Monthly Archives: December 2010

A photo journey through 100 years of the ROC

This coming year, the Republic of China (ROC) will celebrate its centennial birthday with events being held in Taiwan and aboard. Founded by Sun Yat-sen in 1912 in China, the ROC government was forced to move to Taiwan following the Civil War between the Nationalists and the Communists. The photographs below are a small sample of the traveling exhibition entitled Retracing Our Steps: A Photo Journey through 100 Years of the ROC, produced by the Taiwan’s Government Information Office. 
 Please join us for an exploration of the ROC’s development over the past century.


Officers are photographed at the ceremony for Taiwan’s retrocession to the ROC on Oct. 25, 1945, marking the surrender of Japanese forces in Taiwan at the end of World War II. (Courtesy of Academia Historica)

U.S. President Dwight D. Eisenhower (left) visits Taiwan on June 18, 1960, riding in a convertible with President Chiang Kai-shek (right) to downtown Taipei. This was an important period for ROC-U.S. relations. President Eisenhower is the only U.S. president to have visited the Republic of China. (Government Information Office)

During the 1960s and 1970s, the textile industry, benefiting from various government policies and promotional projects, was one of Taiwan’s key export industries. (Government Information Office)

Top: Skeletons of two hulking steamships in the shipyard of the then China Shipbuilding Corporation. The Ten Major Construction Projects, which included the founding of this large shipbuilding company, were carried out during the 1970s.

Bottom: Cars line up at the Yangmei Toll Station to watch the ceremony for the opening of National Highway No. 1 in 1978. (Government Information Office)

During an Oct. 7, 1986 interview with Katharine Graham, publisher of The Washington Post, President Chiang Ching-kuo (left) made a preliminary remark that martial law would be lifted. Chiang’s English secretary Ma Ying-jeou (center) later described this historic moment as “electric.” On the evening of July 14, 1987, the government officially announced the lifting of martial law. (Courtesy of Academia Historica)

The 228 Memorial Monument is unveiled at Taipei New Park on Feb. 28, 1996. The monument commemorates the 228 Incident in 1947, reminding people to forgive past mistakes, console those affected, and move ahead into the future. (Government Information Office)

Ma Ying-jeou (center) shakes hands with supporters after being elected president on March 22, 2008. Ma, the Kuomintang candidate, won with 58.45 percent of the vote. (Cheng Yuan-ching)

With Palace Museum and food culture, Taiwan’s tourism continues to flourish

At a time when many industries in Taiwan have been hit hard by the worldwide economic slump, Taiwan’s tourism industry has continued to experience double-digit growth and is projected to do even better in the coming year. In 2009, there were 4.4 million foreign tourists visiting Taiwan, a 14.3 percent growth over the number in 2008, ranking No.1 in the Asia-Pacific region.

Currently, Chinese tourists are the largest group of visitors to Taiwan. The steady increase in tourism from China has meant that over 2.01 million Chinese visitors have come to Taiwan, bringing in foreign exchange earnings of close to US$2.10 billion. This is welcome income as Taiwan’s industrial and agriculture sectors decline. In fact, one of the six new industries the government is promoting is tourism since the industry has become an important part of the service sector, accounting for 73 percent of Taiwan’s GDP.

Though promoting Taiwan as a travel destination might prove tricky according to Liu Wen-yi, the general manager of Lion Travel, Taiwan’s largest travel agency. In talking to Taiwan Business Topics, Liu said, “Taiwan is a good place to visit, but you have to work hard to promote your special characteristics to attract foreign tourists.” Taiwan’s Tourism Bureau understands that the island is not known for being a tropical paradise such as Hawaii or Bali (Indonesia), nor can it rival metropolitan cities like Tokyo, Shanghai, or New York, which are shopping meccas better known for their city life. Still, the industry is growing tremendously and will continue to do so with the diversified market channels utilized by the Tourism Bureau.

