2010Vol.40No.11 by AmCham Taipei

THE AMERIC AN CHAMBER OF COMMERCE IN TAIPEI

Industry Focus A Report on the Automotive Sector

November 2010

Vo l u m e 4 0 N u m b e r 1 1

w w w. a m c h a m . c o m . t w

Update on the iTaiwan Projects 愛台十二建設的進度

TAIWAN BUSINESS TOPICS November 2010 • VOLUME 40 NUMBER 11 中華郵政北台字第號執照登記為雜誌交寄 5000 11_2010_Cover.indd 1

NT$150 COVER SPONSOR

2010/12/2 7:26:51 PM

CONTENTS

NEWS AND VIEWS

6 Editorial NOVEmbEr 2010

Guidance from the WTO and World Bank

VOlum E 40, NumbE r 11

九十九年十一月號

Publisher

Andrea Wu

發行人

Editor-in-Chief

By Jane Rickards

經商環境持續改善；企業的溫室氣體減量計畫

總編輯

Don Shapiro Art Director/

More Gains in the Ease of Doing Business; Cutting Greenhouse Gases at the Company Level

世貿組織與世界銀行的建言

7 Taiwan briefs

吳王小珍

11 Issues

沙蕩

COVEr SECTION

美術主任 /

Production Coordinator

Katia Chen Staff Writer

Jane Rickards

後製統籌

election campaign and in the early period of his administration in 2008, much was heard about his plans for the iTaiwan 12 infrastructure projects. In seeking to review the progress of the projects, Taiwan Business TOPICS finds that it is difficult to make a clear assessment because of the broad scope of the program and the sometimes imprecisely defined nature of some of the initiatives. But the good news is that the number and value of projects open to the private sector are due to increase. By Jane Rickards 撰文／李可珍

陳國梅採訪編輯

李可珍

Manager, Publications Sales & Marketing 廣告行銷經理

Irene Tsao

曹玉佳

Translation

Zep Hu

翻譯

胡立宗

American Chamber of Commerce in Taipei 129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, Taiwan P.O. Box 17-277, Taipei, 10419 Taiwan Tel: 2718-8226 Fax: 2718-8182 e-mail: amcham@amcham.com.tw website: http://www.amcham.com.tw 名稱：台北市美國商會工商雜誌發行所：台北市美國商會臺北市10596民生東路三段129號七樓706室電話：2718-8226 傳真：2718-8182 TOPICS is a publication of the American Chamber of Commerce in Taipei, ROC. Contents are independent of and do not necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. © Copyright 2010 by the American Chamber of Commerce in Taipei,

17 update on the iTaiwan Projects

愛台十二建設的進度 During Ma Ying-jeou’s presidential

26 The Cultural Anthropology of Taiwan’s Public Construction By Jane Rickards

ROC. All rights reserved. Permission to reprint original material must be requested in writing from AmCham. Production done in-house, Printing by Farn Mei Printing Co., Ltd. 登記字號：台誌第一零九六九號印刷所：帆美印刷股份有限公司經銷商：台灣英文雜誌社台北市105敦化北路222巷19之1號1樓發行日期：中華民國九十九年十一月中華郵政北台字第5000號執照登記為雜誌交寄 ISSN 1818-1961

OFFICERS: Chairman/ Alan Eusden Vice Chairmen/ William E. Bryson / George Chao Treasurer: Carl Wegner Secretary/ Stephen Y. Tan 2009-2010 Governors: William E. Bryson, George Chao, Cindy Shueh Lin, Neal Stovicek, Gordon Stewart, Carl Wegner, Alexander Duncan. 2010-2011 Governors: Alan Eusden, Revital Golan, Douglas R. Klein, David Pacey, Wei-Li Shao, Stephen Y. Tan, Lee Wood. 2010 Supervisors: Steven Lee, Dana McCarty, Charles H. McElroy, Bill Wiseman, Derek Yung. COMMITTEES: Agro-Chemical/ Mong Yang Tan; Asset Management/ Christine Jih, Derek Yung; Banking/ Carl Chien; Capital Markets/ William Bryson, Jane Hwang, Jimin Kao; Chemical Manufacturers/ Art Yen; CSR/ Lume Liao, Fupei Wang; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou, Stephen Tan; Human Resources/ Richard Lin, Seraphim Mar; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Mark OÆDell, Dan Ting, Lee Wood; Intellectual Property & Licensing/ Jason Chen, Jeffrey Harris, Douglas Weinstein; Manufacturing/ George Chao, Albert Li; Marketing & Distribution/ Christopher Fay, Wei Hsiang, Gordon Stewart; Medical Devices/ Daniel Yu; Pharmaceutical/ David Lin, Jaime Robledo Cadavid, Wei-Li Shao; Real Estate/ Peter Crowhurst, Kristy Hwang; Retail/ Angela Chang, Prudence Jang, Douglas Klein; Sustainable Development/ Eng Leong Goh, Kenny Jeng; Tax/ May Lee, Cheli Liaw, Josephine Peng; Technology/ Revital Golan, R.C. Liang, Jeanne Wang, Deborah Yen; Telecommunications & Media/ Ben Way, June Su, Jason Wang; Transportation/ Gary Wu; Travel & Tourism/ Pauline Leung, David Pacey.

