Monthly Archives: December 2012

American lawyer looks back at crucial times for US-Taiwan relations

Thirty-four years ago this month, then US President Jimmy Carter announced his intention to recognize the People’s Republic of China (PRC) at the expense of the Republic of China (ROC) on Taiwan. The United States’ official relations with Beijing took effect on January 1, 1979, leaving a great deal of uncertainty in Taiwan. His decision meant the termination of the mutual defense agreement between Washington and Taipei. Within three months, American soldiers stationed in Taiwan withdrew, the US Armed Forces radio station went silent and the Taipei American School closed.

At that time, Robert Parker, an American lawyer in Taiwan, had just been elected chairman of the American Chamber of Commerce (AmCham) in Taipei. He quickly began to rally his friends to jointly establish the International Community Radio Taipei (ICRT) and worked to set up the American School and the American Club. To safeguard Taiwan’s security, Parker also went to Washington to testify before Congress. Part of his testimony would later be incorporated into the Taiwan Relations Act, the foundational document governing US-Taiwan relations today.

Parker, whose wife is Taiwanese, is a senior counsel in the Silicon Valley office of White & Case, a global law firm. His expertise is in intellectual property, mergers and acquisitions, capital markets and, of course, Taiwan. He worked in Taiwan from 1976 to 1995, witnessing Taiwan’s rapid industrial growth.

The World Journal, one of the largest Chinese-language newspapers in the United States, published a full page interview with Robert Parker on December 16 where he reflected on this difficult time for US-Taiwan relations. Taiwan Insights has translated a part of this article here.

Parker pointed out that all members of the AmCham in Taipei were surprised when former President Carter made the announcement about switching American diplomatic ties from Taipei to Beijing. Like other Americans, he did not know about it until the next morning when he heard the news from the US Armed Forces radio. At that time, the radio was the only broadcast media for English-language news in Taiwan.

There was no internet, no e-mail and even fax machines were unavailable then. Parker knew that the military radio would not remain after the withdrawal of US troops, so he wanted to set up an English radio station for the Americans who lived in Taiwan.

At that time, The Asian Wall Street Journal and the International Herald Tribune did not exist. The English-language radio station was the only lifeline of information for Americans in Taiwan. Within two weeks of President Carter’s announcement, Parker led a delegation of AmCham members to meet then Premier Sun Yun-suan to make four requests: first, to find a new location for the Taipei American School; second, to set up a children’s activity program for the children of expats in Taiwan; third, to find a new home for the American Club; and fourth, to set up an English-language radio station to replace the US military station. At a New Year dinner with AmCham members a few days later, Premier Sun publicly announced the government’s agreement to all four requests. Parker said he was deeply moved.

After President Carter’s announcement to sever diplomatic relations with Taiwan, the US embassy staff and troops left in less than 90 days. And the American Institute in Taiwan had not yet been established. At that time, the AmCham became a leading center for Americans on the island. The chamber felt obliged to protect the security and interests of overseas Americans in Taiwan, but also to preserve the security and interests of Taiwanese friends in face of PRC’s hostility, Parker said in the interview.

In February 1979, Parker went to Washington to testify before Congress on behalf of the AmCham in Taipei. He appealed to Congressional members about the need for the US to make a powerful guarantee regarding Taiwan’s security, and the need for explicit legislation dealing with relations between the US and Taiwan. Parker stressed that the new legislation (later the Taiwan Relations Act) should not only serve to protect the interests of US businesses in Taiwan, but should also be in line with the moral responsibility of the United States to Taiwan and its people. The main recommendations of the AmCham were incorporated into the act, including much of their recommended wording and terms

In 2000, the Taiwan government awarded Parker the “Order of the Brilliant Star with Grand Cordon”, in recognition of his contributions to Taiwan-US relations. He remains the only American businessman to win this medal, the World Journal reported.

Temple of shells

Located in the coastal township of Sanzhi (northern Taiwan), the shelled temple was built by believers of the Taipei-based Foofu Hilltop Temple Organization in 1996. After years of construction, the shrine is mainly used to worship Ji Gong, a legendary monk, and 18 legendary arhats (holy disciples of Buddha).

Unlike other monks, Ji Gong ate meat and drank wine, often over-indulging on the latter. He is often depicted with a smile on his face, carrying a magical fan and a bottle of wine (as shown in the first picture below). Though a flawed deity, he is very popular in the Taoist community for his compassionate nature. With his mischief-making, he was sentenced at one point to serve 360 years in the undersea Dragon King’s palace.

