Category Archives: Special Report

Taiwan’s 85°C Bakery Café expands in California

On a frigid mid-November morning, over 300 people huddle in an orderly queue awaiting the grand opening of 85°C Bakery Café’s newest store in Newark. Extremely popular in Taiwan, the bakery-coffee house was opening its first northern California location, one of more than 700 retail stores located in Taiwan, China, Australia and the United States. This year alone, the company has opened new stores in Chino Hills, Newark, Gardena and Garden Grove. With the completion of its new central facilities in Brea and Newark, 85°C Bakery Café plans to open at least 10 new stores in the new year.

As the fifth store in California, the Newark store is located in Fremont Plaza, near Ranch 99, a popular Taiwan-owned supermarket chain. Taiwan Insights visited the store on the afternoon of December 18 and saw around 50 people in line, but with five cashiers hard at work in just the Pastries and Breads section, and another two at the Cakes and Drinks section, the customers moved along steadily. The shelves were well stocked by a team of clerks calling out “Fresh Bread, Fresh Bread” as they made their way around the crowd. Judging by the popularity of the store during a weekday afternoon the first northern Californian location has proven to be most successful.

Michelle Wu who lives nearby said that the store had sent out invitations to residents of Newark for a soft opening beforehand. On the actual day of the opening, she tried to go, but was daunted by the line going out of the door. She checked again throughout the week, but saw the same extensive queues. “The following weekend, hoping to beat the crowds, I went at 7:30 am and stilled waited for more than an hour”, she said.

Expanding in California

Stephanie Peng, public relations manager of 85°C Bakery Café in the US, told Taiwan Insights, that the company has local flavors that they try to develop for each country. In fact, “we have a R&D team with chefs that are always creating new bread and cake products and our own drinks team.” Among the most popular drinks are Sea Salt Coffee/Tea and 85°C coffee. They are also known for the Marble Taro, Brioche, Milk Pudding, Berrytale, Cheese Dog, Squid Ink Bread, Coffee Crème Brulee, Mango Crème Brulee, Halfmoon Cakes, Mochi Egg Tarts, and Sponge Rolls.

Since most Taiwanese consumers usually find American pastries too sweet, the bakery tried to find the middle ground. Lillian Liu said one of her favorites at the bakery is the Blueberry Cheesecake and “one of the reasons I like the cakes at 85°C Bakery Café is because the cakes are not too sweet,” she said.

“Before we opened our first store, we did a lot of research and product testing to alter our products so that our customers in the American market would love and enjoy it! 85°C products here compared to Asia have many more flavors. The sweetness is slightly sweeter but not too sweet compared to the American products.”

Founded in 2004 in Taiwan, 85°C Bakery Café was chosen as the name because 85°C is the ideal serving temperature for coffee. The company’s first overseas branch opened in Australia in 2006. When the first retail store in the US opened in 2008, 85°C Bakery Café quickly won a loyal following. According to Peng, the company has been featured by Time, CNN, NPR, the Travel Channel, and the Los Angeles Times. Since then, the company has grown, but not as fast as its fans would like.

In talking to Commonwealth monthly in Taipei, James Hsieh, 85°C Bakery Café’s CEO said, “We could not make further progress before, because we were bounded by some ropes – a lot of unsolved issues.” He noted that the previous model of having a retail space in the front with a factory at the rear prevented the company from entering shopping malls. Therefore, he decided to spend NT$3.1 billion (US$104.7 million) to build a more automated centralized factory in Southern California.

According to Commonwealth, the company built its 71,000 square foot factory in a quiet industrial zone in Brea to serve its southern California growth. It is equipped with a tower capable of holding 66,000 pounds of flour, and a sweeping furnace, equal to 3.5 traditional kilns. This centralized factory can provide baked goods for 30 to 50 retail stores. By undertaking this investment, the company is hoping to reduce its workforce at local stores by 30 percent and also leave more retail space for customers.

Building an international brand

Before starting 85°C Bakery Café, Hsieh was the second in command of over 4,000 7-Elelven convenience stores in Taiwan’s President Chain Store Corp. During his 30-year career, he helped build a kingdom of super retail stores in the island. Now he has his sights set on entering the American market.

Hsieh goes to the US for an inspection tour every three months and holds weekly meetings with managers and top executives in the US. He said, “I feel that the American market is more important than that of China,” adding that China’s market accounts for up to 70 percent of total revenues of 85°C Bakery Café, but Hsieh sees the power of American consumers and the international stage. “Only when you survive in this market, will you be competitive enough, and 85°C Bakery Café will be recognized as an international brand, not a regional brand. This is what I want to achieve.”

Competing with Starbucks

Starbucks Coffee Company was founded as a coffee bean roaster and retailer. It caters mainly to coffee drinkers, while 85°C Bakery Café satisfies the broader needs of its customers. In talking to Business Weekly, George Agosto, store manager of 85°C Bakery Café in Newark, and a former Starbucks’ employee, said that coffee is Starbuck’s main commodity, supplemented by breads and pastries, while breads, cakes and drinks are all major products at 85°C Bakery Café, attracting a broader customer base. Aware of its own shortcomings, Starbucks has gradually added more food items and just this April, purchased Bay Bread Group’s La Boulange Café and Bakery to bolster its food selection.

It has been six years since 85°C Bakery Café opened its first bakery in Irvine, southern California and its popularity has not waned. Even now, people still queue up every day. In September, it was chosen as one of the top ten most popular coffee shops in the US by social networking website Foursquare. According to Commonwealth, a single month’s sales at its Irvine bakery exceeds NT$20 million (US$675,675.00), equivalent to the average monthly sales of seven Starbucks shops.

With this level of success, 85°C Bakery Café has to speed up its globalization plans. Furthermore, in the US, the sales turnover at a single store is 15 times that of its counterpart in Taiwan, and 6 to 8 times that in China. Despite this, US revenues account for less than 5 percent of the total 85°C Bakery Café.

Excelling by offering more variety

How did 85°C Bakery Café go about expanding in the US, where bread has been a staple for centuries and readily offered in supermarkets and bakeries? Lin Ming-zhe, US regional CEO of 85°C Bakery Café, said the branches in Taiwan and China are formed by the concept of a “retail store,” while those in the US are more like a “supermarket.” According to Business Weekly, he said people do not come out just to buy an item or two, but to purchase larger quantities, normally over eight to ten items, spending roughly US$13 – 15 per customer.

Hong Ya-ling, secretary general of the Association of Chain and Franchise Promotion, Taiwan, said that American service industries are very good at standard operating procedures (SOP), but Taiwanese brands can excel by virtue of greater differentiation and complexity. So when local Californian stores are simplifying their products and service, 85°C Bakery Café stands out by offering more variety.

To make a store more like a supermarket, it is important to offer enough items in addition to space. The company adopted a policy of more variety and a larger quantity of items in the US. Lin noted that local stores offer one or two dozen items at most. Even local American fast food stores will not offer such a wealth of combinations.

The selection of retail space is also different from Taiwan. In Taiwan and China, the best store location is at the corner or the intersection. But in the US, traffic flow is as important as people flow. Therefore seeking a retail space with enough parking is equally weighted. Currently 85°C Bakery Cafés are all located in plazas with more than 300 parking spaces, making it easier for customers to park.

Another difference is that the bakery’s products are baked throughout the day and frequently. With opening hours from 7 am to 10 pm daily, and to midnight on holidays, fresh baked goods come out of the oven every hour until 9 pm. Local bakeries do not emphasize freshly baked goods, but will bake a product only once a day.

At present, Peng indicated that 85°C Bakery Café will add two more stores in the San Jose area, likely around Spring 2014.


Taiwan Film Days becomes a SF mainstay

Taiwan Film Days (TFD), the only yearly Taiwanese film festival in the States, opened its three-day program on November 1. Hosted by the San Francisco Film Society (SFFS), this year’s line-up included the island’s hit, Zone Pro Site: the Moveable Feast and seven other films.

Three filmmakers were also on hand at the 5th TFD to attend their film’s Northern California screenings and to participate in the Q&A which followed. They included Hou Chi-jen, director of When a Wolf Falls in Love with a Sheep, Hsieh Chun-yi, director of Apolitical Romance, and Mimi Wang, producer of Ripples of Desire.

Starting from Cape No. 7

Since 2006, the Press Division of the Taipei Economic and Cultural Office (TECO) in San Francisco has worked with major Bay Area colleges and universities to hold the Taiwan Film Festival. During certain years, the program would extend to campuses in Utah, Nevada, Washington and Oregon. But, given the division’s limited staff and the extensive multi-state and campus coordination needed, the concentration shifted to partnering with the San Francisco Film Society and localizing the festival in the Bay Area.

In 2009, Manfred Peng, the new press director of TECO, began discussions with Graham Leggat, the then executive director of SFFS, regarding organizing an annual Taiwanese themed film festival. Leggat, both personable and an avid supporter of Taiwan films, agreed to organize a festival and Taiwan Film Days was born.

Founded in 1957, the SFFS holds the annual San Francisco International Film Festival, the longest-running international film festival on the West Coast. Each May, this highly competitive festival screens a selection of 150 films from around the world. SFFS, a proponent of Taiwanese cinema, has played a pioneering role in introducing Taiwan-made films to Bay Area audiences. Its San Francisco International Film Festival has shown over 40 Taiwanese films over the years. Works by leading figures—Hou Hsiao-hsien, Tsai Ming-liang and Edward Yang—have been featured, and prominent actor Lee Kang-sheng was a Festival guest in 1998.

With SFFS’s track record and its extensive mailing list of Bay Area film lovers, this collaborative effort allowed TECO to reach further off campus. Not only was the SFFS a prestigious and trusted institution, its staff members were also well-connected to the American film industry, giving visiting filmmakers from Taiwan a chance to learn more from their host. Also, since the films were selected by a third party with a sterling reputation, the films were given more legitimacy.

Five years ago, Taiwan’s movie industry also underwent a revival with the introduction of Cape No. 7, a local blockbuster. The first Taiwan Film Days was born in the wake of this Taiwanese film renaissance. Through the selection of SFFS, Cape No. 7 and six other newly produced feature films and documentaries tested the American market by selling tickets at movie theaters in San Francisco. The box office result of the three-day festival was good enough that Leggat renewed the festival for the next year. It is now a part of the SFFS fall program, along with more well-established festivals such as French Cinema Now and New Italian Cinema.

