在世界的邊境

The island that rocketed to the top of Asian exporters has quickly lost its grip on prosperity

MARK MACKINNON

00:00 EDT Wednesday, October 28, 2009

Made in Taiwan. Not so long ago, those three words were nearly as ubiquitous on toys, electronics and other products as "batteries not included."

But as this tiny island of 23 million struggles to get up after getting hammered by the recession, many here fear that the world-famous "Made in Taiwan" brand may be another casualty of the downturn.

A year of plunging exports - combined with increasing economic integration with mainland China and a lack of recognizable Taiwanese brand names - has pushed this long-robust economy into a corner. The unemployment rate has shot up to levels not seen in more than half a century.

Manufacturing, for decades the basis of the island's success, is moving to cheaper and less-regulated places like China and Southeast Asia. Taiwan is still a leader in research and development, but outside of laptop computers, little of what it produces reaches consumers directly. Many items that once reached store shelves in North America and Europe branded "Made in Taiwan" now have the final touches put on them in China or Vietnam instead.

"We used to have some specialty niche markets, such as high tech. But those niches were an illusion and now we need to find another niche to make Taiwan special," said Antonio Chiang, former deputy secretary-general of the island's National Security Council and now a popular newspaper columnist.

But another Taiwanese economic miracle, such as the one that saw it shoot from one of the world's poorest economies to one of its most developed in the latter half of the 20th century, seems unlikely. "Maybe the golden time is up for 'Made in Taiwan,' " Mr. Chiang said.

The Economist magazine determined earlier this year that Taiwan was the economy hurt most by the recession, while some analysts projected gross domestic product would fall as much as 10 per cent on the year. It hasn't turned out as dire as predicted, but 2009 will nevertheless go down as the worst year in the island's history.

The economy is now expected to shrink by a painful 4 per cent. And unemployment recently soared above the 6-per-cent line for the first time since the Kuomintang conceded the Chinese mainland to the Communists and set up its government-in-exile here back in 1949.

Exports, which account for more than two-thirds of the economy, fell an astonishing 41 per cent in December and 44 per cent in January, when the economic storm raged last winter. While those figures have started to look better (exports were down 12.7 per cent in September, the slowest pace of decline since the crisis began), many believe the game will have changed completely by the time the recession is over.

According to the U.S. Department of Labour, average compensation costs in Taiwan's manufacturing sector were $6.58 (U.S.) an hour in 2007, a figure slightly higher than Hong Kong's $5.78. In comparison, compensation costs in China were estimated in 2006 to be $0.81 an hour.

"Before now, we never had to worry about unemployment problems. People are starting to become nervous," said Yang Chia-yen, an economist at the Taiwan Institute of Economic Research. "If we don't lower our wage rates, there will be none of these job opportunities. Unless we do something different."

To Mr. Yang, that something different would be building on "Made in Taiwan" to develop the cachet of "Designed in Taiwan" and "Educated in Taiwan." Taiwan, he said, is well positioned to become the research and development centre for companies looking to expand in Asia and who are keen to use China as a manufacturing hub without being headquartered in the People's Republic.

One key, Mr. Yang said, will be liberalizing Taiwan's strict immigration policies in order to allow the island's companies and universities to attract more high-end talent from around the world.

"Right now, China is the manufacturing base for the globe. But some of those 'Made in China' products are actually made by Taiwanese companies. Taiwan needs to develop our brand names," said Cheng Cheng-mount, an economist with Citibank Taiwan.

Taiwan already makes about 80 per cent of the world's laptop computers and 40 per cent of the liquid crystal displays (LCDs) used in flat-screen televisions, but outside of perhaps Acer Inc., the world's second-largest maker of laptop computers, few of its companies are known worldwide. Already, more than a third of Taiwan's exports go to mainland China, though nearly all of that is machinery equipment and electronic components that are assembled in Chinese factories before being re-exported to final markets in the United States, Japan and the European Union. That share is expected to grow if, as expected, Taipei and Beijing sign a tariff-reducing agreement early next year.

Such a deal would be a move toward ending decades of Beijing-imposed isolation for Taiwan, but would also bring the island - which China considers a renegade province - further under Beijing's widening economic influence. Defying the global downturn, official figures suggest that China's economy is on pace to grow at a surprising 8 per cent this year.

"We have to normalize relations with China, but we cannot depend on China only," said Mr. Chiang, the newspaper columnist. "Right now, all bets are on China. That's dangerous, not only for unification or independence, but because we cannot depend on China to save our economy."

© The Globe and Mail

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