New market strategy

According to Sylvia Yu-hsiang Yu, the director of Tourism Division of Taipei Economic and Cultural Office in San Francisco, the Tourism Bureau has intensified and diversified its campaigns through video broadcasts, print ads and television programs. They have also placed keyword banner ads on the world’s top search engines and portals such as Google, MSN and Yahoo.

In addition, Yu’s headquarters has utilized social media platforms by launching contests such as “The Best Trip in the World – Taiwan Explorers Wanted” where international teams come up with their best itineraries for trips around Taiwan. “The event’s official website was viewed more than 2.4 million times, and videos watched over 160,000 times,” she said. The selected team’s videos and blogs were also reposted on other social networks and blogs, with close to 3,500 websites making a reference or further repostings.

Moreover, by collaborating with Taiwan’s airline companies and hotels, the tourism industry is enticing travelers with offers to “Stop over in Taiwan, and for $1 USD more, stay at a 5-star hotel” program. Besides appealing to a traveler’s wallet, the government hopes to grow the industry through better branding of the country’s special attractions.

Taiwan’s special attractions

Taiwan is highlighting attractions that other destinations cannot match, such as the National Palace Museum, gourmet food, the unspoiled beauty of Taitung, and a bike friendly destination, to name a few unique selling points of the island.

Taiwan’s National Palace Museum is ranked as one of the four best museums in the world, along with the Louvre, the British Museum and the Metropolitan Museum of Art. The museum has 700,000 items in its collection, which represents the world largest collection of Chinese artifacts. Due to the museum’s size, only 15,000 pieces can be displayed at any given time, so the museum rotates its displays every three months. Given the size of the collection, it would take a dozen years to display the museum’s entire collection.  

The museum is one of Taiwan’s top attractions, but with increased Chinese visitors to the museum, the buildings are often crowded. However, the museum has begun to consider expansion feasibility plans, which might triple the size of the current exhibition space in five years, according to Ovid Tzeng, the cabinet minister without portfolio in charge of tourism promotion.

Exceptional food, cycling and unspoiled Taitung

Taiwan’s food culture is another important selling point of the island. With the recent success of films like Monga and Au Reviour Taipei, which included plenty of scenes of Taipei’s night markets and the thriving food culture, these films have attracted a new breed of tourist to Taiwan – those focused on exploring Taiwanese culinary specialties.

The Tourism Bureau hopes to expand Taiwanese gourmet foods by attracting foreign businesses to invest in the local food industry. This would include inviting famous chefs to Taiwan to give cooking demonstrations, increasing the visibility of Taiwan’s cuisine.

Also, as an island and in keeping with the popularity of a greener way of traveling, Taiwan is promoting “Let’s Bike Taiwan” as another way to experience Taiwan’s magnificent scenery and interact with local people.  At a recent “Let’s Bike Taiwan” event, 500 cyclists from Hong Kong, Singapore, Malaysia, Japan, Korea, throughout Europe and the United States, cycled five routes around Taiwan. Besides being a popular leisure activity, Taiwan is also home to many bicycle manufacturers, including Giant Bicycles, the largest quality bicycle manufacturer in the world.

In 2009, when Typhoon Morakot slammed into the island, it hit eastern Taiwan especially hard. Taitung County was particularly badly affected. While the region’s relatively undeveloped state might put off some industries, this is not the case for tourism. According to Global View monthly, Stanley Yen, the former president of the Ritz Landis Hotel in Taipei, one of the top hotels in Taiwan, saw the potential attraction of Taitung and began recruiting his friends to lend their expertise toward publicizing this last piece of relatively untouched Taiwan.  

Tour Taiwan and experience the centennial

Next year, the Republic of China will celebrate its 100th birthday with planned activities for both domestic and foreign visitors. One of the programs aims to promote the Top 100 Travel Routes in Taiwan. It will introduce the island’s rich ecosystems and diverse scenery to visitors through showcasing the unique local culture. To make it easier for travelers to plan a trip to Taiwan, the Tourism Bureau will offer “Tour Taiwan and Experience the Centennial” with information in several languages (Chinese, English and Japanese). The information pack includes electronic maps and extensive information about Taiwan’s scenic spots, transportation, local specialties and leisure activities.