SFFS, seasoning Taiwan’s filmmakers

Most of Taiwan’s film companies are small, lacking in foreign language talent and international experience. In order to broaden the visiting director’s experience, SFFS would invite some directors of the participating films to meet American audiences, filmmakers, teachers and students at participating film schools. This allowed the visiting filmmakers to gain a better understanding of the US market.

Since the inception of the Taiwan Film Festival and Taiwan Film Days by the Press Division, it has welcomed more than 50 Taiwanese filmmakers/producers and screened over 70 movies since 2006. As a result, San Francisco has become the “launch pad” for Taiwan filmmakers to test how their movies will translate to an American market.

In 2012, when Taiwanese blockbuster Warriors of the Rainbow: Seediq Bale was screened at cinemas in the US, the box office in the Bay Area took top place among major US cities. In part, this can be attributed to the long-term marketing and steady cultivation of the local audience by TECO for Taiwan-made films.

Since the launch of Taiwan Film Days five years ago, many have come to known Leggat. When he passed away in 2011, Taiwanese directors joined a vast numbers of international directors in expressing their condolences. Since then, two subsequent executive directors have also renewed their support for Taiwan Film Days, with the festival growing each successive year. Inspired by the success of Taiwan Film Days, Hong Kong has also followed TECO’s model by holding its own festival in cooperation with SFFS starting 2011.

A useful tool to promote soft power

Movies have become a tool for Taiwan’s diplomatic offices overseas to promote Taiwan’s soft power. Since the 1990s, Taiwan’s films have steadily appeared in international film festivals, promoting the international appeal of Taiwanese directors. Taiwan’s films showcase the island’s way of life in a manner that is easily assimilated into the general consciousness. And, film screenings required little overseas personnel and are not cost prohibitive to stage, unlike other forms of performing arts or exhibitions.

In October 2010, TECO held Taiwan Film Days as scheduled. About the same time, the Chinese Film Festival opened in San Francisco, screening the Founding of a Republic, one of the most costly films ever to be made in mainland China. In a review of the two festivals, San Francisco Chronicle commented that the two sides of the Taiwan Strait held their respective film festivals, but there were big differences between the topics of their films. “Mainland China makes films with a collective bent and Taiwan makes smaller, more independent and individualistic movies,” the article noted. Along with the review was a poster of Taiwanese film Somewhere I Have Never Traveled, directed by Fu Tian-yu. Fu and other directors invited to attend the screenings of TFD were proud to read that comparison.

An American couple was asked about their loyal support of the festival, buying a book of tickets and watching almost every film screened each year. What accounted for their enthusiasm for Taiwan films? The wife responded that her father was a missionary in mainland China and that is why she is so fond of Chinese culture. She believes that Taiwan’s movies highlight social issues and the humanitarian spirit, which is not seen in most mainland Chinese movies.

Ministry of Culture takes over film promotion

As a city with a high concentration of different ethnicities and cultures; San Francisco is a wonderful venue for TFD. Asians alone account for 30 percent of the city’s population. By and large, the city’s demographic is highly educated, well-traveled and economically comfortable, making it a fertile ground to promote Taiwan’s soft power.

Up to 1,500 people attend the festival each year, with half of them being ethnic Chinese or Taiwanese. And of that segment, half of them are American-born Chinese (ABC). They do not understand Mandarin, but are more economically and politically tied to America. This also is a particularly good group for TECO to nurture since they are also culturally tied to Taiwanese and Chinese culture – or would like to be – yet wield certain influences in the States. An example can be seen during the Q&A session of last year’s Joyful Reunion, when an English speaking ethnic Chinese writer complimented director Tsao Jui-yuan, saying that Tsao’s work gave her a better understanding of Taiwan.

This year, the main sponsor for the festival came from Taiwan’s Ministry of Culture (MOC), a newly formed government agency charged with promoting Taiwan-made films. In previous years, the festival’s main collaborator was the Government Information Office (GIO). However due to restructuring in the Taiwan government, the GIO was disbanded in 2012 and most of its work shifted to the MOC or the Ministry of Foreign Affairs (MOFA). Since TFD is the only festival dedicated to Taiwan-made films in the States, the MOC is committed to continuing and growing the festival from their office in Los Angeles.

Many challenges for Taiwan films to break into US market

Each year, Peng and SFFS’s programmers, Sean Uyehara and Rachel Rosen, have sifted through Taiwan’s most recent films, narrowing it down to 20 to 30 films to watch. Once selected, Peng watches the selected films at the festival screenings again. In total, he has watched almost 150 Taiwan movies in the past five years, in addition to repeatedly watching certain movies at smaller venues throughout the Bay Area. With his clear mandate to promote Taiwan-made films, he had never watched so Taiwanese many movies before arriving in the States. Because of this, “Colleagues at other overseas offices have asked for my opinion. I’ve become a semi-professional movie critic, giving recommendations on which films are good to screen at the festivals.” Although Peng happily promotes the movies selected for the festival, he also has a sharp eye for movies that do not make the festival, but are noteworthy. One such film is The Soul of The Bread. Going on his personal instincts, Peng started promoting the light-hearted romantic comedy locally. It soon became a popular audience favorite throughout the Bay Area.

Peng said, “Working to promote Taiwanese films in America, I feel I have kept up with the growth of Taiwan’s film industry. My attitude has changed from being indifferent to one of enthusiasm.” Because of his work, he noted the following challenges for Taiwanese films in entering the US market.

Since the late 1980s, a number of new Taiwanese directors have focused on targeting the metropolitan middle class, catering to international film festivals, and not to Taiwan’s domestic market and the Taiwanese taste. However Cape No. 7 changed all of that. It reversed the direction of Taiwan’s producers, turning their eyes to the underlying theme of uneducated characters in the country side. Coupled with the Taiwanese government’s subsidy based on box office receipts, Taiwan’s filmmakers have readily turned to the domestic film market to seek topics and style, Peng said.

Ten years ago, Taiwan-made films accounted for only 3 percent of the total revenue of the island’s theaters. It now stands at 18 percent as of last year, showing a surge of people going to theaters to watch locally made films. With commercial viability of Taiwan-made films realized, movies have been targeting Taiwan’s young adults, who are the largest consumer segment for films. Recent film plots have included first love, encouraging stories of perseverance and hard work, youthful rebellion into crime, and stories centering on the lower middle class society found in night markets and rural villages, to the marginalized in Taiwan. Peng said it is rather difficult to select six to eight different styles of movies to reflect the different plotlines or not to repeat them during the festival.

Cultural divide still a barrier

Although movies are a universal language, the cultural barrier is still a difficult divide to overcome. It is not easy to attract Americans to spend half a day in a theater watching foreign movies. American theaters only screen a handful of non-English films throughout the year, mainly French and Italian movies. American television channels also rarely play Asian movies. This is the reality that TECO faces in promoting Taiwanese films in the US.

Furthermore, Taiwanese film budgets are far less than that in Europe or America, and usually lack a superstar cast or dazzling special effects. The key for Taiwanese films in standing out is the script. Like the US, there are many instances where a low cost indie film succeeds at the box office by touching on topics or stories that resonate with an audience.

Given this handicap, it is natural for Taiwanese films to localize its subject. However, by localizing the humor, storytelling and centering on Taiwan’s lower middle class, much of the meaning is lost in translation. And if you need to explain a joke, it’s not funny. After watching Din Tao, a very popular Taiwanese movie at TFD last year, some of the American audience were confused by why such a group would want to carry the load of a heavy puppet while traveling around the island, or even climbing the mountain?

After Edward Yang and Ang Lee

Last year, the SFFS specially screened A Brighter Summer Day, directed by Edward Yang, which was the only non-current film shown since the establishment of TFD. Peng was originally dubious of its attraction, since the movie was more than two decades old. But to his surprise, it played to a full house with the vast majority of the audience being non-Asian. It was a testament to the quality of the film since its running time is nearly four hours, and no one seemed bored or left early. At the invitation of the festival, Edward Yang’s widow Peng Kai-li also came to the screening and was deeply touched by the film’s reception. The packed house renewed TECO’s hope about marketing Taiwanese films to a US market.

In recent years, Taiwanese films have moved from “international” to “localization”, which seems too narrow in terms of topics for overseas film festivals. International selectors at festival films are fully aware of each work by Hou Hsiao-hsien, Edward Yang, Tsai Ming-liang, and Ang Lee. However, after a decade, will there be another group of new directors to carry on Taiwan’s cinematic banner in the international arena? Will the next classic hit at a prestigious international film festival be plucked from the screening list of TFD, asked Peng.

After enjoying the resurgence of its domestic box office, Taiwanese filmmakers need to assume the responsibility of taking Taiwanese films to global audience by telling stories that will captivate the hearts of an international audience. After all, Taiwan’s film industry is no longer as unseasoned, with local government assistance and overseas offices standing ready to help. And given Taiwan’s stature, it still remains the best tool to demonstrate Taiwan’s soft power worldwide.

American motorcyclists help Taiwan’s senior riders fulfill dream

On the morning of August 20, more than 100 Taiwanese-Americans, local residents and a dozen journalists packed the Santa Clara County Government Center Plaza in San Jose to attend a ceremony for the grandriders. The colors red, white and blue were prominently on display, coincidentally being the colors of the United States’ and the Republic of China’s (Taiwan) national flags. Hanging around the stage were banners proclaiming the occasion, “Grandriders’ West Coast kick off rider”. The audience was drawn from all age groups, young and old all drawn there to applaud theses motorcycling octogenarians.

Never too old to pursue a dream

The grandriders became known in Taiwan for their motorcycle ride around the island. The ride was subsequently made into a documentary, Go Grandriders, which featured 17 grandparents motorcycling around the island. Organized by the Hondao Senior Citizens Welfare Foundation, the ride started from Taichung (central Taiwan) and circled the whole island in 2007. The riders overcame physical and mental difficulties to complete the 730–mile trip. Their desire was to impart a clear message that you are “never too old to pursue a dream, or to cease to learn, or to experience something new.” Their trip and subsequent film became a major hit in Taiwan and Hong Kong, with devoted fans around the world.

Since the original trip, four of the riders have passed away, but the recent trip to the United States by ten of the remaining Grandriders appears to be echo another message that “we’re not done yet.” The grandriders decided to visit California, because most of them had never been to the US. They were offered the opportunity to take part in a road trip from San Jose to Los Angeles on Highway 1. So last month, the grandriders, their families and assorted medical support staff, arrived in the Bay Area for the ride. By now, the average age of the grandriders is 87 years old, with the oldest at 95. The group was all male, except for one lone female rider, Zhang Ying-mei. She and her husband had more prominent roles during this trip since they both speak English.

