In order to maintain its strong role in international trade, the ROC on Taiwan has adopted a number of trade-related policies to adapt to trends in global trade. This is particularly clear in regard to Europe. In order to correct a serious trade surplus with the U.S., and a severe trade deficit with Japan, the government has been pursuing a trade diversification policy. Development of the European market has been considered a major part of this plan.
Until recently, European countries were generally remote in the minds of most Taiwan residents, even though these nations together constituted the ROC's third largest trading partner. But European nations have been paying closer attention to Taiwan, especially after the ROC's foreign exchange reserves and economic growth rate began shooting upwards in 1985, climaxing in 1987 with reserves at US$77 billion and a growth rate of 8.5 percent. Coupled with the rapid appreciation of the NT dollar and a high per capita GNP, the ROC became recognized as a place to cultivate investment and trade.
Relations between Europe and Taiwan grew closer during the latter half of the 1980s, even though the lack of formal diplomatic relations often complicated matters. Many of the political problems have been circumvented by the establishment of foreign trade or representative offices in Taiwan and by counterpart offices in European nations. These have made useful bilateral link ages possible. There are currently eighteen foreign institutions from fifteen European countries in Taipei, while the ROC has representative institutions in sixteen European countries.
Among the foreign institutions in Taipei, many are relatively new and are just beginning to build up their office staffs and business activities. But whether they have had long-term presence in Taiwan or not, European representative offices appear generally upbeat about the prospects for the growth of substantive ties. As a result, they are bringing key services on stream, such as disseminating investment and tourist information and expediting visa procedures.
The ROC government has long sought to establish relationships with European nations based upon genuine reciprocity and equality, despite the absence of formal diplomatic relations. The effort was not in vain. True, these offices often provide quasi-consular functions, but business is what they are really all about. Thus, these offices deal primarily with economics and trade-related issues.
Feel free to come closer ─ European and Taiwan businessmen can now establish contacts faster and more efficiently.
Formerly troublesome procedures that slowed down contacts between businessmen in Europe and Taiwan have been simplified and are now less time consuming. In the past, for example, if a Taiwan industrialist applied to visit a European country, the request was usually transferred to an office in Hong Kong or back to the home country. It was not uncommon for visa arrangements to take weeks or even months to complete. The procedures were neither efficient nor helpful to improving trade relations. European nations have learned that as soon as visa procedures are simplified, substantial growth in trade, investment, and tourism from Taiwan quickly follows. Thus, the opening of foreign offices ─ such as the German, British, and Irish offices described below ─ are usually accompanied with an expansion of the service units for communications, personnel, travel, archives and files, and research ─ all ultimately aimed at promoting trade. " In 1981, there were only three persons and a typewriter in our trade office," says Jiirgen Franzen, the director of the German Trade Office in Taipei (GTO). "The situation remained virtually unchanged until I came to Taipei in 1986." But the office has undergone extensive changes in the past four years. It now has five departments, including both functional and service units: travel, trade fair, marketing, legal, and computer support. The GTO is now staffed by four German expatriates and twenty-two local employees, making it one of the largest European offices in Taiwan.
The work load is larger as well. For example, a substantial growth in visa applications accompanied the improved efficiency of the issuing procedures. Instead of weeks, it now takes four days. "Our basic philosophy is to be very pragmatic," Franzen says.
The attitude has paid off. Business relations between Germany and Taiwan have grown 15 to 20 percent over recent years, indicating a tremendous increase in bilateral trade. In Taiwan, the demand for German goods from automobiles to machinery has increased steadily. At the same time, Germans are importing more products from Taiwan, ranging from clothing to computers. Thus far, trade between the ROC and Germany has been fairly well balanced. Investment from Germany to Taiwan is rising steeply as well. In 1986, Germans invested about DM88 million (US$46 million) in Taiwan, and the total is expected to reach DM420 million (US$262 million) this year.
According to Franzen, "Investment is not only substantial, it also indicates a commitment by the business world to the future of Taiwan." The GTO not only provides information about the Taiwan market to German companies, it also helps Chinese companies sell their products to Germany.