With a revelation from Ji Gong, a Taiwanese believer of the organization named Lee Shu-tsong, along with other believers, began collecting shells, coral and agate to build a temple simulating the underwater palace to recreate his imprisonment.

The shelled temple seems to offer solace to worshipers seeking advice from worries about health, wealth, education or business. Today, a large number of worshippers and tourists visit the temple daily, so much so that the owners are considering relocating it elsewhere since the space has outgrown the daily influx of visitors arriving on tour buses.

The following photos were taken by Tao Bing-hua, a Taiwanese amateur photographer. He said, “I admire the sincere mind of the religious believers who built the temple by taking advantage of nature’s raw materials and innovative designs. This makes the Shelled Temple a museum of shells.”

The temple is located at No. 69, Erpingding, Yuan-shan Village, Sanzhi Township, New Taipei City, Taiwan.

Taiwan brands seeking to break the OEM pattern

Interbrand, the world’s largest brand consultancy, recently selected Taiwan’s top 20 international brands for 2012. Reflecting on the announcement, Jerchin Lee, executive director of the Taiwan Trade Center in San Francisco said that although establishing an international brand is harder than being an Original Equipment Manufacturer (OEM), this is the only way for Taiwanese companies or even the island’s economy to survive in the future.

The Taiwan Trade Center is an overseas post of the External Trade Development Council (TAITRA), Taiwan’s semi-official trade promotion agency. Designed to promote global product marketing of Taiwanese enterprises and products in Silicon Valley, Lee has an overarching view of each country’s hi-tech businesses and suggests that “Taiwan’s economy should take another direction after traveling on the road of OEM for 50 years. It is imperatively urgent that Taiwanese companies establish international brands,” said Lee.

Is OEM the default position for Taiwan firms?

It has been nearly half a century since Taiwan stopped accepting US aid, embarking on its own road of economic development. Since then, Taiwan has continued as an OEM economy without interruption. Initially, Taiwan’s cheap labor force produced consumer goods in huge quantities, becoming a major exporter of textiles to appliances, footwear to umbrellas. This was Taiwan’s route to rapid industrialization.

Then Taiwanese businesses moved their factories and facilities to mainland China and South East Asia, shifting their roles to bringing financial resources and technology to areas with a cheaper labor force. Orders were still taken in Taiwan, but the products were manufactured by OEMs to customers in Europe and the United States.

The United Daily News pointed out that the OEM model seems to be the fate of Taiwan. On the surface, the most popular products like the iPhone 5 and iPad Mini are mainly manufactured by the high-tech companies in Taiwan. Though Apple makes 50 percent of the gross profit, those Taiwanese companies responsible for producing these famous products only take 1 or 2 percent of the profits.

The Commercial Times reported that Taiwanese commodity exports in 2001 accounted for 2 percent of the total global exports, ranking 14th in the world, but in 2011, Taiwan’s exports accounted for 1.7 percent of total global exports, tumbling to 18th place, demonstrating Taiwan’s industrial lag in terms of international competitiveness.

Enhancing Taiwan’s export competitiveness

South Korea is known internationally for brands like Samsung Electronics, Hyundai Motor, LG Electronics and others, which enhance market competitiveness with their brands. South Korean businesses have also invested in industrial research and development and in diversifying their products to include electronic components, iron and steel, shipbuilding, petrochemicals, plastic products and textiles, and in the process gain competitiveness in international markets.

The Commercial Times stressed that the decline of industrial status in international supply chains is the main reason for Taiwan’s drop in export competitiveness and a lack of economic momentum. The economic and trade agencies of the government should actively develop countermeasures to help Taiwanese products cut into the supply chains of international companies, and to create unique and key technology within Taiwanese enterprises specifically designed to compete in the global market place. Taiwanese companies should also devote more resources to research and development to create a brand presence in a range of fields to increase the diversification and competitiveness of Taiwanese export industries.

Taiwanese brands with Silicon Valley branches

Since 2003, Taiwan’s Ministry of Economic Affairs and the TAITRA have commissioned Interbrand to conduct the Taiwan Global Brands Value Survey to select 20 of the most valuable manufacturers in Taiwan. One of the selection criteria for this survey is that one-third of a company’s revenue must come from markets outside Taiwan.

On the tenth anniversary of the survey, the system continues to use the professional valuation procedures and services of Interbrand, which combine quantitative analysis of corporate financial performance and qualitative analysis of a brand’s role. The survey offers a brand value assessment for Taiwan’s world-class brands and gauges their global competitiveness. The survey is aimed at publicly traded, over-the-counter, international Taiwan brands. The brand valuation system uses the same methodology as used to assess the “100 Most Valuable Global Brand Value Ranking”.