As the majority of the group does not speak English and the likelihood of passing an English driving test seemed close to nil, the grandriders had a dilemma. This is where the members of the BMW Club of Northern California stepped in to save the day by offering the grandriders a lift down south. Before long, there were more than enough American volunteer riders to pair up with each Taiwanese rider. Although, not as elderly as the grandriders, with an average age of 55, they were no less excited about the trip.

Instrumental in making the ride possible was Edward Perry, the captain of the motorcade. A former assistant sheriff of Santa Clara County, he was deeply moved after watching the documentary on YouTube. When Perry, whose wife is Taiwanese, found out that the Hondao Foundation had the idea of arranging a California trip for the grandriders, he quickly volunteered to plan the trip. With the full support of Z. Ortiz, president of the BMW Club of Northern California, Perry mobilized a team of American volunteers to form a motorcade and scouted out the route.

A liberating experience

Ortiz recalled that he was always confident the American volunteers would accomplish the journey, “but not as a task or some mundane chore.” He said, “When you have 10 Alpha-males in a group of motorcyclists there are bound to be some challenges, but when you make things about someone else, it is extremely liberating and it aligns everyone to the higher purpose instead of yourself.”

Escorted by the county sheriffs, the senior motorcade pulled away from the curb in front of the plaza promptly at 11:30 am, and straight up to Highway 1. Riding through Monterey, Santa Barbara and other places in between, they arrived in Los Angeles on August 23.

Before the West Coast trip, the grandriders stayed in the San Francisco Bay Area from August 16 to 19. They visited The Sequoias and On Lok, two very well-regarded organizations serving senior citizens, and took part in the Happy Kids Day in Cupertino, the San Jose International Film Festival and other activities. They also toured well-known tourist attractions in San Francisco.

The senior riders had fun and were surprised with so many things during their US trip. One said, “The US is huge. Americans are tall, the mountains are high and the ocean is big too.” Besides sightseeing, the grandriders also met with other seniors to share their experiences. According to Doris Lin, chief executive of the Hondao Foundation, many American seniors admired the riders’ tenacious energy. Despite the language barrier, the two sides communicated well enough through hugs and smiles.

Language not a barrier to mutual understanding

During the ride, San Jose resident Dan Carter rode with 85-year-old Sun Xiang-chun. Sun was originally from Shandong province, northern China and followed Chiang Kai-shek’s troops in withdrawing to Taiwan in 1949. Retired from the army in 1982, Sun served as a kindergarten bus driver and a condominium clerk. His hobby is traveling and photography. He never thought he would be able to take part in such a wonderful journey.

Carter only knew a few words in Mandarin, while Sun spoke no English at all. Carter said, “We tried to speak some Mandarin, and the grandriders were very polite and nodded at our humble attempts.” “So many things were universally understood; a beautiful view, the thrill of riding down the coast, photographs of our families.” Ortiz recalled although there was a language barrier when the grandriders had something to say, it was conveyed with alacrity. “Their eyes were very expressive and full of wisdom.”

As for his American counterparts, Perry noted, “I witnessed more selfless acts and acts of kindness than I can remember. And never once did I recall anyone trying to ‘take credit’ for anything good that may have happened. “I believe we all had the sense that we were part of something much bigger than ourselves and felt proud … to be a part of the journey.”

Asked how he thought of helping the grandriders, Kevin Kelly, a Vietnam War veteran, described the trip with them as “a gift from the Heaven”. He had played the documentary film to a dozen of his friends at his Sacramento residence before the trip, and all of them had tears in their eyes after watching it.

Perry stressed that the intrinsic reward the American volunteers received from the journey has made them richer and better people, something that cannot be measured.

Changing stereotypes of older people

Lin said that Taiwan has the world’s fastest growing aging population, and little time to prepare to deal with an aging society. She works to change the generally held perception that the elderly are sick and burdensome. She believes that the best way to deal with senior citizens is preventive care, that is, to encourage the elderly to live with a younger mind.

Lin hopes that the Taiwanese grandriders would help to change the stereotype of the elderly with their trips.

Huang Ma-chun, 81, is a retired civil servant from Nantou County in central Taiwan. He said that the purpose of his participation in this trip was to prove that someone elderly can still have a dream, and to act to realize that dream is to have a young heart.

Wang Zhong-tian, 83, a calligraphy teacher from Taichung, said the American riders took great care of the Taiwanese seniors during the trip. He was deeply touched by the profound friendship between the peoples of Taiwan and the US. Both countries are concerned with senior care. Even though the Taiwanese grandriders rode behind their American counterparts, the whole 430-mile journey still posed a major challenge for them. He said, “The Americans helped us to realize a dream. They are part of our courage.”

“How to Start a Business in Taiwan” made easy

Taiwan Insights recently interviewed entrepreneur Elias Ek about the rewards to be gained and the pitfalls to avoid when starting a business in Taiwan. Ek has been teaching a seminar on this topic to foreign entrepreneurs in Taiwan since 2006. Recently, he published a book, How to Start a Business in Taiwan to consolidate his wealth of knowledge.

According to Ek, who is originally from Sweden but has lived in the US, Japan and Taiwan since 1994, Taiwan is the ideal country to start a business because of its high-tech capability, high standard of living and democratic environment. Moreover, Taiwan is the best test market for companies wishing to enter the China market. “Taiwan is the perfect stepping stone if you want to do business with China. It is the most similar market, with strong cultural links, and is a great place to test new product – or your own cross-cultural business skills – before heading across the Taiwan Strait,” he said.

Ek points out other factors that make Taiwan an ideal location for starting a business, ranging from its favorable legal environment, quality workforce and its central location in the Asia-Pacific region. Also, compared to other Asian countries, Taiwan is pretty transparent, with the process of starting a business being pretty straight forward, usually taking 4-8 weeks.

During the interview, he also suggested that Taiwan ought to follow Chile’s example by marketing its startup advantages. “I would love for Taiwan to follow in the footsteps of Startup Chile ( and promote Taiwan as a place for foreigners to come and start innovative companies. The quality of life here is great, people are friendly and for certain industries like technology hardware, there’s probably no better place to develop a business anywhere on the planet” he said.

Motivation for writing the book

Ek says his motivation in writing the book stems from his desire to help foreign entrepreneurs and also to “help Taiwanese government, banks and other service providers know there are many foreign entrepreneurs in Taiwan, they deserve good services and they provide value to Taiwan.”

With years of experience and now a consulting business specializing in helping other people set up a business in Taiwan, Ek is a treasure chest of information. The book gives its readers clear steps, not only in how to go about setting up a business, but also in navigating certain immigration issues most expats face when they relocate to Taiwan.

In comparing setting a business in Taiwan with the process in other countries, Ek believes the island comes out very favorably. “I actually think Taiwan has fewer hoops than many other countries. In some countries like for example Thailand, a foreigner cannot own 100% of a company. This is a fact we should advertise? Let the world know they should come to Taiwan!”

Hurdles include visas, ARC, banking

Among Ek’s stories collected from fellow entrepreneurs include stories about the difficulty in getting an Alien Resident Certificate (ARC) or visa. “There is always a lot of griping about VISA/ARC issues but I think it is a bit unfair. Most people who are setting up a serious business would have no problem getting a visa. That being said, I was so so so relieved when I received my Permanent ARC because the 3 times I renewed my ARC before that, the lady at the immigration bureau told me ‘you have been here a long time, why don’t you go home.’” Did she really think I should fire 40 people and leave?”

Another issue that might vex expats is when they try to open a bank account and apply for a credit card. “A bigger issue has to do with banking. Often if a foreigner walks into a Taiwanese bank to apply for a credit card or other services, they are met with a blank stare and the news that ‘government regulations do not allow us to issue a credit card to foreigners.’ Well, this is untrue.” So it’s important to know this so the applicant can advocate for themselves.

Cultural difference in doing business

Along with the step by step regulations, he also offers some cultural tips and traditional norms of doing business on the island which are very useful for people new to Taiwan.

One particular difference is the preferred methods of payment used in Taiwan which is not the norm in the United States. Whereas Americans, whether they have a business or not, might prefer using their credit and debit cards, this is not the custom in Taiwan. Since “most companies in Taiwan do not have credit cards. Direct deductions, Paypal or similar modern payment methods are quite uncommon.”

When Taiwan Insights asked: what was the most surprising aspect of doing business in Taiwan, Ek related a “surprising” lesson he learned in starting his own company.  “When we started Enspyre we knew that phone answering services already were a very very popular service in other countries. In the US and UK for example there are companies that service tens of thousands of companies as their virtual secretary. So considering that we could not find any high quality providers in Taiwan, we figured we would quickly sign up many Taiwanese businesses as customers. We were completely wrong. Taiwanese bosses rarely outsource. So 11 years later, Enspyre is the biggest player in a small phone answering service industry. Fortunately we did listen to our customers and added B2B telemarketing and are now the biggest in the much bigger industry as well. The lesson here is that what works in one country doesn’t always work in another country.”

Taiwan Trade Center in San Francisco provides help

For entrepreneurs in the Bay Area who might like to learn more about doing business in Taiwan, they can also visit the Taiwan Trade Center (TTC) located in Santa Clara. As an overseas office of the Taiwan External Trade Development Council, one of its main functions is to help Taiwanese manufacturers develop new markets and also to assist Americans in investing in Taiwan. The center also maintains information binders on suppliers and manufacturers in Taiwan to help American companies with their sourcing needs.

According to Jerchin Lee, the director of the TTC, “With a wealth of high-tech companies and talented people in the Silicon Valley, Taiwan Trade Center has been successful in helping Supermicro, Neurosky, InvenSense to find partnership in recent years.” In addition, it also helped Landway, Sunwell, and Talent Basket to sign Letters of Intent with Taiwanese businesses last year. This year, the center has found matching partnerships for AFS BioOil, Peter Stathis & Virtual Studio, and Geoproteck Solar.

Since the US has been Taiwan’s most important source of foreign investment and technology, ranking first with the cumulative amount of foreign investment. In order to enhance Taiwan’s technological level, the center assists foreign entrepreneurs seeking to invest or establish a company in Taiwan, including helping them with legal issues related to visas, their search for office space and land, accounting and tax issues.