Taiwan’s tourism will receive an additional boost when the government increases the daily quota of Chinese tourists to 4,000 per day, with independent Chinese tourists allowed to visit Taiwan by the end of June 2011. Since the lifting of the ban on Chinese tourism in July 2008, the average daily number of visitors from China has steadily increased. In 2009, visitors from China averaged 1,661 per day, but, by the first half of 2010, it jumped to 3,440 per day. 

There may be many places in the world that offer magnificent sights and unparallel food, but Taiwan offers you both, with the bonus of being both friendly and safe. It is a place where you can experience a different culture, way of life and language, yet the warmth and the hospitality of the Taiwanese people will make you feel welcome and instantly at home. According to Yu, this is one of the reasons that National Geographic Traveler lists Taiwan as “Asia’s best-kept secret.” Prepare for the secret to be out in 2011.

Photo exhibition celebrating the ROC’s centennial at Bellevue’s City Hall, Jan 8-18

A new photographic exhibition will be unveiled at the City Hall in  Bellevue, Washington on January 8. The exhibition entitled Retracing Our Steps, is a 60-piece photographic display celebrating the Republic of China (ROC), produced by Taiwan’s Government Information Office. Founded in 1912, the republic will celebrate its centennial next year. The exhibition also includes 30 historical photographs from Sun Yat-sen: His Life and Legacy.  As the founding father of the Republic of China, Sun  played a pivotal role in laying the groundwork for the modernization of China and the democratization of Taiwan.

The exhibition is open to the public from 9am to 5pm from Monday to Saturday.  The City Hall is located at 450 110th Avenue NE in Bellevue, Washington.

Free online version of the Republic of China Yearbook 2010

The Press Division of the Taipei Economic and Cultural Office (San Francisco) is pleased to announce the online publication of the Republic of China Yearbook 2010. The 2010 edition offers an overview of contemporary Taiwan, with a review of the major events and trends of the past year.

The yearbook contains 20 chapters – in which Taiwan’s geography, history, government, culture, technological advances, foreign relations, environmental initiatives and a plethora of other areas are explored. It provides more than just up-to-date facts and figures by including informative writing, photographs, charts and tables, and a wealth of content to deepen a reader’s understanding of the country.

In addition, the “Who’s Who in the ROC” section lists leaders from across the political spectrum and in all walks of life. This year’s edition also includes four appendices: chronology of events in 2009, a timeline covering 1949 to 2008, the full text of the Constitution of the Republic of China and an article comparing the various Romanization Systems.

To access the 2010 yearbook, please visit: taiwan-website/5-gp/yearbook/contents.htm.

Taipei, Beijing sign landmark health agreement

On December 21, Taipei and Beijing signed a landmark medical and health cooperation agreement covering four areas: prevention of infectious diseases, the management and development of medical and drug safety, the regulation of Chinese herbal medicines and traditional Chinese medical research, and emergency rescue and treatment.

Taiwan’s Straits Exchange Foundation (SEF) chairman Chiang Pin-kung and China’s Association for Relations Across the Taiwan Straits (ARATS) chairman Chen Yunlin inked the agreement in Taipei. The health agreement is the fifteenth agreement between the SEF and the ARATS, which have held six meetings since President Ma Ying-jeou took office in 2008.

According to the Central News Agency, the two sides will set up emergency contacts within their health departments. In case of accidents affecting Taiwanese tourists in China, or vice versa, the agreement will allow the health departments on both side to exchange information immediately, be kept informed of the number of the casualties, the names of the people involved and injured, and provide those affected with medical treatment or transportation. Officials attending the meeting also said there will be a similar notification mechanism relating to infectious diseases with the two sides setting up closer communication about major epidemics such as the H1N1 flu virus, the exchange of information on other medical emergencies such as an intestinal virus epidemic, and cooperation on the research into intestinal virus vaccines.