“The information and communications technology (ICT) industry has been Taiwan’s mainstream industry with global competitiveness. Companies in the ICT industry used to take more than half of the top 20 positions, according to Lee’s analysis. This year is no exception, with 11 ICT firms in the top 20. In recent years, Taiwan’s food production industry has expanded rapidly in the mainland China market, and occupies five top 20 places this year. Also among the top 20 are three companies from the sports and leisure equipment industry, and one car tire manufacturer.

The top three spots are taken by the ICT industry. Taiwan’s technology industry has been facing the impact of industrial ecosystem migration from PCs to mobile applications. HTC, ACER and ASUS have retained their top 3 positions in this year’s survey, but the brand values of HTC and ACER have declined slightly after their growth spurt last year. HTC’s brand value was US$1.371 billion, US$3.605 billion and US$2.753 billion respectively in the three years from 2010 to 2012; while ACER’s brand value in those three years was US$1.401 billion, US$1.940 billion and US$1.676 billion respectively.

Among the top three, only ASUS has continued to strengthen in the marketplace due to its continuous innovation, the launch of several “Eee Pad Transformers” in rapid succession, and its collaboration with Google on tablet products such as Nexus7. The brand value was US$1.285 billion, US$1.637 billion and US$1.662 billion respectively, with 2 percent growth this year.

Lee stressed that with regard to the characteristics of each industrial market, the US is the world’s largest market for ICT products, compared to Europe and Asia. Accordingly, the key to success of these top ICT companies is to maintain facilities or posts in the American market, especially in Silicon Valley. More than 80 percent of the top 20 Taiwan brand enterprises, especially those in the ICT industry, maintain a branch office or some posts in Silicon Valley.

Taiwan’s food industry benefits from China market

Among the top 50 large enterprises in Asia over the last four years is Tingyi Holding Corporation, which specializes in making instant noodles and beverages under brands like Master Kong, ranked fifth this year. Their products account for more than 50 percent market share in mainland China. Ranked eighth is Synnex, now the largest ICT products distributor in Asia, also among the top three ICT product dealers of the world.

Ranked ninth among the top 20 Taiwan brand names is Maxxis, also the 10th largest tire manufacturer in the world. Ranked tenth is 85°C Bakery Café, which has over 100 retail stores in China, and continues to expand. Ranked 16th is Johnson Health, the third largest sports equipment supplier in the world with 10 percent global market share. Ranked 18th is Transcend which is the third largest USB flash drive producer in the world. Bikes of Giant and Merida are already well-known leading brands.

Lee mentioned two reasons for the rapid and smooth development of Taiwanese food producers in China – the huge Chinese market and Taiwan’s sterling food safety reputation. According to Lee, Taiwan’s food industry has been actively developing the Chinese mainland market for many years, making improvements in product distribution and operational efficiency, and dedicating resources to manage the unique Chinese life style, driving the growth of the overall brand value of the food industry.

Learning from Apple

Over the past decade, the brand value of the top 10 brands has grown from US$3.564 billion in 2003 to US$10.84 billion this year, a growth rate of 204 percent; triple the total value in 2003. As to the three major goals scheduled to be completed by the end of 2012 in the “Branding Taiwan Plan”, namely that “the brand values of the top five will have surpassed US$1 billion”, that “2 brands will  have surpassed US$1.5 billion” (in fact, 3 brands surpassed US$1.5 billion), and that “the total brand value for the top 20 will have surpassed US$10 billion” (in reality, the total value for the top 10 exceeded US$10 billion). All the goals were fulfilled last year, and this year have been either maintained or surpassed.

OEM and ODM (Original Design Manufacturer) have been the major patterns of development for Taiwan’s international trade. Most companies have focused on manufacturing and production, and have long ignored the importance of research and development and marketing. Even those firms who want to develop their brands have placed more of an emphasis on function, underestimating the value of culture, creativity and marketing that brand names can engender. Lee said, “Let’s look at Apple’s new product announcement. They cover everything on every aspect of the product. This kind of thinking should be ingrained in Taiwanese manufacturers who really want to establish their brands.”

Lee concluded, “I also find that Taiwanese enterprises are in a process of transition, slowly learning how to strengthen brand value. Actually Taiwanese firms have a strong learning ability, and the R&D talent is full of potential. I believe that Taiwanese enterprises eventually will take an important seat in the international community if they are given a little more time.”