The office has also encouraged Taiwan firms to open new markets and invest in Eastern Europe. The great structural changes during the last few years have aroused worldwide business interest in opening up trade in this region. Taiwan is no exception. Since West Germany had decades of trade experience with East Germany and other Eastern European countries, such as Poland and the Soviet Union, a unified Germany has provided world business men with a channel to what is considered a largely untapped market. Taiwan businessmen are also aware of Germany's future role in the Economic Community.
Juan Huang ─ "Visa handling and commercial services are a compact whole. Making things convenient for people helps promote both trade and tourism. "
"One can discover new trade potential in Europe, but Taiwan businessmen still have to do business with individual countries," says Gert Rabbow, deputy director of the GTO. The office is willing to playa role in providing services to en courage Taiwan businessmen to take a look at these places, instead of merely asking them to invest in Germany. The GTO has already helped a Taiwan delegation to visit Eastern European countries. This might seem contrary to Germany's interests, but Franzen thinks it is a good idea. "You have to compare and have choices before you can make any decisions on investment," he says, "and Germany has offices in Warsaw and Moscow. Even if businessmen find out that Eastern Europe is probably the best place to settle, the business will be done one way or another through Germany."
Quite a number of Taiwan companies have asked for GTO assistance, particularly in the computer field. For example, in December 1990, representatives of more than fifty Taiwan companies joined a delegation to meet East German businessmen and officials, as well as visit chambers of commerce. The trip was arranged with the assistance of CETRA (the China External Trade Development Council) and the Economic Daily News. Since the organizers stayed low key and let the businessmen take the lead, the program proved to be a great success. The GTO has already expressed an interest in helping with similar business trips in the future.
Since Germany is in the center of Europe, it has made the country an ideal ground for international trade fairs of all kinds. A good example is the popular Frankfurt Trade Fair for consumer products. "It's an absolute necessity for businessmen to go to these trade fairs,"
Franzen says. "And it is also a necessity for our trade fair department to help Taiwan businessmen get there."
Legal problems such as payments and copyright protection can occur as trade grows, and the GTO's legal department provides a wide range of these services to businessmen. It also helps find mutually acceptable measures to settle disputes between local and German companies. Both German and Taiwan companies have entrusted the GTO to act as an impartial middleman.
All the GTO's services are backed by the German Information System which regularly releases information concerning German buyers. It handles various credit checking services as well. The GTO has also conducted cross cultural seminars for Chinese investors to help and adjust more quickly to living in Germany. "Germany is a country of forms, so we have even translated the forms for opening a bank account into Chinese," Franzen says.
The Anglo-Taiwan Trade Committee (ATTC) was established in 1976, after formal diplomatic relations were cut between the ROC and the U.K. The British organization was established to help British companies sell their goods and services in Taiwan. Between 1976 and 1988, the relationship remained essentially static, but in 1989 the A TTC moved to new offices and began broadening its functions. As a result, the scale of business between the two countries has increased.
"Besides our commercial unit, we now issue visas and provide educational consulting services," says Juan Huang, the ATTC representative. "Visa handling and commercial services are a compact whole. Making things convenient for people helps promote both trade and tourism." After the ATTC's visa handling unit was set up, much less time is now spent on the whole process. In the past, ROC citizens needed two to three weeks to obtain a visa to the U.K., but now it takes only four days.
Michael Garvey ─ "My main job is to get investors from here to Ireland."
The Anglo-Taiwan Education Center is a separate service unit under the ATTC. The center encourages Taiwan students to study in the U.K. It arranges local educational exhibitions, and in March 1991 it participated in a large scale educational exhibition at the National Central Library in Taipei. More than eighty British universities and polytechnic institutes joined. "I think other than the States, Britain can provide an alternative for Taiwan students," Huang says. "After the visa handling unit was established, the number of Taiwan students studying in Britain increased to eight hundred. In the past, there were no more than two hundred."
Still, the ATTC's main function is given to trade. The office was set up primarily to help British companies sell their goods and services in Taiwan, but it also welcomes Taiwan investors to set up factories and manufacturing operations in the U.K. Tatung, a major electronics and appliances manufacturer, has already done so. Manufacturing instead of marketing is encouraged be cause it will create more job opportunities. Information about the Taiwan market is available for British companies, but little information about the U.K. is passed on to Taiwan businessmen.