The agreement stipulates that both parties will follow agreed standards, such as, the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH) and the Global Harmonization Task Force (GHTF), to set up safety management guidelines on pharmaceuticals, medical supplies, health food and cosmetics. It would also include testing, inspection and registration (approval), and production management. Both sides also agreed to follow international standards such as good laboratory practice (GLP), good clinical practice (GCP), and good manufacturing practice (GMP) for mutual authentication in order to streamline the review process to enter each other’s markets.

At the three-day meeting, the SEF and the ARATS not only signed the medical and health agreement, but also confirmed that from January 1, 2011, the average daily quota of Chinese tourists to Taiwan will be increased from 3,000 people  to 4,000, and that independent Chinese tourists will be allowed to visit Taiwan by the end of June, 2011. 

KMT, DPP face post-election challenges

Last month’s election in Taiwan saw the ruling Kuomintang (KMT) wining three mayoral seats in the north and the opposition Democratic Progressive Party (DPP) grabbing two seats in the south.  “For the KMT, this election was a hollow victory,” said Wang Dan, a lecturer  at  Taiwan’s National Tsing Hua University and a prominent Chinese dissident of the 1989 Tiananmen Square protests.

The election had no major losers, but also failed to produce a winner. The KMT might have won more mayoral seats, but the DPP won a higher percentage of the total vote.  Both parties now need to tread carefully in order to handle the changing political landscape in the wake of the election.

Commonwealth magazine reported that economic issues and cross-strait relations will be at the heart of future development in Taiwan’s five special municipalities involved in November’s election. They are Taipei City, Xinbei City (New Taipei Municipality, originally Taipei County), Greater Taichung City (to be formed by a merger of Taichung City and Taichung County), Greater Tainan City (to be formed by a merger of Tainan City and Tainan County) and Greater Kaohsiung City (to be formed by a merger of Kaohsiung City and Kaohsiung County).

Economic issues for the KMT

While the economic figures presently look good, the ruling KMT government will face a severe challenge in 2011. In the wake of the financial crisis, Taiwan is expected to post economic growth of 9.98 percent in 2010, which would be the highest in 21 years. But Professor Tung Chen-yuan, from the Graduate Institute of Development Studies, National Chengchi University, warned that Taiwan will not be able to maintain upward momentum. Next year the island’s economic development will reach its limits.

Pointing to United Nations’ rankings, Tung noted that Taiwan placed 54th as an attractive destination for foreign direct investment. The island lags behind other Asian nations such as Indonesia and Thailand, not to mention Hong Kong and Singapore. “The future challenges are going to be enormous,” he said.

In the foreseeable future, Taiwan needs to switch its focus from manufacturing to services, from an economy of scale to an economy based on branding, experience and innovation, Tung stressed. Given that service industries  account  for 73 percent of Taiwan’s GDP and employ 64 percent of the working population, GDP and employment will not increase and the wealth gap will not narrow unless the government puts in some serious effort.

Commonwealth reported that this was the key reason the DPP was able to gain a higher share of the total votes. Tung attributed the DPP’s success to its four-pronged campaign strategy: supporting the interests of central and southern Taiwan;  championing the lower echelons of society; looking after the interests of small- and medium-sized enterprises; and targeting the middle classes.

Relations with China: Challenge for the DPP

Commonwealth also noted that that DPP is not without problems. The party needs to face the challenge of increasing rapprochement with China. In southern Taiwan, where two-thirds of the vote went to the DPP, post-merger Kaohsiung and Tainan need to quickly overhaul their industrial structure if they want to develop and gain greater international visibility. In order to achieve that, the two municipalities will also have to face the necessity of intensifying interaction with China. 