More information about the 2012 Taiwan Top 20 international brands can be found at

Taiwanese food industry targets American market

After many years of popularizing Taiwan’s favorite snack foods around the world, the Taiwanese food and beverage industry is expanding more and more into the international market. Already, international consumers have developed an appreciation for hot pot, pearl milk tea, shaved ice dessert, and seem to have an insatiable appetite for more Taiwanese foods.

According to the 2012 Republic of China Yearbook, there are currently 550 chain stores and restaurants in Taiwan, nearly 18 percent of them have branches overseas. Among these internationalized Taiwanese food and beverage brands, up to 81 percent have entered the mainland Chinese market, followed by Malaysia (16.7 percent), Singapore (15.6 percent), Hong Kong (14.4 percent) and Macau (10 percent).

Taiwanese stores like CoCo Fresh Tea and Juice, and Chatime, already have a strong presence in Asia. Through direct ownership, franchise, joint venture or regional licensing, they have successfully set up branches in New York, London, and Dubai.

Commonwealth monthly reported the most obvious competitive advantage for Taiwanese food and beverage vendors is diversification and innovation. “It is very common for a Taiwanese chain restaurant to provide a menu of over a hundred dishes. For beverage stores, each one can develop at least 200 to 400 remarkable tea drink recipes,” said Beryl Lee, secretary general of the Association of Service Industries, Taiwan.

Local competition also helps to beef up the skills and strength of the Taiwanese food and beverage industry. From small night market vendors to top restaurants, they have to cater to the ever changing appetite of the Taiwanese people. In addition to innovations in menu, recipes, and beverages, the high-level design of commercial space in Taiwan also plays a key role in creating a festive atmosphere, Commonwealth reported.

Gongyi Road in Taichung, central Taiwan, is legendary among Taiwan’s gourmet food lovers. The interior design of stores like Tripod King, Karuizawa, Orient Dragon, cost tens of millions of Taiwanese dollars (about US$1 million) each, demonstrating the island’s seriousness in developing a distinct food culture.

“The majority of Taiwanese food and beverage stores are concentrated in Asia. It is still very difficult for them to expand to the US,” said Chen Ming-li, manager of the Corporate Synergy Development Center. If they have no local partners, it is very hard going, especially when Taiwanese firms are unfamiliar with American regulations.

Commonwealth reported that with over 700 retail stores round the world, 85°C Bakery Café still focuses the main market in China, but the highest turnover of a single store is in Los Angeles, California. The single-day turnover of this store goes up to US$30,000, double those in China or Taiwan. “We have no immediate expansion plans and can only maintain two stores like this in the US because it is too difficult to get the work visas for the bakers,” said Chiu Chih-hong, executive vice president of the 85°C in China.

For overseas expansion, Taiwanese businesses cannot rely on innovation alone, and need to move towards systematic operation. In addition to personnel and legal regulation knowledge, Taiwanese food and beverage industry brands also need to streamline the process of internationalization and systems development. Taiwanese enterprises often stay at the standardization stage, not aware of or unwilling to invest further in developing innovative operations systems,” Lee told Commonwealth.

South Korea’s advantages overblown in Taiwan’s media

Taiwan’s media likes to compare the development of South Korea with that of Taiwan, but Chung Sang-ki, representative of the Korean Mission in Taipei, said that Taiwanese people might lose faith in their country if the local media continues to always carry a negative image that Taiwanese are inferior to South Koreans.

Taiwanese media tends to compare the performance of South Korea and Taiwan in areas like wage level, economic development, and the entertainment industry. Along with the comparison comes all kinds of criticism, often highlighting what is found lacking in Taiwan.

In an interview with Taiwan’s CNA News World magazine, Representative Chung said that as a country with high expectations, the Taiwanese people could take the merits of these criticisms in order to stimulate the government to do better. But he warns that if the media always dwells on the negatives, it will leave local people with the wrong impression that they are inferior. This will probably affect how people think and result in a gradual loss of confidence in the country.

He said that in comparison with other countries, Taiwanese media likes to focus on one specific country while South Korean media are more distributed in its focus. For example, Taiwan often compares itself with South Korea exclusively in areas of economics, performance and the entertainment industry, highlighting the strong competition between the two sides, while South Koreans are more likely to make comparisons with a range of countries across a range of fields.

According to CNA News World, Chung spoke highly of Taiwan’s national healthcare system, freedom of speech, education, human rights, and people’s happiness index. He believes that Taiwanese people should be proud of themselves for enjoying advantages in all these areas.