Even for Bay Area entrepreneurs considering doing business in Taiwan, it would be beneficial to pick up Ek’s book, since it is easy to read. Readers can scan the book for general information and also read different sections with more care, depending on their needs. Each chapter also includes personal stories from different entrepreneurs who have faced similar challenges and their advice. The book is not too difficult to finish, marrying the regulations, personal experiences and stories with incremental steps that the entrepreneur should take to achieve their goals.

When Taiwan Insights asked Ek to share some overall impressions, he said, “Overall my experience being an entrepreneur in Taiwan has been good. At least in the industries that I have been involved with there is little government red tape to overcome. Just pay the relatively low taxes (corporate income tax is only 17%) on time and things are good.”

For readers interested in learning more about starting a business in Taiwan or Ek’s book, please visit

In dispute with the Philippines, Taiwan flexes its muscles

Relations between Taipei and Manila have been especially tense since the recent killing of a Taiwanese fisherman, Hong Shi-cheng, by a Philippine Coast Guard vessel on May 9. This incident has strongly stirred Taiwanese anger. So much so, that Director General Bruce Fuh of the Taipei Economic and Cultural Office in San Francisco penned a letter to politicians and opinion leaders saying, “I hope you can see the merit of keeping abreast of this escalating situation. Please join us in seeking justice for Mr. Hong, and to prevent such a cruel murder from taking place again by putting pressure on the Philippine government. Your attention to this incident and support for a fair, transparent investigation is greatly appreciated.”

In his May 21 letter, Fuh explained the situation that has been brewing between Taiwan and the Philippines as one that could influence the stability of the region. His letter was a part of the global protests launched by Taiwan’s Foreign Ministry after the incident.

Coldblooded murder, callous attitude

On May 9, a Taiwanese fishing boat Guang Da Xing No. 28 was fired upon by a Philippine government vessel in the overlapping Exclusive Economic Zone (EEZ) between Taiwan and the Philippines. The coldblooded attack left Hong Shi-cheng, the 65-year old Taiwanese captain, dead and the fishing boat adrift. The use of excessive force was apparent by the 48 bullet holes that riddled the defenseless fishing boat.

The attack was so shocking that the Taiwan government immediately asked for a formal apology, compensation, an expedited investigation with the appropriate sentencing of the perpetrators, and a forum to negotiate fisheries matters to prevent a repeat of such an incident.

Although the Philippine government made an apology, it has done little to soothe the anger felt by Taiwan’s people, particularly when Manila characterized the shootings by its coast guard as “unintended”, and postponed a joint investigation by turning away Taiwan’s investigative team on May 18. Furthermore, the Philippine government claimed that the GDX 28 rammed its official ship and the latter acted in self-defense. Both claims are outlandish, given that the fishing boat is seven times smaller.

Unnecessary use of force on an unarmed fishing boat truly violates international law, especially the UN Convention on the Law of the Sea. Piracy in the Philippines, sometimes under the guise of the coast guard, is rampant in the waters south of Taiwan. In the past, many perpetrators were not punished by the Philippine government. Seeking justice for the murdered fisherman, the Taiwanese government has instituted contingent measures, ranging from ceasing to process the applications of Filipino laborers, imposing sanctions on bilateral economic exchanges, to stepping up its Navy patrols in these EEZ waters.

Neighbors, yet strangers

The shortest distance between Taiwan and the Philippines is only 141 kilometers (87 miles). There are now about 88,000 Filipino laborers in Taiwan, half of them work as caregivers for the elderly or disabled, while the other half are mainly construction workers. However, the squabbling resulting from the GDX 28 incident shows that Taiwan is ignorant of its next door neighbor, reported Commonwealth monthly.

After the incident, Taiwan sent an ultimatum to the Philippines to apologize within 72 hours coinciding with their parliamentary and local election campaigns. Manila ignored it on the grounds that it was “off duty on weekend.” Although close in proximity, the distance culturally is clearly apparent.

Commonwealth reported that Filipinos are the second happiest people in Asia, only after Thais, according to the latest poll by Gallup. Whenever disaster strikes the Philippines, victims are often seen smiling and happy in pictures taken at inflicted areas. However, what has riled the Taiwanese is learning that the Philippine coast guards laughed while firing upon the GDX 28, and worse, when the Philippine government spokeswoman addressed the incident at a press conference, she did it with a smile. Although Filipinos have a reputation for being happy people, their lack of remorse in this case has not endeared the country to Taiwanese people, but rather, added fuel to the fire.

Sea of troubles between Taiwan and the Philippines  

Taiwan’s territory is smaller than three-fourth of the UN’s member states, but the island has maritime clout in the world, the Taipei-based Business Weekly reported.

According to UN statistics, Taiwan’s tuna fish catch is the fourth largest globally, only behind Japan, Indonesia and Spain. The big purse seine fishing boats Taiwanese own rank No. 4 in the world in terms of the number of vessels. Taiwan’s small and medium sized fleets of tuna longline fishing vessels rank No. 2 only behind Japan. Taiwan’s annual production value of offshore fishing reached NT$40 billion (US$1.33 billion) last year. This figure did not include those from actual Taiwanese fleets but those registered under foreign countries. If all were included, the total Taiwanese fishing value would reach NT$100 billion (US$3.33 billion).

Sixty percent of the global tuna fish comes from the mid-Western Pacific Ocean near Taiwan, but the largest tasty black tuna favored by many connoisseurs mainly come from the overlapping EEZ between Taiwan and the Philippines.

Taiwanese fishermen from Donggang and Lamay Island, both in Pingtung County in southern Taiwan, catch tuna for a living; while the Philippines depend on these Taiwanese fishermen entering this overlapping area for money. Captain Lin Han-de of Lamay Island told the weekly that they have been catching black tuna fish for three generations – from his grandfather to his father, now to himself. They have apparently come under numerous attacks from the Filipino Navy, coast guards and militia. A member of the Donggang Fishing Association said, “The Taiwanese fishing boats are expensive, and equipped with advanced devices. Besides, Filipinos believe Taiwanese are rich anyway.”

Given these circumstances, Taiwanese fishermen always carry up to US$10,000 onboard to pay ransoms in case they are arrested by the Philippine Coast Guard. When confronting greedier Filipinos, their boats would be towed in the direction of the Philippines, and their US dollars confiscated. At times, the sailors have been asked to pay more – sometimes from US$60,000 or even up to US$300,000. In all cases, the fishermen were released, but only after their families had wired the ransom money, Business Weekly reported.

However, before the GDX 28 incident, there were over 600 Taiwanese boats going there to fish with only a catch of 50 tunas. Up to 90 percent of the Taiwanese fishing boats returned empty-handed. So far this year, the catch of black tuna by the fishermen from Donggang are at record lows, only 119 tunas, a contrast with the historic record highs of 300-500 tunas a day.

Professor C.C. Hsu, from the Oceanography Institute, National Taiwan University, told Business Weekly that the GDX 28 incident is only the tip of the iceberg between Taiwan and the Philippines. As the ocean resources get scarcer and scarcer, the struggle to grab those precious resources will get fiercer, not less so.

Following a similar model with Japan

Lacking membership in the United Nations, Taiwan is not able to be a signatory on many international fishing agreements. Taiwan usually concludes separate memorandums of understanding that obligate the island under regional or global fish-quota systems.

The relations between Taiwan and the Philippines have never been tense before. Both sides signed a memorandum on fisheries cooperation in 1991, designating two routes for Taiwanese fishing boats to pass and in turn Taipei offered financial aid to Manila for fisheries cooperation. It was not until 1998 that the Philippines passed their own fisheries law and unilaterally abandoned this memorandum. Thus this part of the ocean became a point of conflict, Business Weekly reported.

After the GDX 28 incident, the Taiwan government asked the Philippines to restart the fishing negotiation, following the model of the fisheries agreement between Taiwan and Japan, regulating the fishing operations of both countries in these overlapping territorial waters.

Taiwan and Japan finally signed a fisheries agreement this April after 17 negotiation talks since 1996. At a time of conflict over the sovereignty issue of the Diaoyutai Islands between Taiwan and Japan, the two sides still reached an agreement on fishing operations in the overlapping EEZ, without touching upon the sovereignty issue. The agreement has been effective since May 10.

According to the Central News Agency, on June 14, Taiwan and the Philippines reached an initial consensus during a preparatory meeting in Manila over fisheries issues. Both sides agreed to address the mechanism: to not use force during enforcement, to notify each other in the event of fishing boat incidents and to immediately release fishermen and boats detained.

President Ma Ying-jeou stressed if the dispute between Taipei and Manila are not solve soon, it will affect the bilateral relations and the peace and security of the region as well, reported the United Daily News.

Winning greater regional influence

According to the British newspaper, the Guardian, Taiwan’s fishing deal with Japan “may have finally been clinched by China’s recent naval assertiveness, about which both Japan and Taiwan are wary… Taiwan is winning for itself greater regional influence.”

The Central News Agency reported that Taiwan is seeking to revise the principles of protecting its fishing boats in the overlapping EEZ by considering expanding patrols to the area surrounding the whole Batan Island off the Philippines, and letting its Navy and coast guards regularly patrol further south to protect fishing boats.

Near to the Batanes Archipeligo lie important navigational channels for commercial vessels passing through the Bashi Channel. The expansion of Taiwanese Navy patrols in the EEZ will show the island’s determination to stand toe to toe, so that neighboring countries need to pay more heed to the situation.

The Navy’s expanded area of patrol will go a long way to protecting Taiwan’s fishing rights and sovereignty. Through the routine protection of its fishing boats, Taipei will force the Philippines to face the reality of Taiwan’s regional power and seriously sit down with Taiwan in negotiations, stressed the Central News Agency.

From Taichung to Silicon Valley, Taiwan keeps pace with global markets

With over 300 companies, Taichung County in central Taiwan is the largest cluster of machine tool companies on the island. It is also the center of the components supply chain shared by Taiwan’s three major industrial alliances of bicycles, sports equipment and machine tools. Without this clustering of firms, it would be impossible for these important industries to experience their recent stellar growth.

Despite the global financial tsunami (2009-2012), Taiwan saw several of its products maintain export growth of 100 percent. They included special glass, digital cameras, mechanical arms for the machine tool industry, and components for processing machines. Other areas also grew over 50 percent in value, such as garments, knitting and the steel screw industries. According to Taiwan’s Business Weekly, the manufacture of sports equipment, auto parts, hand tool machines and plastic products also experienced over 20 percent growth.

Clustering speeds up development and delivery

The top three global socket set handle brands from Germany, Italy and Japan, use Re-Dai Precision Tools Co. in Taichung as an OEM. These socket handles are essential for repairing and maintaining BMWs, Mercedes-Benz and F1 racing cars.