Aside from channeling private-sector prowess and innovation, and attracting foreign capital and technology, the south must capitalize on its advantage as a sea and air transportation hub. As for proposals to promote Kaohsiung as a “Sea and Air Trade City,” Professor Liao Da-chi, from  the Department of Political Economy at National Sun Yat-sen University warned, “even if the central government doles out the money, the local government also needs to have a strategy. It can’t neglect building good mutual relations with China.”

As leaders of the newly merged and upgraded municipalities, Kaohsiung’s mayor, Chen Chu, and Tainan’s mayor, William Lai, will have to go about the business of wooing investors pragmatically. But reconciling practical economic concerns with the DPP’s pro-independence views will surely put them to the test.

After the elections, northern Taiwan remained blue, referring to the party color of the KMT, while the south remained green, the DPP’s color. Commonwealth reported that the different political camps have their own  interpretations of the election outcomes. But as Professor Chiang Da-shu, from the Department of Public Policy and Administration at National Chi Nan University, asserted, “from the perspective of regional development and urban planning, this is definitely a good direction.”

Restructuring local municipalities, finances

For the sake of regional development, the five municipalities will need more platforms for cooperation, be they in the field of transportation or related public facilities, Chiang believes. Given that the northern neighbors Taipei and Xinbei are ruled by one political party and the southern neighbors Tainan and Kaohsiung are ruled by the other, political confrontation can be eased and regional cooperation can be facilitated, Chiang noted.

But while the five municipalities share many problems, they also face different challenges. What all five have in common is a restructuring of local government finances, given that the central government will have to cede certain powers and funding. They will all need to efficiently use and manage their newly gained resources in order to develop their own distinct profiles and be internationally competitive, concluded  Commonwealth.

Taiwan seeks to deal with hot money

Policies adopted by the US Federal Reserve Bank have caused hot money (funds that move into a country to take advantage of favorable exchange or interest rates) to flow internationally and fuel foreign exchange speculation. Taiwan’s government has prepared itself to deal with this inevitable problem. So far, the Central Bank has forcibly checked foreign capital inflows by taking two measures: establishing bond collateral and setting a limitation on the public bond ratio held by foreign capital.

Talking to Global View monthly, Sun Shiao-kong, a professor at Kainan University and a former researcher at the Taiwan Academy of Banking and Finance, said that as a small island, there is little that Taiwan can do, sandwiched as it is between two superpowers, China and the US. For long-term benefits, Taiwan has relied on the United States, the end market for most Taiwanese products. While China has become a major export market for Taiwan, it serves mostly as a transit point. As a long-standing trading partner of the US, and with extensive business connections in China, Taiwan needs to tread lightly.

Yin Nai-ping, a professor at National Chengchi University, said the Central Bank has taken active action, but it has had limited success in fending off international hot money. Once the speculation mentality of currency appreciation is detected, even if  the amount of individual remittance overseas is restricted, transactions will still continue under different people’s names, he said.

Yin suggested it is better for the Central Bank to expand the Taiwanese capital market by channeling  the international hot money rather than attempting on a daily basis to block such transactions. He believes the best way to check the inflow of hot money is to expand the scope of Taiwan’s bond market. Under sound management, it is estimated that Taiwan’s bond market could be expanded by as much as five times.

Yin noted it is a good idea to open up Taiwan’s bond market by gradually allowing foreign governments, enterprises or financial institutions to acquire government  bonds or private business bonds so that the international capital can flow in and out of Taiwan more frequently and freely.

According to commentary in the United Daily News, the appreciation of Taiwan’s currency will indeed impact export-oriented industries, which only make up one part of the domestic economy. Even if these export industries repeatedly make record  profits, this merely benefits the companies and is not shared by society at large. The value of the New Taiwan Dollar has been low for some time now, and some would say that it is not fair to hold down the spending power of the general population in order to subsidize export industries.

Moreover, it is a developing country mentality to use the exchange rate advantage, often with government intervention to support industrial growth. As a developed country, Taiwan should have abandoned such big government thinking long ago. This would allow domestic industries to develop by strengthing and constantly upgrading in order to face the increasingly globalized and competitive environment, the United Daily News stressed.