The United Daily News reported that Kim Joon-sik, an exchange student from  Seoul National University who is studying at National Taiwan University (NTU), published an article in the NTU Consciousness newspaper, triggering heated discussions.

Taiwanese almost never mention the negative sides of South Korea, according to Kim. He believes that it is apparent that South Koreans are not happy after they achieve competitiveness. Their mentality is that “they survive for the sake and existence of the nation.” They feel they make huge sacrifices, and they are exploited by large Korean enterprises and oppressed by the nation. However, Taiwanese, on the contrary, believe that their own interests are the most important.

Kim said, “South Korea is a highly repressive society. Each individual is oppressed by his organization. You are even pressured by your families, your schools, and teachers.” However in Taiwan, everything can be questioned. Everyone has the freedom to challenge the authority. This skepticism can bring up a society full of diversification, while in South Korea, “You have to play your role, and the society is completely militarized.”

Kim noted that although the South Korean government does not exert direct control over the media, the media never criticizes South Korean President Lee Myung-bak, nor dares to criticize Samsung (a South Korean multinational
conglomerate company). “If you do, you get no commercial advertising. In Taiwan, if you do not get ads from Hon Hai (Taiwan’s mega OEM) you can get them from other companies. But in South Korea, if you don’t get ads from Samsung, you will get no business advertising at all, because there are no small or medium businesses in South Korea.”

Taiwanese people seem eager to follow South Koreans’ examples in every way, but one day “when you successfully transform into the South Korean model, you will not feel happy,” Kim stressed.

US should internationalize islets disputes, not take sides: scholars

Two Taiwanese scholars, Song Yann-huei, research fellow at the Institute of European and American Studies, Academia Sinica and Chen I-hsin, professor at the Graduate Institute of the Americas, Tamkang University, were invited by the Center on Democracy, Development and the Rule of Law (CDDRL), Stanford University, to talk about “Maritime issues in East Asia, Finding Peaceful Solutions.” The November 29 talk focused on their analysis of the issues involving the East China Sea, South China Sea, and relations between Taiwan, China and the US.

Song began by introducing the situation in Taiwan’s territorial dispute over the Diaoyutai Islets (also known as Senkaku in Japan) and his interpretation of President Ma Ying-jeou’s East China Sea Peace Initiative. He pointed out that the initiative’s focus on shelving the disputes in favor of peaceful development should be applied not only to the Diaoyutai territorial disputes between Taiwan, China, and Japan, but also in solving other disputes in the South China Sea among Taiwan, China, and five Southeast Asian countries. He stressed that those countries should refer to the spirit of President Ma’s initiative to avoid sovereignty issues, diverting military confrontation in favor of maritime exploration, development and research funding in the region. This would establish a peaceful mechanism to jointly develop the islands of the East and South China Seas in the NGO cooperation platform.

Song pointed out that President Ma’s peace initiative serves only as a framework. Concerning the complexity of the issues, a solution cannot be achieved overnight. Those countries involved must take gradual actions for a final long-term resolution. Although there is rising tension in the East and South China Seas, the situation can also serve as a turning point for international cooperation in the Asia-Pacific region, he said.

He called on the US, Canada and the European Union to make the disputes in these two regions an international issue, one which requires multilateral negotiation, not just for countries to take sides in the disputes. All relevant countries, including Taiwan, should be invited to take part in the establishment of a mechanism to prevent potential conflicts in the East and South China Seas.

Chen said that President Ma’s initiative can be characterized as “FIRM” – flexibility, international environment, resolve and military force. It is the best policy option for Taiwan’s government after carefully studying various domestic and international situations. He also noted the Obama administration’s intention to return to Asia to revive the American hegemony, which is difficult to maintain. In the face of the US economic downturn and the rising of China internationally, Washington has limited resources to intervene in Asian affairs singlehandedly. President Ma’s peace initiative offers the best opportunity for the US to return to Asia, Chen said.

Besides Stanford University, Song and Chen also talked about the subject at the University of California (Berkeley), the University of San Francisco and among gatherings in the overseas Taiwanese communities in the Bay area before continuing on to Los Angeles, New York and Washington, D.C.

Taiwan: signing of peace accord with China not a priority

Wang Yu-chi, Taiwan’s Minister of the Mainland Affairs Council, said December 5 that judging from the statement and general opinion from the recent 18th National Congress of the Chinese Communist Party (CCP), his assessment is that Beijing will increase pressure on Taiwan to start political dialogue, especially on a “peace accord” between the two sides.