Business Weekly reported that in Taiping, Taichung, there is a street lined with all the makers of computer numeric control (CNC) machine tools, and another street where all the electroplating companies operate. These clusters of 30 to 50 small businesses are capable of producing any part for bikes, machine tools or treadmills.

Habor Precise Industries Company, in Dali, Taichung, is the largest manufacturer of high-end temperature control equipment in the world. Seven of the top ten machine tool manufacturers in Japan are customers of Habor. Even the top products of the advanced PCB drilling and routing machine maker Posalux of Switzerland, the leading wafer foundry producer, Taiwan Semiconductor Manufacturing Company, and special makers in the supply chain of Apple’s products, are all made by Habor.

Orange Electronic Co. in the countryside of Tanzih, Taichung, is the only maker of wireless tire pressure monitoring systems to successfully enter the American automobile service market. Orange has beaten large competitors such as Lite-On Technology, Delta Electronics, and Mobiletron Electronics to win over Standard Motor Products (SMP) Inc, a leading distributor and maker of replacement parts for motor vehicles in the US. As a publicly traded company, Standard is so confident with Orange’s potential success they have decided to invest 25 percent in the Taiwanese company, according to Business Weekly.

To Silicon Valley, Taiwan still matters

On April 4, Facebook entered the smartphone market in a joint venture with Taiwan’s HTC to develop software for Facebook Home. In the future, the home page of their smartphones will display active news from FB, in direct competition with the core business of Google, while Google also works with Hon Hai/Foxconn to manufacture the Google glass, a wearable computer with head mounted display.

Taiwan has been a valuable partner for the US high-tech industry. Even though Apple, Google, Facebook and Amazon are squaring off with each other, they all benefit from the contributions of Taiwanese high-tech companies, Commonwealth monthly said in its cover story entitled “Taiwan still matters”. A report on the future of the technology industry in Asia, compiled by the Samsung Economic Research Institute, termed the US-Taiwan partnership as “Taiwan is a king maker for US IT companies.”

Every day there are 480 million visits to Facebook, which takes tens of thousands of servers to support. All these servers are made by Quanta Computer in Taiwan. In 2012, the global server market grew about one percent, but Quanta registered 19 percent growth due to the substantial growth of Facebook and Rackspace, a cloud and management service hosting company based in Texas. One of every seven servers in the world is made and sold by Quanta. It is estimated that sales of servers made by Quanta will overtake those sold by IBM in 2013, Commonwealth reported.

Other Taiwanese companies are also closely tied to top IT companies in the US. Hewlett-Packard is the largest foreign buyer in Taiwan, with a purchase of NT$750 billion (US$25 billion) in 2012. With the supply chain of Taiwanese companies, HP is capable of shipping two computers and two printers every second, the monthly noted.

In June 2012, Google introduced a tablet Nexus 7 in a joint branding exercise with ASUS. Sales soared immediately after launch, even surpassing iPad sales in Japan. And according to Commonwealth, Apple could not expand its empire without the Hon Hai/Foxconn Technology Group. In 2006, when Apple introduced the iPod, Hon Hai’s revenues exceeded over NT$1 trillion (US$33.33 billion) for the first time. With the subsequent introduction of the iPad and iPhone, Hon Hai’s revenues reached NT$3.5 trillion (US$117 billion) in five years, equivalent to the total revenue of the top ten manufacturers in Taiwan.

Recently, Foxconn decided to reduce its reliance on Apple by not focusing on only being solely an outside contractors, but towards developing their own products, with an especially hard push toward designing and producing large, flat screen televisions.

What’s next?

At a time of speeding growth of mobile telecommunications, the original design manufacturer (ODM) which Taiwan was proud of is no longer valuable. ODM is disappearing fast.

Lee Kun-yao, BenQ chairman, understands clearly that Google has done almost everything from the top to the bottom including hardware design, interface between users and smartphones, ergonomic engineering of the products, and even the business model after manufacturing in house. Google’s model leaves little room for Taiwan’s ODM.

In the 2013 Global Competitiveness Report (GCR) published by the World Economic Forum, Taiwan was ranked first in terms of competiveness of industrial clustering development among 144 worldwide economies. Yet despite the clustering resources, Taiwan still lags behind Germany and Japan. Business Weekly attributes the cause to a lack of innovation, as the reason Taiwan came in at 14th place in the GCR.

In the GCR’s overall rankings, Taiwan is placed No. 13, a little higher than South Korea, but far behind Switzerland, Singapore, Finland, Sweden, the Netherlands, Germany and Japan. This means merely clustering development is not sufficient. Taiwan must continue innovating to remain competitive.

At the end of 2012, Dr. Victor Tsan at the Institute for Information Industry in Taipei, warned the Economics Ministry that, if Taiwan’s ODM and OEM industries do not transform or upgrade, they will be left with the manufacturing service only, lower added value and lower unit price. This is what Dr. Tsan is worried by when contemplating the electronics and technology industries of Taiwan, according to Commonwealth.

However, Dr. Wang Ting-an, director of the Science Division of the Taipei Economic and Cultural Office in San Francisco, is confident and optimistic. He told Taiwan Insights, if Silicon Valley is the new rocket of global technology innovation, Taiwan will be working as the rocket propellant. For Apple, Google, Facebook and Amazon, Taiwanese companies have always been a necessary partner in realizing technology innovation.

Dr. Wang believes, in the face of Silicon Valley’s technology innovation, Taiwanese industry must get rid of the mentality of making only marginal profit and start industrial transformation, so as to create added value, for buyers, for consumers, and even to contribute to environmental protection. Only when the performance of Taiwan’s products and services exceeds the expectation of its customers can Taiwanese companies enjoy the benefits of high gross profits and brand recognition. “This is the only way to survive for Taiwanese industries,” stressed Wang.

Amid massive anti-nuclear protests, Taiwanese rethink their desired lifestyle

On March 9, 200,000 people took to the streets in Taipei and three other major cities, demanding construction be halted on the fourth nuclear power plant, located in Gongliao at the northern tip of Taiwan. The protest in Taipei was the largest ever anti-nuclear demonstration in Taiwan. Protestors also demanded the early decommissioning of the other three nuclear power plants currently in operation and the removal of nuclear waste from Orchid Island, located off Taiwan’s southeast shore, and home mainly to aborigines.

The rallies, held in Taichung, Kaohsiung, Taitung, and Taipei, were staged as the government prepares to hold a referendum – possibly towards the end of the year – on whether to scrap the fourth nuclear plant project.

In a statement, President Ma Ying-jeou reiterated the government’s policy to move gradually toward a nuclear-free homeland, without causing power shortages or exceedingly high energy prices that would hurt Taiwan’s economy, according to the Central News Agency.

Plant viewed as a dinosaur  

Taiwan’s electric power industry has been managed and monopolized by the state-owned enterprise Taiwan Power Company (Taipower). The electricity generated by Taipower’s 27 coal-fired power plants accounts for 69.4 percent of the country’s total electricity production, while 11 hydroelectric plants generate 13.8 percent and three nuclear power plants generate 15.7 percent. As for the production of renewable energy, Taipower’s 15 wind farms and three photovoltaic power plants account for less than one percent.

The life span of each nuclear plant was set at 40 years. The two generators at Plant One are scheduled to be decommissioned in 2018 and 2019 respectively, with those at Plant Two are set to retire in 2021 and 2023, and Plant Three will follow in 2024 and 2025.

On March 12, Premier Jiang Yi-huah said in the Legislative Yuan that all nuclear power plants in Taiwan will be decommissioned by 2055, based on the 40-year operating lifecycle for each nuclear power plant. According to the Central News Agency, the calculation includes the fourth nuclear power plant.

Commonwealth monthly reminded its reader that when the construction of the Taipei Mass Rapid Transportation system started, costing US$14.8 billion, and Taiwan High Speed Rail, costing US$15.3 billion, these projects were strongly criticized during their construction. Since their opening, they have greatly improved the quality of life for Taipei City residents, and are now a source of pride for all Taiwanese.

However, since construction started on Plant Four in 1997, it has met with numerous protests, and twice leading to the halting of construction. With a total cost of nearly US$11 billion, the power plant is expected to be completed by the end of this year. Over 6.5 million people, or nearly a third of Taiwan’s population, live within 50 miles of the plant. Thought of by anti-nuclear activists as a dinosaur, they are hoping Plant Four will meet the same fate and become extinct.

Tug-of-war between political parties

The Taipei-based China Times reported that nuclear power was first introduced in Taiwan 40 years ago. At the time, nuclear energy was said to be the most advanced technology in the world. However with the nuclear disasters at Three Mile Island (United States) and Chernobyl (Ukraine), making the headlines, it awoke possible safety concerns of nuclear energy among Taiwanese. The seriousness was driven home with Japan’s nuclear disaster at Fukushima in 2011.

By the end of October 2000, then President Chen Shui-bian of the Democratic Progressive Party (DPP) announced the cessation of construction on Plant Four. In January the following year, the Council of Grand Justices further explained that the suspension of construction on Plant Four was an important national policy change, so that the Executive Yuan needed to report to the Legislative Yuan in order to come up with a compromise among the parties involved.

Subsequently, an overwhelming number of votes were passed in the Kuomintang (KMT)-dominated Legislative Yuan to oppose the cancellation of Plant Four. Both the Executive Yuan and the Legislative Yuan signed an agreement to resume construction at the plant in mid-February 2001, ending a four-month delay.

To be decided by referendum

The Commercial Times noted that in the aftermath of the Japanese nuclear disaster, President Ma announced the principles of “ensuring nuclear safety, steady reduction of nuclear energy to create a green low-carbon environment so as to gradually move towards a nuclear-free homeland.” He also reassured Taiwanese by promising that the new plant would begin commercial operation only under secure conditions, the early decommissioning of Plant One, and that the lifespan of Plant Two and Three would not be prolonged.

The tide of rising voices are not only limited to the DPP now, but also to civilian organizations at the site of nuclear power plants. They have been joined by other civic groups like Mom Loves Taiwan, which consists mostly of housewives, as well as artists, celebrities and intellectuals. Premier Jiang Yi-hua, who only recently assumed office, is facing unprecedented pressure. In order to appease the growing number of opponents, on March 1, he proposed holding a national referendum to decide the fate of Plant Four.

Taiwan’s “referendum law” requires a high threshold of votes to pass it nationally. A nationwide referendum needs to have a voter turnout of more than half of the total number of people eligible to vote, and has to receive more than half of the valid votes to pass. Taiwan has had six national referendums, and none has passed.