The appreciation of Taiwan’s currency would automatically increase the value of assets held by the general public. With declining import costs, every Taiwanese dollar can buy more imported goods, and is especially advantageous to those traveling abroad, acting in effect as a pay rise. It can also reduce domestic inflation pressure, since Taiwan is highly dependent on imports. The United Daily News noted that a rising Taiwan Dollar value would see a reduction in the cost of importing crude oil or wheat. In turn, the pressure of rising retail prices would be relieved, and the general public would not need to worry about the possibility of “imported inflation.”

Workers yet to feel economic growth

Taiwan is expected to have achieved an economic growth rate of up to 9.98 percent this year, the highest in nearly twenty years, but most ordinary people are still to feel the positive effects. Scholars believe that the missing component in the equation is an absence of salary increases.

Liang Kuo-yuang, president of the Polaris Research Institute, told the United Daily News, “the speed of income increase for the general public has not matched the economic growth rate,” and thus personal incomes are seen to be out of alignment with the positive economic data.

Kung Ming-hsin, vice president of the Taiwan Institute of Economic Research, agreed that most salaries in Taiwan have fallen, with only a few increases. However, while many international professionals in Taiwan enjoy high salaries, the wages for the majority of ordinary workers have remained frozen, with some seeing a workload that has doubled due to staff streamlining.  

Liang said that this year’s economic growth rate is “not real.” The “beautiful illusion” of 9.98 percent is created in large part by the financial tsunami in 2009 resulting in negative 1.93 percent of GDP – the biggest recession in Taiwan’s history.

After subtracting the unusually high economic growth this year, Liang predicts that if Taiwan’s economy can continue with moderate growth rate for several years, it is possible that people will see their salaries grow eventually.

Kung stressed that there have been major changes in Taiwan’s economic growth pattern, according to the United Daily News. Due to continuous technological progress and efficiency, the traditional labor-intensive manufacturing industries have been unable to absorb the unemployed, and indeed are trimming their staff numbers further. Meanwhile, service industries have not been able to further upgrade and provide the motor to drive the island’s economy forward.

The Economic Daily News said in an editorial that the nature of the recovery is the result of the government’s past economic development and tax policies, which placed the emphasis on export-oriented industries and businesses that enjoyed the benefits of tax credits as a reward for investments. But now the situation has changed with the manufacturing bases relocating overseas. With the low value of research and development in related manufacturing industries, the business model of taking orders in Taiwan and manufacturing in China can no longer distribute the fruits of economic growth across Taiwan society. Thus causing the formation of a structural problem where Taiwan’s GDP has risen far more than salaries.

The Commercial Times suggested in a review that the government should actively attract more Chinese investors, saying that since the government’s opening of Chinese capital to Taiwan in  mid-2009, there have only been around 50 Chinese companies coming to Taiwan with an investment amount worth US$100 million. Such a level of investment is meager in Taiwan’s economic system, so it comes as little surprise the people do not feel any effect. On the other hand, the paper said, if the governments on the two sides of the Taiwan Strait can begin to work together to promote Chinese infusion of capital into Taiwan, it would not be long before Chinese enterprises play an active part in Taiwan’s industrial system and people feel the increasing benefits of bilateral economic and trade relations.

The paper also noted the FTA-like Economic Cooperation Framework Agreement (ECFA) signed between the two sides does indeed favor Taiwan and more so for the owners of Taiwanese businesses in China, although not the general population in Taiwan. In the initial stages of the ECFA’s early harvest list, for example, there is an implicit tendency to encourage Taiwan’s manufacturing businesses to invest in China. For those industries not included in the early harvest list, such as automobiles, LCD panels and major petrochemical products, the agreement encourages the transfer of manufacturing capacity to China, and a reduction of investment in Taiwan.

If this reflects the trend of cross-strait economic and trade liberalization, the employment opportunities for Taiwanese people would further decline with closer cross-strait trade relations. Therefore, follow-up negotiations relating to the ECFA must adhere to the principle of keeping alive Taiwan’s manufacturing activity in order to protect employment opportunities in Taiwan.