Quoted in the United Daily News, he said that Taiwan’s government has its own thinking on negotiating a peace accord, adding that “the cross-strait peace agreement will be different from a truce, or a non-aggression pact,” but both sides should work hard to identify the core common ground before framing the agreement.

Wang said, in terms of international practice, the majority of peace accords are truces or non-aggression treaties, but this no longer applies to current cross-strait relations. After all, there are no longer military conflicts and confrontation between the two sides.

Specifically on a cross-strait peace accord, said Minister Wang, mainland China should put forward more substantive content, otherwise it would be difficult to have a discussion. He stressed that the signing of a peace accord is not a priority of Taiwanese government policy.

He pointed out, “If mainland China wants to talk about the agreement of unification, such a topic is not acceptable to Taiwan’s mainstream public opinion currently.” Wang made the remarks as he delivered a special report to the ruling Kuomintang’s Central Standing Committee on the CCP’s 18th National Congress and its implications for cross-strait relations.

On December 10, President Ma Ying-jeou stressed in an interview with the Commercial Times that it would be beneficial to both sides when Taiwan and the mainland take a pragmatic approach to a cross-strait peace agreement. However, Beijing should first make a substantive proposal towards such a peace agreement, describing what kind of function a peace accord would serve, and whether this would make cross-strait interactions better than at present.

He said that international scholars are highly concerned about the two sides’ negotiating a peace accord. He often asked them: “What content do you think that a cross-strait peace accord should have?”

President Ma said that political consultation is not a priority for his government, adding that any critical development of relations with the mainland cannot be achieved overnight. The direction of his government’s current work is to build an expandable and durable framework for relations with the mainland, which can be the basis on which to promote future peaceful cross-strait development no matter who takes control of the government.

Singles and single-parent families on the rise

According to the Ministry of the Interior, the number of centenarians in Taiwan has increased by 452, a sharp rise of 30 percent, moving from 1,489 last year to 1,941 this year. Yet, the size of households continues to shrink as Taiwan’s society ages, reported Taiwan Panorama.

The figures of the Directorate-General of Budget, Accounting and Statistics (DGBAS) show that there are currently 7.41 million households in Taiwan. The largest type is a family consisting of a father, mother, and their unmarried children, accounting for 35.8 percent of all households. Though still the highest segment, it is 5.7 percent less than 10 years ago. The second largest type is one of single individuals, now accounting for 22 percent of households, and the third largest is of families consisting of a husband and wife only, accounting for 11 percent. Couples now outnumber traditional families of grandparents, parents and children living under the same roof (10.9 percent).

The first important trend to note is that the number of large households is shrinking. Those with five people or more accounted for only 8.7 percent of the total, while those with six or more accounted for just 7.3 percent. In 1990, the average household had four people, but that figure fell to 3.3 by 2000, and slid to just 3 in 2010.

Taiwan Panorama pointed out the second most prominent trend is the growth in the number of single-parent families. Numbering 560,000, single-parent households currently account for only 7.6 percent of all households, but that proportion has grown by 50 percent over the last decade. The increase in single-mother households is particularly pronounced, from 65 percent a decade ago to 74 percent of households of this type.

The growth in single-parent families as a whole is being driven by higher divorce rates and a lower percentage of adults getting married. Taiwan currently has the highest divorce rate in Asia. The previous generation’s high rate of separation and divorce rates have made today’s young people even more leery of matrimony, reported Taiwan Panorama.

This is reflected in the third major shift seen in household structure – the growing proportion of single-person households. According to the DGBAS, the figure of unmarried individuals in the age range 30-34 reached 41 percent in 2010, while it was 27 percent in 2000.

Lin Wan-I, a professor at National Taiwan University, said that the act of marriage traditionally implies a commitment to carrying on the family line. But many young people worry about their ability to raise kids and decide that they don’t want any.

He noted it is extremely difficult to reverse the trend toward single-hood and childlessness, which are worldwide phenomena. The only thing the Taiwanese government could do to reverse this trend is to lower the cost of having, rearing and educating children.

Lin added that Taiwanese people should look at marriage and childbearing separately, accepting children outside of wedlock, and treating such children without stigma. Most of the 20,000 children per year currently born out of wedlock in Taiwan are born to girls on the cusp of adulthood, while in Europe; it is largely adult women who are having children out of wedlock.

Taiwan needs to get over the notion that having a child out of wedlock is shameful and a terrible thing. Furthermore, Taiwan Panorama stressed the need to provide comprehensive parenting education and greater support to women who choose not to marry, but would like children.