Some consequences reconsidered

The China Times reported that the Environmental Protection Administration’s Minister Stephen Shu-hung Shen said that the immediate abolition of nuclear energy is a romantic idea, and is in conflict with the Taipei’s goal of carbon reduction.

Taiwan has made international commitments to such agreements as the Kyoto Protocol, promising to cut its carbon emissions to the 2000 level by 2025. Such a cut would reduce emissions by 90 million tons of carbon. Even with the three old nuclear plants extended passed their decommissioning dates and with Plant four online, Taiwan’s annual carbon emissions will still be 170 million tons by 2030, which far exceeds Taiwan’s international commitments of 90 million tons.

Minister Shen estimates that if Plant Four should canceled and be replaced by coal-fired plants, Taiwan’s carbon emissions would soar to 187.76 million tons, that is, 97.76 million tons over the committed carbon emissions target. He is worried that there would be 17.56 million tons more even if Plant Four started commercial operation.

Commonwealth reported that if Plant Four were scrapped and replaced by natural gas, Taiwan’s electricity generation costs would increase 40 percent. Based on the calculation of an average electricity bill of US$67 every two months, that would translate into an increase of US$27 every two months or an increase of nearly US$167 a year.

Wu Min-shuan, director of electricity development at Taipower, said the worst scenario could happen by 2024 when Plant One, Plant Two and Plant Three each have one generator decommissioned. In this situation, there will be electricity rationing island-wide if any one generator goes offline.

The goal of zero electricity growth doubted

As for the question of whether Plant One or Two will see an extension to their period of use, Tsai Chuen-horng, Minister of the Atomic Energy Council of the Executive Yuan, did not give a specific answer, but added that there have been many cases of extensions of nuclear power plants in other countries.

Irene Chen, one of the founders of Mom Loves Taiwan, an association for mothers against nuclear power, told Commonwealth that she disagrees with the idea to extend the life of Plant One and Two. She said the continuing service of nuclear power plants only increases the risks and feelings of insecurity. Besides, extensions would still continue the production of nuclear waste.

Green Citizens’ Action Alliance (GCAA) board member Chao Chia-wei said the government still predicts Taiwan’s electricity needs by using calculations based on current industrial structures. If it does not change its calculation method, there will always be a deficit, no matter how many plants are built. Therefore, the question of Taiwan’s electricity shortage depends on whether the government can develops new thinking to compensate for electricity demand.

The GCAA plans zero electricity growth by 1) reducing the ratio of electricity thirsty industries, 2) increasing the generation of renewable energy and 3) increasing the improvement of energy efficiency. With all three ways working, the energy saved would be equal to the production capability of Nuclear Power Plant Four.

Yang Jyh-shing, senior superintendent of the Industrial Technology Research Institute of Taiwan, has said that except for the United Kingdom, all other countries have failed to achieve zero electricity growth. He pointed out, “The UK has drastically reduced the proportion of industry in its economy, which is not feasible in Taiwan.”

A choice of value and lifestyle

The United Daily News commented that during the decade-long fight between the KMT and the DPP over Plant Four, the two sides never put forward a complete alternative, including the planning of alternative energy sources, the proportion of renewable energy, transition of energy-intensive industries, nor even the decommissioning schedule of nuclear power plants. If suspension of Plant Four becomes a reality, the immediate impact will be rising electricity prices. But a much bigger problem is power rationing, which will have a greater impact on daily activities. Both the ruling and opposition parties seem ill-prepared for this; while the anti-nuclear activist groups probably don’t have any answers either.

When questioned by Commonwealth on what to do if Plant Four is never operational, anti-nuclear activist Wu Wen-tong said, as a resident of Gongliao, he only cares about enjoying the beautiful ocean beach where a lot of tourists will come in the summer. When the construction of Plant Four is scrapped, people there can start their tourist and fish farming industries, reviving the local community.

Ho Ron-shin, chief editorial writer of Commonwealth, noted that the referendum on Nuclear Power Plant No. 4 serves not only as a physical examination of nuclear energy safety in Taiwan, but also a vote of confidence by the Taiwanese people on its government. It is also a value choice based on their desired lifestyle.

Taiwan’s major IT companies face uphill struggle

As a result of reduced shipments of the iPhone 5, Hon Hai Precision Industry Co. (trading as Foxconn), suffered an 8.19 percent drop in its combined annual revenues in 2012. The company is the world’s largest electronics contract manufacturer, when measured in terms of revenue. HTC is another leading manufacturer in Taiwan, but in the last few years it has focused on branding its own line of products. Despite their successes, both companies are facing difficult times ahead.

In 2012, South Korea’s Samsung accounted for over 30 percent of the global smartphone market, well ahead of Apple’s 18.4 percent and HTC’s 4.8 percent. Samsung’s net profits also surpassed those of HTC for the first time (by 1.6 times). As two of Taiwan’s most successful hi-tech companies, Hon Hai and HTC’s success or failure will have a profound impact on the future of high-tech industries in Taiwan.

HTC seeks to upgrade

For Peter Chou, HTC’s CEO and president, 2013 will be a pivotal year, since it will determine whether the company can emerge from the depths of an extremely difficult 2012. Last year, total revenue fell an estimated 37 percent and its global market share fell from 10.7 percent to 4.8 percent. The company’s share price plummeted to a 7.5-year low, and its earnings per share of NT$20.14 (US$0.68) were barely a quarter of the NT$73 (US$2.47) in EPS posted by HTC in 2011, Commonwealth reported.

HTC has refused to succumb to the gloom, instead launching a series of new phones. The company’s “Butterfly” model represents the first weapon in the company’s arsenal to reverse its fortunes. HTC J smart phones, jointly introduced by HTC and KDDI, one of Japan’s largest telecom operators, have sold briskly in Japan. The two firms partnered again to introduce the five-inch screen HTC J Butterfly, which is also doing well in the market. According to KDDI’s hot sales list, the Butterfly even beat Apple’s iPhone 5 in Japan. The Butterfly J has enabled HTC to emerge from a dark valley and into the sunlight again. Additionally, HTC is reviewing its product and marketing strategies in order to remain competitive.

Fighting a David and Goliath battle

Although successful in Japan, another problem facing HTC is that its success in Japan cannot be easily replicated elsewhere. “Japan is an extremely closed market controlled by the major telecom vendors. Even Nokia and the iPhone have been unable to break into Japan,” said Lee Ji-ren, who lectures on business strategy and management at National Taiwan University (NTU). He explained that Japanese-brand smart phones hold a 70-percent share of the market, meaning HTC does not have to directly butt heads with Apple and Samsung, reported Commonwealth.

“Actually, HTC is still a profitable company. It’s just that it has run into the world’s two strongest adversaries,” said Victor Tsan, the vice president and general director of the Market Intelligence & Consulting Institute (MIC).

According to Commonwealth, these two adversaries are the largest competitors for HTC in the global smart phone market. Samsung’s revenue is nine times that of HTC. It has a market value 28 times that of HTC, and R&D spending 15 times that of HTC. Apple’s revenue is seven times greater than that of HTC, with a market value measuring 60 times that of HTC, and it spends four times as much on R&D.

How can HTC compete given such overwhelming odds? In facing Samsung which has 31 percent of the global market share, and Apple, which takes 60 percent of all profits in the smart phone business, HTC clearly understands that it has to fight to protect the company’s turf. HTC realizes it has to be financially fit to take on this monumental challenge. The company will have to find its own niche in defeating the Goliaths of the industry and overcome its inherent limitations.

Taking advantage of markets ignored by Apple  

There are still opportunities and one of them is to cater to China’s middle- and lower-end smart phone market, which has long been ignored by Apple and under-served by Samsung, said Commonwealth. In the third quarter of 2012, HTC sold 2.8 million smart phones in China, giving them a 5.8 percent market share and surpassing Apple’s tally.

“The iPhone’s average selling price is US$600, and that won’t come down. HTC already has strong product development and time-to-market capabilities. It now has to learn how to segment the market at price points below US$600 and take advantage of a market Apple ignores,” Lee suggested. And only time will tell if this market strategy will pay off for HTC.

HTC is determined to continue its focus on R&D and innovation to stay strong in Taiwan. “At least one company is still willing to keep its production line in Taiwan and to make the best products. I am proud to say that I stay in HTC to fight,” a senior HTC R&D official told Commonwealth.

Hon Hai is too big to fall

On January 10, Hon Hai Precision Industry Co. announced its 2012 non-combined revenues had reached NT3.2 trillion (US$107 billion). This broke its own record in monthly, quarterly and annual reports, an unprecedented high among all the private manufacturing businesses among the Chinese communities, Business Weekly reported. A month before this announcement, 62-year-old Terry Gou, chairman and president of Hon Hai, was included – for the first time – in Forbes’ World Most Powerful People list. Hon Hai was also listed as the tenth largest employer in the world by the UK’s BBC with 1.2 million employees in March, 2012. Nine months later, Hon Hai has almost 1.5 million employees.

At present, Hon Hai is a conglomerate “too big to fall,” said Business Weekly. Why? Because Hon Hai controls the supply of over half of the world’s desktop computers, as well as Apple’s iPhones, iPads, Sony’s liquid crystal display television sets, the PlayStation 3, and Nintendo’s Wii gaming machines. The company supports the livelihood of over 10,000 related companies. Not so long ago, Hon Hai contributed 20 percent of total revenues to the integrated industrial cluster of precision machine manufacturing in central Taiwan.

According to a study by the Topology Research Institute, without Hon Hai, the popularity of Apple’s iPhone, iPod, and iPad would have been delayed by two to three years, and the price of entry level desktop computers would be double, reported Business Weekly.

What does Apple’s decline mean for Hon Hai

After Hon Hai’s announcement of record high revenues came a string of bad news from Apple. News quickly spread that Apple intended to introduce a low cost iPhone to grab a share of emerging markets and break its own one-phone-per-year rule. This caused a sharp drop in iPhone 5 sales, the fastest depreciation and with the shortest life span in the history of the iPhone. Then Apple announced its intention to half its order of the iPhone 5. All these measures seriously hurt the company’s stock price. This means that Apple’s supremacy in commanding the highest market value in the world now faces a new challenge. It also casts a shadow over Hon Hai’s future.

