by-category exhibition of export products of 165 Taiwan companies.
Participants are producing textiles, machinery, chemicals, metal products, electrical appliances and electronic products, drugs, construction materials, processed farm products, frozen marine products and handicrafts.
The special exhibition was opened recently for those who had just attended the Fifth Asian Overseas Chinese Traders' Convention and for visitors to free China's October national holidays.