By the year 2027, Taiwan’s young adults will be burdened by raising an elderly person or a child. Currently young adults account for 70 percent of the labor population, about 3.5 workers raising one person.

The United Daily News reported that the aging population of Taiwan is accelerating while fertility is declining. According to Lin, the key to slowing down the aging society is to increase the fertility rate. In 2016, Taiwan’s elderly population will outpace the juvenile population. That same year, Taiwan’s post-war baby boomers will turn 65, starting a wave of retirements. The senior population will reach 3.12 million, putting an additional social burden on young adults.

Taiwan’s cosmetic surgery entices Chinese tourists

When visiting Taiwan, wives of China’s provincial governors take in the must-sees – the night markets, Ali Mountain, and Sun Moon Lake. Of late, the list now includes a visit to the Taiwan’s cosmetic surgery clinics as well. Business Weekly reported that the wives of Chinese high-ranking officials like to accompany their husbands to Taiwan so they can take advantage of the cosmetic enhancements available there.

Chinese movie stars also look toward the promotional packages in Taiwan and seek some “cosmetic nutrition.” They stay in Taiwan for up to a week for laser whitening, facial skin tightening, fat removal under baggy eyes, minor cosmetic procedures, and physical examinations, often costing them NT$1 million (US$33,800).

The big business of small injections

According to a report by American Medical Insight Inc., the market for aesthetic plastic surgery products and equipment in Asia last year reached US$586 million, an annual growth rate of 13.3 percent. The top three countries with the highest growth were India, China and Taiwan in descending order.

There are about 1,200 plastic surgery clinics in Taiwan, said Jen Chung-chieh, president of Dynamic Medical Technologies, a provider of 50 percent of the aesthetic lasers and light-based equipment to hospitals and clinics in Taiwan. Based on monthly business revenues of NT$3 million (US$100,000) per clinic, the annual production value is around NT$43 billion (US$1.4 billion) in Taiwan, equivalent to that of the industrial machine tool industry, which is ranked among the top five in the world.

Take hyaluronic acid for example, the Restylane brand has taken 90 percent of Taiwan’s market since it was first imported and introduced in 2003. There were 45,000 Taiwanese having hyaluronan injections temporarily smoothing their wrinkles in 2010, increasing to 50,000 injections in 2011. With other brands entering the market, this is estimated to increase to about 70,000 injections in 2012. On average, 193 Taiwanese receive injections daily.

For international brands, they treat Taiwan as a testing ground with an eye on expanding to other markets in China, Hong Kong, Singapore and Malaysia. Business Weekly reported that there are three million people who undergo plastic surgery in China every year. The Chinese cosmetic surgery market is expected to grow to US$33.5 billion by 2015, making it a very attractive market.

Local ‘beauty belts’

In South Korea, there is a “beauty belt,” where 650 plastic surgery clinics are clustered around Apgujeong-dong, a string of subway stations in the districts of southern Seoul. In order to serve the Chinese customers, almost all of them hire Chinese interpreters.

Similarly in Taiwan, there are over 200 cosmetic surgery clinics clustered in the district of Zhongxiao East Road in Taipei. Based on the estimation of monthly revenues of NT$6 million (US$203,000) per clinic, the annual revenue generated within this 1.5 kilometer area is about NT$14 billion (US$470 million), accounting for a third of the total Taiwanese cosmetic surgery market. Taipei City is the center of Taiwan’s plastic surgery market, accounting for 60 percent of the total market value.

Taipei City has been coordinating with the hospitals and hot spring hotels to promote cross-strait medical and cosmetic tourism since 2007. In the last five years, there were 2,263 Chinese people following this promotion to Taiwan for physical examinations, bringing in about NT$320 million (US$10.8 million) worth of income.

Plenty of room for growth

According to the statistics of the Taiwan Trade Center, in 2010 there were 15,000 foreigners who visited Taiwan for medical and cosmetic visits.  The figure increased to 39,000 in 2011, among them, 30 percent sought minor plastic surgery procedures. Compared with South Korea, Taiwan has plenty of room for growth.

However, Taiwan is poised to make the medical and cosmetic industry a driving factor in its GDP growth, according to Business Weekly. As Taiwanese and Chinese share the same language, doctors and patients can communicate directly without the need of interpreters so that patients can easily receive a satisfactory service. Plus, the opening of direct flights between Taiwan and China makes traveling easier and more time efficient. It takes only 110 minutes to fly from Shanghai to Taipei, compared with 2.5 hours between Shanghai and Japan.