Due to declining demand for the iPhone 5, Macquarie Securities believes iPhone 5 shipments will drop 32 percent from 44 million sets in the previous quarter down to below 30 million in the first quarter of 2013. Before the introduction of the iPhone 5 S in June, there will be two quarters of non-active operation, which will definitely affect Hon Hai’s revenue in the first half of 2013.

Gou has betted heavily on Apple in terms of capital and human resources. Almost 40 percent of Hon Hai’s 1.5 million-strong work force in China is reserved for making Apple products. Now the only breakthrough the world is expecting from Apple is iTV.

In 2012, Gou became a shareholder of Sharp’s Sakai Plant, a subsidiary of Sharp, and is planning to join Sharp too. Beside taking over the rights of management of Innolux Corp. (formerly Chimei Innolux Corp.), he has even used a large amount of his Hon Hai stock to borrow NT$20 billion (US$677 million) to bet on the success of Apple’s iTV.

Business Weekly noted that if Apple is not red hot any longer, Hon Hai, a conglomerate with revenues of almost NT$4 trillion (US$135.6 billion), is also bound to lose its luster.

Size a blessing and a curse

The flexible, innovative and fast developing IT industry has helped Taiwan earn the title of “Silicon Island,” playing an important role in the global supply chain over the last two decades. But after a paradigm shift bolstered by Apple and Samsung in recent years, Taiwan’s IT industry (OEM, ODM or key brands), is facing a crucial challenge and transformation.

HTC and Hon Hai definitely face significant challenges ahead. HTC is the world’s third-largest mobile phone brand, after Apple and Samsung, but in a much smaller company. The key for HTC’s survival will depend on its market development and marketing strategy.

Currently Hon Hai is expanding in central and western China by building a factory in Zhengzhou, Henan Province, and enlarging its facilities in Chengdu, Sichuan Province. However, Business Weekly reported, Hon Hai’s huge size is an advantage, but also a burden. Without transforming to increase its added value, will Hon Hai lose its advantage when China ceases to be a source of cheap labor?

And, because of its size, Hon Hai also has huge advantages, with its revenue accounting for 28 percent of Taiwan’s nominal GDP in 2012. The challenges faced by operating such a large operation can be illustrated by considering the company’s ability to feed its workforce at its sprawling factory in Shenzhen, Guangdong Province. On a daily basis the plant’s central kitchen faces the challenge of feeding up to 60,000 people per meal. Similarly, to sustain the firm into the future, Business Weekly asked, “Without Apple’s immense global brand value, who can satisfy Hon Hai’s appetite?”

Pursuing Taiwanese values in the shadow of a giant neighbor

President Ma Ying-jeou’s administration has been fond of using the term “soft power” to identify the values of Taiwan since he took office in 2008.

“Soft power” is a concept developed by Joseph Nye of Harvard University to describe a nation’s ability to use its way of life, cultural assets or public diplomacy as a tool of persuasion, rather than choosing to compete on a political, military and economic level.

Soft power matters

“Soft power” has a special significance to Taiwan. To show “soft power,” you don’t need to hold a high academic degree, which has traditionally been considered important, if not superior, by the ethnic Chinese. You can still be a high achiever in non-academic areas (such as sport, hospitality, and social movements) even with a lower level of education. On several occasions, President Ma cited Kevin Lin, the ultramarathon champion, Wu Pao-chun, master pastry chef, Yani Tseng, the top seeded women golfer, and Chen Shu-chu, the vegetable vendor and philanthropist. In the past, only successful entrepreneurs, scientists, and academic scholars were praised as role models by the head of state.

The influence of “soft power” allows Taiwanese people to pause and reflect on the long-term pursuit of increasing GDP. Rapid economic growth has alerted the people of Taiwan to be more concerned about quality of life, artistic innovation and cultural refinement.

More importantly, under the pressure of strong competition from China in terms of politics, economics, military power, and international status, Taiwan has to find a value system capable of strengthening the self-confidence of its people.

Unreal anxiety

Columnist Yang Tu wrote in the Taipei-based China Times that current exchanges and interaction between Taiwan and China are at an all-time high. However, there is a growing concern in Taiwan that the island will become “a second Hong Kong”.

Since 2008, there have been several break-throughs in relations between Taiwan and China, including: direct flights, reducing trade and investment barriers, and allowing mainland Chinese students and tourists to visit Taiwan. As cross-strait interaction is gradually strengthening, Taiwan’s people are getting to know the mainland and its people better. However, the better that Taiwanese people understand China, the deeper their anxiety, Yang noted.

There has been a marked change in the dynamic between the two sides since Taiwanese residents were first allowed to visit relatives in China in 1987 – the first move to liberalize exchanges with the mainland since 1949, according to Yang’s analysis.

From an economic perspective, China relied on Taiwanese investment in the early days and ultimately fully accepted Taiwan’s capital and human talent. Now that China has become the second largest economy in the world, the largest global consumer market, and is the world’s chief economic driver, Taiwan is increasingly relying on China economically.

In terms of military strength, the two sides were basically relatively balanced in the past. Taiwan’s modernized armaments were not inferior to those of China. But now, even the United States and Japan are somewhat concerned about China’s military build-up. It is not surprising that Taiwanese people feel very insecure by contrast.

“In the face of the rise of China, it is not without reason that Taiwanese people are worried of becoming ‘a second Hong Kong’,” pointed out Yang. “Indeed, Taiwan is not Hong Kong. The most obvious difference is that Hong Kong has no democratic system. After democratization in the 1980s, Taiwan has twice experienced a change of ruling political parties, has established a consensus of democratic values, and has accumulated enough experience and dynamic energy to cope with the rise of social movements. This is the most fundamental difference between Taiwan and Hong Kong,” and “Taiwanese have formed a sense of self-identification based on Chinese culture and a Taiwanese consciousness. This is different from Hong Kong which returned to China from British colonial rule in 1997, and lacks a long-term and self-conscious cultural movement.”

Yang said that although the concern about “becoming a second Hong Kong” is exaggerated, it shows that Taiwanese people are worried about their excessive economic dependence on China, fearing a loss of the freedom of speech, their democratic system, and even their self-identity. These fears are not without basis, but have been formed from observing Hong Kong’s experience since 1997.

Ranking high in life-satisfaction surveys

Since 1980, Taiwanese people have developed a pride in their export-oriented economic miracle. However, in 2008 when the global financial tsunami started, Taiwan suffered a sharp drop in exports. Even though the situation improved in 2011, the European debt crisis negatively impacted the Taiwanese market. All this financial turmoil has resulted in a shift in the value structure of Taiwan’s people.

Awakening News Networks reported that what Taiwanese people want is not just the pursuit of business success or expanding their wealth, but increasingly how to live a meaningful life, how to spend time with family, a desire to improve the quality of life in their communities, as well as the pursuit of social justice. “In an economic environment that can not be improved and where frequent bad news is experienced, stable happiness has become a basic demand of most Taiwanese people now.”

The Taipei-based China Times pointed out in its New Year’s Day editorial that over the past ten years, the most criticized topic is the vicious fighting between political parties. The blue camp (ruling KMT) and the green camp (opposition DPP) attack each other, seriously upsetting the normal functioning of the Legislature.

In the authoritarian era before the lifting of martial law in 1987, the government tried to control everything, and was totally unwilling to contemplate the existence of non-governmental organizations (NGOs). At that time, any NGO was considered as a potential threat to the government. Therefore there was a serious lack of NGOs to foster social cohesion in Taiwan.

But in the past decade, Taiwan’s politics has been extremely polarized, thus providing an opportunity for social movements to emerge, and form NGOs. In this way a new social order is gradually formed, according to the paper.

Now there is a boom of NGOs and religious groups in Taiwan, with about 40,000 NGOs and more than one million volunteers quietly dedicating their time and efforts. They supplement the lack of government resources and formal education, improve the quality of life for Taiwanese citizens in every corner of the island and become a part of everyday life in Taiwan.

The United Evening News reported that at the end of 2012 the U.S. Gallup poll announced its global happiness rankings. Abandoning traditional indicators of happiness such as GDP, education, and longevity, the poll measured “positive emotion” across 148 countries. Taiwan ranked 39th, the highest rating of the four Asian Little Dragons.

When The Economist’s “The World in 2013” ranked 80 countries according to where would be the best place to be born, Taiwan took 14th place based on various quality-of-life indices.

The United Evening News reported that Pai Hsiu-hsiung, chairman of the Taiwan Social Welfare League, said that Taiwan’s economy has been stuck in the doldrums in recent years, but the people are generally happy. Neighborhoods, families, and friends have developed a corporate social function by providing mutual assistance to each other to maintain a certain level of life satisfaction.

A learning journey for all Chinese

The China Times said in a comment that visitors from mainland China, Hong Kong, Singapore and other Chinese communities have noted a special social order has developed in Taiwan. No matter how crowded, Taipei Metro passengers always line up patiently to board trains, and always leave seats for those in need. Several major cities in Taiwan are promoting a campaign dubbed “keep-trash-off-the-ground” (namely, every evening residents of each city deposit their household waste at the designated times and points, where it can be collected by a garbage truck). This policy has resulted in a significant improvement in the city’s environment, reducing the quantity of garbage and realizing environmental protection goals by increasing recycling. These actions do not rely on government oversight or legal punishment, but build on the basis of spontaneous social action.

The Sing Tao Daily, a major Chinese language newspaper in the US, pointed out in an editorial that the evolution process of Taiwan’s social values has not followed the direction of a certain political party’s propaganda, but has been developed through an awareness of people’s participation and involvement and looking for solutions to solve social justice issues since Taiwan’s economic development reached a certain level.

The paper stressed that as the modes of Taiwanese thinking and mobilization are no longer following the instructions of political parties, their concerns are not limited to political issues, but extend to all levels of society. In 2012, there were several movements, including opposition to nuclear power plants and media monopoly. The leaders of these movements were not just a few organizations, but increasingly included students and scholars committed to giving a voice to vulnerable sectors of society.

Keeping the reins on China

The Washington Times recently summed up the relationship between Taiwan and China as “a small island in the shadow of a giant neighbor that claims its territory, Taiwan nonetheless holds a key to shaping China’s meteoric rise.”

Lung Ying-tai, Taiwan’s minister of culture, told the paper that “A democratic system with guaranteed freedom of expression has given rise to a creative and culturally vibrant society in Taiwan.” He said, “Taiwan is a center of gravity for the Chinese diaspora, especially on the cultural level, where the island’s vigorous book and movie industries often publish works banned on the mainland.”