Taste the difference: Authentic versus “fake” Taiwanese Tea

Most of Taiwan’s 23 million people have grown up drinking tea, and with the popularity of sweet ice teas consumption has only increased. But Taiwan has never been a big producer of tea. In 2009, Taiwan had only about 13,000 acres of tea plantations, producing just 16,780 tons in 2009.

Taiwanese tea consumption has grown from 0.2 kilograms to 1.8 kilograms per person per year over the last 30 years. Accordingly, the island now consumes 41,400 tons of tea each year. In 2009, 9,556 tons of Taiwan’s total tea production was exported to Japan, China, Europe and the US. This leaves an annual shortfall of 34,900 tons that must be made up through imports, reported Taiwan Review.

Demand far exceeds supply

According to the Taiwan Tea Manufacturers’ Association (TTMA), customs data reveal that Taiwan imported 27,734 tons of tea in 2009. Given the large amount of imports, it is not easy for consumers to get authentic Taiwanese tea.

With the demand for Taiwanese tea far exceeding supply for many years, Vietnamese and Chinese teas have been labeled and sold as local products. As an example, some major retailers have packaged their house brands as “Taiwanese” as long as the tea is processed in Taiwan. Even teas growers themselves are hawking imported teas as something they have grown and processed.

Ted Fan, secretary-general of the TTMA, said Taiwan is the only country in the world that treats tea as an agricultural product. Actually, tea is not a “raw” agricultural product like an apple, but rather, it should be treated as a processed product.

Authentic or fake

Under the Department of Health’s country-of-origin standards for imports, one can designate a processor’s location as the “production location” as long as the processor completes the key processing of the good in question, or the value added by the processor exceeds 35 percent, according to Taiwan Review.

Raw, imported tea that is dried and has its flavor profile adjusted in Taiwan exceeds the 35 percent threshold, whether using the “change in substance” criterion or the “value-added” criterion, and ought to be designated as “Taiwanese.” This is the case made by Jackson Huang, former TTMA chairman, who cites the UK’s Lipton brand as an example. He says its teas come from a dozen countries, but because Lipton processes the tea itself before re-exporting, the UK is labeled as the country of origin on its package. Nobody has ever questioned the practice.

“Blending tea leaves is completely legitimate,” Huang told Taiwan Review. He mentioned Lipton again, noting that the company sources black tea from more than 20 countries in order to maintain the distinctive style and quality of its products. In fact, Lipton makes constant adjustments to its blend to achieve “the flavor consumers find most acceptable.”

Expert tea blenders

“Tea growers have been mixing and matching teas for ages,” said Tim Lan, owner of the Moonlight Tea House in Taipei. According to a top tea inspector, “skill in blending is the mark of a real tea expert.” If this is indeed the case, how then can a buyer determine whether a tea is authentically Taiwanese?

According to some, the tea plants used to produce “Taiwanese-style” oolongs in China and Vietnam were imported from Taiwan about a decade ago, and are therefore genetically very similar to Taiwanese tea. According to the Council of Agriculture, “the technology needed to determine the country of origin of tea leaves is not yet mature. At the moment, we can only assess their quality based on their appearance and the use of our own five senses.”

In an interview with Taiwan Review, Ted Fan said that foreign Taiwanese-style oolongs are produced from the same varieties of tea and processed in the same way as Taiwanese teas. The differences are slight and related to climate and quality control. He therefore argues that as long as the amount of foreign tea blended remains below 30 percent, even industry insiders cannot tell the difference. But when the blending ratio goes above 30 percent, the appearance and taste is detectable.

“Whether they are ‘real’ or ‘fake’ is not the point. What matters is whether they are good or bad quality,” said Chen Kuo-renn, head of the tea manufacturing section of  the Tea Research and Extension Station. However, Jackson Huang holds a different view. “With tea, it is not a question of ‘good’ or ‘bad,’ but whether you like it or not.” Tea has always been a luxury and people’s tastes vary. And it is your taste that sets the price and rules.