Although South Korea is considered a cosmetic surgery powerhouse, about a third of Korean cosmetic surgeons have studied in Taiwan. According to Business Weekly, they often go to the Chang Gung Memorial Hospital to learn cosmetic surgery skills, said Su Gong-min, educational supervisor of Dynamic Medical Technologies. The good reputation and high standards of Taiwan’s medical system can even rival those offered at the world’s top cosmetic surgery destination – the United States.

Re-emerging business opportunities in China

The recently concluded 18th National Congress of the Chinese Communist Party clearly forecasted China’s economic growth rate to double by 2020. China’s economy has sustained double digit growth since former General Secretary Hu Jintao and Premier Wen Jiabao took power in 2002. On the other hand, Taiwan has struggled to keep up its four percent growth rate, even suffering negative growth in 2009.

In the past decade, both Taiwan and China have made progress in accumulating wealth. China made an impressive jump while Taiwan maintained a marginal rise. From 2006 to 2011, China’s average GDP more than doubled from US$1,700 to US$5,400, while Taiwan saw more modest growth of 25 percent, from US$16,000 to US$20,000, reported Commonwealth.

Even with a slowdown and the need for reform, China’s annual economic growth over the next eight years is likely to remain impressive. Chen Dong-sheng, chairman and CEO of Taikang Life Insurance, the fifth largest insurance company in China, said: “It is meaningless to predict a collapse of China. There is no doubt that China will double its GDP by 2020.” After graduating from college in Taiwan in 1983, Chen moved to China and has witnessed the enormous growth of Beijing. “Beijing has tripled its size in less than 30 years” he said.

Following the Swiss model

In the spirit of the 18th National Congress, China will move to the higher standard of international market rules, regardless of China’s future or that of cross-strait cooperation. This is not a question of whether to open up the market, but one of market reform, Commonwealth noted.

Taiwan could chose to follow the development model set by another small country, Switzerland. It is not necessary to own many resources, but it is imperative to develop intellectual property and renowned brand name industries.

Taiwan can learn from Nestlé of Switzerland, the makers of Nescafé coffee, which sells coffee worth hundreds of billions of dollars a year without producing any coffee beans in Switzerland, stressed Commonwealth.

Sharing the big bio-medical pie

After the 18th National Congress, Chinese leaders from central down to local government have replaced or repositioned. The new leaders are those who suffered during the Cultural Revolution (1966-1976). These are people who were shipped off to remote villages to endure many years of hard labor. They know the hardship of poor farmers and the problems facing rural villages.

China’s government announced that total consumption value of private citizens is expected to reach US$10 trillion by 2020. In addition to daily consumption, where will the spending go? Based on mainland China’s economic structure, policy and its new leaders, Business Weekly reported that huge business opportunities are there for the taking in medicines, biotechnology, and medical care for an aging population.

Currently the ratio of medical expenses to China’s GDP is only 4.9 percent, far below the global average of 10.4 percent. So there is huge room for growth. It is predicted that China will replace Japan as the second largest medical market in the world, only next to the US by 2020, according to Business Weekly.

How can Taiwan claim a piece of the pie?

Currently Taiwan is one of the major global producers of medical testing materials to measure blood sugar, blood pressure, body temperature, and so on. Taiwan is also moving to produce higher level ultrasound and X-ray equipment.

To deal with the vast Chinese territory, medical equipment must have the following characteristics: be refined, small, mobile, containable and transportable at room temperature. Additional modes of communication for future expansion are also needed, like being accessible via the internet, web sites, and cloud computing. Taiwan enjoys advantages in this regard because of its sound foundation in information technology. Brand name companies like Qisda and Delta Electronics have already added medical equipment to their future product development plans.

The key to securing a large part of the Chinese pie is to find opportunities in untapped rural communities, rather than in mega-cities like Shanghai and Beijing, where a few providers have already monopolized the market. Smaller cities are where the opportunities lie for growth.

In many remote areas of China, they are not even equipped with basic blood or urine testing facilities in their healthcare units. This is a huge emerging market for Taiwanese businesses.

Meanwhile the right to operate secondary hospitals is undergoing a gradual transition from local government to private businesses. Medical behavior is changing to commercial behavior so as to increase the income of physicians, and at the same time, these secondary hospitals are responsible for providing educational training to smaller hospitals and clinics in remote villages. Secondary hospitals present a far easier prospect by which to enter the market than mainstream markets which are already well catered for.