Taiwan has repeatedly served as a stimulus for China to transform, from the patterns of economic development, democratic experience, even civil society consisting mainly of the middle class. As some Taiwanese people treasure their existing life-style and worry about “Taiwan being another Hong Kong”, many mainland Chinese people are willing to embrace Taiwan’s values, and to admire Taiwan’s democracy, freedom, and pluralism. At a time when China is intensifying its development efforts by building more skyscrapers, a high-speed rail network, aircraft carriers and maintaining double-digit economic growth, Taiwan has provided unlimited inspiration and encouragement for the mainland in how to develop its civil society and soft power.

Taiwan examines Obama’s re-election and China’s new leadership

On November 6, US President Barack Obama was re-elected for a second term. On November 8, the convening of the 18th National Congress of the Chinese Communist Party (CCP) signaled the engineering of the decennial power transition, starting the era of China’s new leader Xi Jinping. It is the first time that the selection of the new leaders of US and China – the world’s two largest powers – have been decided and announced in the same week. Inevitably many will wonder what changes will take place in the international arena after this “super week”? And, how should Taiwan deal with it?

Positive Taipei-Washington relations set to continue

Government and public opinion leaders in Taiwan generally believe that Taipei-Washington relations will continue to develop smoothly after Obama’s re-election.

Through the Ministry of Foreign Affairs, President Ma Ying-jeou sent a congratulatory message to President Obama saying that Taiwan-US relations have been close and friendly under Obama’s leadership over the last four years, reaching their best state in the past 30 years. President Ma also said that Taiwan is looking forward to continued cooperation and a further strengthening of the partnership between the two sides.

Taiwan’s Premier Sean Chen said that Obama is expected to continue to promote financially sound policies in his second term, which will aid long-term economic stability. The US is an important trading partner for Taiwan’s exports, and will continue to help drive Taiwan’s economic growth.

Premier Chen said that the US is the largest resource for Taiwan’s foreign investment and technology, and he hopes that both sides will base relations on the established good foundations and positive atmosphere, to grasp the opportunity of Obama’s re-election to further strengthen the development of bilateral economic and trade relations. Chen also expects to see the continued promotion of Taiwan-US industrial and trade cooperation, and the early resumption of talks relating to the semi-FTA Trade and Investment Framework Agreement (TIFA).

The Central News Agency reported that a series of actions including US Secretary of State Hillary Clinton’s holding talks with Taiwan’s former Vice President Lien Chan while attending the Asia-Pacific Economic Cooperation (APEC) meeting, the US publicly announcing the news of Taiwan’s Deputy Defense Minister Andrew Yang’s visit to the Pentagon, Washington’s agreement to grant visa-free status to Taiwan travelers, the resumption of negotiations towards the TIFA, all show that Taiwan and the US have entered a period of closer and stronger relations.

Su Tseng-chang, Democratic Progressive Party chairman, and former DPP Chairwoman Tsai Ing-wen also sent congratulations to Obama on his reelection. The DPP Central Committee said it will actively plan to restore the establishment of a DPP representative to Washington to deepen its relations with the United States. The DPP continues the exchange of visits and dialogue with the US to ensure that the US understands the policy direction and thinking of the DPP.

President Ma calls for greater cross-strait trust, cooperation

When Xi was elected as the CCP’s new General Secretary, President Ma, in his capacity as chairman of the Kuomintang (KMT), took the initiative to send Xi a congratulatory message, the first time such a gesture has been made. President Ma expressed his hope that the two sides would further strengthen mutual trust and cooperation to cope with new challenges and to strengthen peace initiatives between the two sides.

Most of Taiwan’s media outlets reported that China has made remarkable advances since it took the path of reform and pursued a policy of opening up over 30 years ago. However, the gap between the rich and the poor, environmental pollution, and corruption, have all surfaced at the same time in China. The thinking and behavior of the Chinese leadership have reached a point of being unable to continue its course without making a change, and this is the major mission of the 18th National Congress of the CCP as it is empowered by history.

The Want Daily commented that since the 17th CCP national congress, “Hu Jintao (party head) and Wen Jiabao (government head) system” have basically followed their predecessors “Jiang Zemin and Li Peng’s reform pace”, made some more adjustments and innovations in economic structure, pushing China’s economic development toward a big leap. The upgrading of economic power has also lifted China’s military and international status, changing the position of China in the world.

However, in the process of its modernization, China’s rapid economic growth has also brought many problems, increasing economic and social contradictions. Due to these contradictions, coupled with the effects brought about by the development of science and technology, microblogging has become the alternative channel for spreading gossip and rumors, expressing political feelings, and increasing demands for political democratization.

The Taipei-based China Times stressed that there are nearly 300 million middle class people in China. The basic demands of the middle classes are for decent economic comfort, the right to participate in politics, and the realization of social fairness and justice. The major topic of the new leadership of Xi and Li Keqiang (premier) is how to meet the needs of the middle class. The shoots of democracy appear to be emerging in China, but the Beijing government only really tries to control the proliferation of social problems, and has yet to review the system and make significant innovations.

The Want Daily reported that just like the preceding 17th CCP congress completing China’s economic reform, the 18th is expected to be able to complete the major tasks of reforming China’s political and social system, moving China to a modern country.

“Comprehensive development” in relations with China?

The Central News Agency reported that Liu Te-shun, deputy minister of Taiwan’s Mainland Affairs Council, Executive Yuan, believes that the Beijing government should continue its policy toward Taiwan, and take necessary steps. There should not be a dramatic change in its Taiwan policy because of a change in leadership.

However, according to the analysis of Taiwan’s former National Security Council Secretary-General Su Chi, Xi is a standard “Taiwan hand” and is bound to play a strong “Taiwan card” in the fight for political achievements and performance. After taking power, Xi will launch a series of “systematic ideas and action” on Taiwan. The biggest achievement of Hu’s policy toward Taiwan was to reverse the downturn in cross-strait relations to safe waters. If Xi wants to do something beyond his predecessor, he will not be limited by maintaining “cross-strait stability” in his policy thinking and initiate a breakthrough policy in the next ten years.

The Commercial Times pointed out in an editorial that, after the leadership changes of the 18th national congress, that the new CCP leadership will launch a model to promote the “comprehensive development” in its relations with Taiwan, no longer placing economics and trade as the top priority. In other words, after the development of economic and trade relations, the two sides should also develop cross-strait cultural, political, and military exchanges and cooperation in parallel, rather than focusing on just one or two areas.

According to the paper, opinions in Taiwan agreed that it is best to build up an “economic and trade spindle” first to serve as a robust foundation between the two sides, so that a natural way can be paved for the comprehensive development of cross-strait relations to bear fruit in future.

And, in case cross-strait political issues were put on the agenda before the solidification of economic and trade cooperation, there would definitely be some argument and discord between Taiwan and China and thus the process of economic and trade negotiation would be impacted. However, Taiwan should also be prepared to deal with the arrival of “comprehensive development” between the two sides, facing the negotiation of non-economic and trade issues, the paper noted.

The Liberty Times stressed that it is apparent that Xi’s government will focus on the economy, people’s livelihoods and rectification of the Communist party style, rather than on the implementation of political reforms, since “reform” has not been mentioned in his speeches. However, today China must face political reform, according to the paper. If Beijing continues ignoring political reforms, it will be difficult for China not only to maintain the Chinese Communist dictatorship system, but also to sustain the pride of continual economic growth.

Dealing with future US-China relations

Despite the re-election of President Obama, the makeup of the US Congress remains little changed, continuing the frustrations of a seriously divided government. With Congressional members from opposing parties holding such divergent views, it remains extremely difficult for the president to promote his domestic policies; however this situation may leave the US president with more room to maneuver in terms of foreign policy, according to China Times.

The paper pointed out that, after the 2008 Olympic Games in Beijing, the trend of a rising China has become increasingly apparent, yet there remain many contentious issues in relation to international affairs between the US and China. All signs suggest a pessimistic future for US-China relations. The Want Daily reported that the US and China not only have conflicts over trade and the economy, they also hold different positions on North and South Korea, on issues relating to the East China Sea and the South China Sea. With such entrenched misunderstandings, surely it will take a very long time to reach a compromise.

“Some people take a pessimistic view about the future of US-China relations, but I think just the opposite,” said Lin Chong-pin, a Taiwanese military strategist. According to his analysis, Xi has a much better understanding of the United States than any previous Chinese leaders. Besides, it is difficult for the US to return to Asia with its economic strength and national power. So the overall situation will be that the US and China will cooperate more to reduce confrontation in the coming four years, the Central News Agency reported.

The China Times pointed out that the Asia-Pacific region has become a contested field of strategic competition between the US and China and there is a trend toward more conflict between the two sides. In an atmosphere of growing US-China strategic suspicions, Taiwan-China relations also face a new set of challenges that are likely to become increasingly complex. It is apparent that when the US actively reinforces its military alliances with Japan and Australia that the common adversary will be China. And if Taiwan takes any position in support of US strategy in East Asia, it will possibly hamper Taiwan’s positive interactions with China.

Balance between the two powers

Sandwiched between China and the United States, what can Taiwan do? Edward I-hsin Chen, a professor at Tamkang University, stressed that Taiwan should maintain an “equidistant” relationship and not take sides, the Want Daily reported.

However, according to analysis in the China Times, the issue of Taiwan has diminished due to positive interactions across the Taiwan Strait. If no solution emerges to the Taiwan issue, this will only add new uncertainty to China’s security. In the event that China and the United States cannot live in peace in the future, and tensions rise, there will be ignition points of local confrontations in the Asia-Pacific region. By that time, President Ma’s balancing strategy between the US and China will face a daunting challenge.

Andy Chang, director of Tamkang University’s Graduate Institute of China Studies, pointed out in an article in the United Daily News that the result of Taiwan’s presidential election in 2016 will be seen as the first important test of the acceptance of Xi’s Taiwan policy. This will be followed by the 19th CCP national congress in 2017. Therefore, whatever the outcome of Taiwan’s presidential election in 2016, Xi and his leadership will make every effort to ensure no change in the peaceful development of relations across the Taiwan Strait. So the major task of Xi’s Taiwan policy during his first term will naturally be to make all necessary preparations to deal with cross-strait relations after Taiwan’s presidential election.

Although Xi expects a cross-strait peace agreement can be signed during his ten year tenure, which would be an historic step in China’s history, President Ma is more likely to work first toward the mutual establishment of representative offices as a mechanism to continuing peaceful development within his remaining term of office. It remains to be seen whether political dialogue can be initiated between Taiwan and China in the coming decade, Chang noted.