Taiwan’s changing health and fitness culture

In October 2010, US-based World Gym Fitness Center acquired California Fitness Centers (Taiwan), becoming Taiwan’s largest fitness franchise. World Gym, the former training ground for California Governor Arnold Schwarzenneger, now has 18 outlets and facilities across the island, with almost 90,000 members and 1,000 employees.

According to Global View monthly, World Gym is not well-known in northern Taiwan, but the company hopes to change that with an aggressive expansion program. When World Gym entered the Taiwan market in 2001, their main competition came from the US-franchised California Fitness and locally run Alexander Health Club. At the time, leases for commercial buildings were three times higher than now, so in order to pick their battles wisely, World Gym decided to start in Taichung, central Taiwan, with a modest strategy of adding one location each year, until mid-2009.

Based on a confidence in their managers and professional coaches, and indications that the industry climate was ripe for consolidation, World Gym set its eyes on acquiring California Fitness, which had a similar business culture and clientele. Yet World Gym’s business model differed from that of Taiwanese fitness centers, where managers are often fitness coaches, prone to exaggerating their business performance when talking to the media.

This is not the case with John Caraccio, president of World Gym Taiwan operations, who headed the acquisition of California Fitness. Armed with a strong management background, he had a thorough understanding of how to run a business in the fitness industry. Caraccio intends to expand World Gym’s base quickly, starting with 12 large full-service health clubs, and 15 smaller ones called World Gym Express by the end of 2012, bringing the total number of outlets to 45.

He told Global View that he is bullish about the potential of Taiwan’s fitness market and explained his strategy to reverse some traditional myths. The traditional business model in Taiwan’s fitness centers is based on pre-paid memberships or annual memberships. Initial customer numbers appear encouraging, but after several years this is no longer the case, and a center’s business declines as it is unable to sustain membership renewals.

World Gym takes a different approach by charging a monthly fee, which is the norm in the US. For initial enrollment, one only pays about NT$3,000 (US$100.00), plus a monthly usage fee of NT$1,000 (US$33.00). Membership at World Gym Express is cheaper, about NT$600.00 (US$18.00) a month. From the fitness center’s point of view, monthly fees become established as a regular monthly income that is predictable and simple to manage.

According to Global View, many Taiwanese health clubs are faced with two common problems, the range of fitness equipment available is too broad and complex for customers, and the staff lack adequate training. Taiwan’s Youth Camp and Alexander Health Club, formerly well-known fitness centers, went bankrupt in 2005 and 2007 respectively. Their common mistake was to diversify their businesses away from the core to include miscellaneous services such as spas, swimming pools, ping pong, racket ball, juice bars, and restaurants in order to attract more members.  However, this over-diversification made their business and financial operations unwieldy and difficult to manage.  

World Gym will focus on their professional services. In training service professionals, most Taiwanese health clubs do not pay attention to international licensing and certification. For example, the aerobic exercises are taught according to a local system of master and apprenticeship, reported Global View. In the dance classes, the participants follow the dance moves of popular singers in the music videos – which are appealing – but not very professional.

The coaches at California Fitness are internationally certified, with at least six or seven years experience, plus the company’s culture is aligned with that of World Gym. This provided another motivation for the acquisition. Also, World Gym has an eye towards entering the Chinese market and Taiwan provides an ideal test market.

Currently, all the well-known Chinese fitness centers are franchised with lifetime memberships or annual memberships, similar to Taiwan’s model. According to fitness industry experts in Hong Kong and Taiwan, in five years, the Chinese fitness market will face the same problems that led to the failure of Youth Camp and Alexander Health Clubs, reported Global View. And this is one of the reasons why World Gym is planning to go public in Taiwan in five years, after they have successfully captured the Taiwanese market; they hope to duplicate this success in China.