In May 1991 the ATTC, with the assistance of the Industrial Development and Investment Center under the Minis try of Economic Affairs, will conduct. a program to attract Taiwan investors to the U.K. But on the U.K. side, the ATTC neither encourages the marketing of Taiwan products nor does it assist importers. Although the ATTC sees doing business with the ROC as more of a one-way approach, the high productivity of British workers, its long history of industrialization and strong technological background, has attracted some Taiwan investors who relish the prospect of internationalizing their firms.
For example, Mitac, a major PC manufacturer in Taiwan, is planning to set up a branch office and a production plant in the U.K. Just like early American and Japanese investors in the U.K., Taiwan investors see the benefit of market proximity to other European countries as well as the comparative ad vantage of production. Besides, Taiwan's manufacturers and producers will be able to use the U.K. as a point of access to the European Community after 1992.
The elimination of physical, technical, and fiscal barriers to trade within the European Community in 1992 will result in the creation of the largest trading area in the world. No country can afford to give up the vast market which has a population of 320 million, and contributes 20 percent of world GDP and 39 percent of world trade. The vision of a "Fortress Europe" or a "single Europe" is a major concern for outside nations since the twelve members of the EC will be in an advantageous position to absorb investments from multinational companies all over the world. But this vision has given many countries within the EC extra impetus and energy for development.
The Republic of Ireland is a good example. The country has a well educated, young, and growing population. Factories and companies there are mostly small-scale, and those of a high tech nature are eager to find a niche market in Taiwan.
The Institute for Trade and Investment of Ireland (ITI Ireland) is striving in this direction. "We saw the need to establish an office in Taiwan," says Michael Garvey, the director of the ITI. "Improving our image in Taiwan would be the best way to develop trade and economic links with the ROC."
Set up in late 1989, the ITI is the representative office for a number of different Irish organizations, including the Industrial Development Authority, the Irish Export Board, and Shannon Development. Before the office was established, there were neither formal nor informal links between Taiwan and Ireland. According to Garvey, the main operation of the office is related to industrial investments. It is trying to promote Ireland as a base for Taiwan companies that are looking for a manufacturing location in Europe.
The office has been especially successful in attracting Taiwan investment. For example, the Hualon Corporation, the fifteenth largest manufacturing corporation in Taiwan, has decided to build a large textile factory in Ireland. The total investment will be around US$200 million, and it is expected to create a thousand new jobs for Irish workers.
The incentives were tempting. A strict quota on synthetic textiles has given full members of the EC a distinct advantage. Apart from that there is a full package of incentives to attract foreign investors, such as setting the maximum tax on profits at 10 percent until the year 2010. Moreover, foreign manufacturers are allowed to buy land, and Ireland would consider assisting foreign investors with cash subsidies to reduce factory startup costs and to train Irish workers.
After the ITI Ireland was established, a number of bilateral economic cooperation meetings have been held. The third conference was held earlier this year, and the next one is slated to be held in Ireland early next year. A Euro Asia Development Consortium has al ready been formed by five senior industrialists from the ROC, and it has borrowed US$20 million from the ROC government's international fund in order to develop the Far East Industrial Park in Ireland as a base to enter the EC market. "When the consortium started to move, the ITI Ireland wanted it to be in Ireland," Garvey says. "and our government made Ireland the most attractive location for the project."
In the past, Taiwan businessmen could only obtain official letters, in lieu of visas, to get to Ireland, where they then picked up their visas. But since March 1991, the ITI has been handling visa services in Taipei.' "My main job is to get investors from here to Ireland," Garvey says.
The attitude is becoming more widespread among other Europeans, who have noted the economic opportunities and advantages of dealing more directly with Taiwan. More and more European countries are setting up offices or sending trade delegations. As the GTO's Franzen says, the future relationship between Germany and Taiwan can be nothing but "up" and bilateral trade will be "prosperous." The same may be said for trade relations with other European countries as well.
In order to meet the drastic economic changes slated for Europe in 1992, the ROC government already has opened direct trade with eight countries in Eastern Europe. Apart from trade, there have been more frequent cultural exchanges, commercial communication, and exchanges of delegations. There is also greater flexibility in issuing permits or visas to residents from the eastern bloc countries, indicating that the distance between the ROC and Europe is steadily decreasing.