TAIWAN buSINESS

30 Fast-growing market for Pet Supplies

A sea-change has occurred in recent years in how Taiwanese view their animal companions. Pets are now pampered by their indulgent “parents.” By Tim Ferry

bOOKS

34 The Story of Taiwan’s Charitable Powerhouse

A review of Tzu Chi: Serving with Compassion by Mark O’Neill By Mark Caltonhill

TrAVEl & lEISurE

50 Slithering through myths and History in Snake Alley

No longer quite as colorful as in its somewhat bawdy past, HuaXi Street remains a unique cultural adventure worth experiencing. By Diana Tsai

COVER PHOTOs: COURTEs Y OF PU bl iC COnsTRUCTiO n CO m mi ssi O n

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nov emb er 2010 • volume 40 n umbe r 11

INDUSTRY F

COVEr SPONSOr

CUS

Ford leads the Way to the Future Cars, Tires, and Components A report on the Automotive Sector 38 Auto market: back to Stability It’s been a good year for the car manufacturers, and a great one for the imported brands. By Don Shapiro 41 Tire makers Expanding Vigorously in China Although the mainland is becoming increasingly important in their operations, Taiwanese companies are also making new investments at home. By Philip Liu 44 China’s Aftermarket brings big Opportunities for Auto-Parts makers Already strong in the world market, Taiwan companies are getting a further boost from cross-Strait trade and the development of auto-electronics. By Philip Liu

AmCHAm EVENT

56 Focus on Digital Convergence The 2010 Telecommunications Symposium

Ford Lio Ho, which recently celebrated its 38th year in Taiwan, continues to focus on meeting our customers' needs and wants by providing tailored products. It is also a company with sustainability at the heart of its business. Our vision for the 21st century is to provide sustainable transportation that is affordable in every sense of the word: socially, environmentally, and economically. With 'One Ford' strategy, we have already rollout of our strategy with the new Ford Mondeo and new Ford Focus. Both models have a new generation of turbocharged diesel engines with advanced fuel-saving technologies capable of using high levels of biofuels that provide customers with fuel savings of between 25 and 35% over conventional petrol engines. We have also improved fuel economy by cutting energy wasted in vehicle systems, minimizing wind drag, and optimizing new six-speed transmissions. In addition, we have Ford Fiesta imported from Europe and the new Ranger imported to tailor different customer lifestyles. Ford is committed to Taiwan and will continue to explore opportunities in new and exciting products. The products we are launching will bring our performance in line with our commitment to leadership in addressing the climate change issue and our goal to provide customers with vehicles that are fully competitive in every way, including drive quality, green, safe and smart. Within our communities, our commitment is helping to create a better world by engaging in a variety of activities. For example, we have held the Ford Driving Skills for Life program for the past two years and trained more than 650 people, raising their awareness and understanding about safe and fuel efficient driving best practices. We joined President Ma to support the "Act Green" campaign initiated by the CommonWealth and promote the reduction in carbon emissions. FLH was the only car company among 10 corporations to participate in the 'Yield to pedestrians’ right' initiative, supervised by Ministry of Transportation and Communication. In the fifth annual Global Week of Caring event, close to 1000 employees and their families reached out to care the environment by cleaning the Yung An beach in Taoyuan County.

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E d i t o r i a l 世貿組織與世界銀行的建言

Guidance from the Wto and World Bank

台

s a member of the World Trade Organization since 2002 (under the awkward but politically acceptable name of the “Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu”), Taiwan periodically undergoes a review of its trade policies and practices by the WTO’s Trade Policy Review Board (TPRB). The report of the most recent such review, released this summer, outlines the significant progress Taiwan has made since the only previous review was completed in 2006. The TPRB chairman congratulated Taiwan on its successful outward-oriented development strategy, and for the considerable economic growth and prosperity that strategy has helped to create. Among the various positive developments cited in the 33-page report were: • Better protection of intellectual property rights, particularly copyrights and patents, through revised legislation and intensified enforcement. • Implementation of tax reform to streamline the tax structure, broaden the tax base, and reduce corporate income tax rates. • Improved regulatory transparency, including the posting of most laws and regulations through government publications and website. • Continued deregulation in such areas as services, investment, and customs. • Strengthened cross-Strait economic relations through negotiation of the Economic Cooperation Framework Agreement (ECFA), as well as liberalized trade and investment regulations. At the same time, the report takes note of areas in which Taiwan will need to bolster its international competitiveness in order to better attract inbound direct investment so as to continue to spur its economic development. It advises Taiwan to undertake further structural reforms, remove “remaining informal barriers to investment,” and adopt international best practices. The review board observes, for example, that in 2009 only 18% of the product standards applied in Taiwan were aligned to international standards, which actually represents a drop from the 25% level recorded in 2005. Like the results of the World Bank’s annual Doing Business survey discussed in the Issues section of this magazine, the WTO report constitutes a valuable reference – clearly demonstrating Taiwan’s steady advances in building a more favorable business environment, but also pointing out the economy’s continued shortcomings, especially in terms of regulatory efficiency and harmonization with global best practices. The findings of the WTO review board, in fact, bear out the conclusions drawn by AmCham Taipei in its 2010 Taiwan White Paper published this June. In that document, the Chamber also credited Taiwan with making impressive strides in forging a favorable investment climate. But in line with the White Paper theme of “Aspire to Greatness,” AmCham urged the Taiwan authorities not to be satisfied with a merely “good” business climate. In the face of intensifying international competition, Taiwan needs to stand out as truly exceptional. In addition to the detailed recommendations given in the White Paper by AmCham’s various industry committees, the contents of the WTO Trade Policy Review and the World Bank’s Doing Business report provide concrete advice on the steps Taiwan needs to take to attract increased investment from both domestic and foreign sources. We urge the government to act swiftly on these suggestions to assure Taiwan’s continued economic momentum.

灣自2002年以「台澎金馬個別關稅領域」的名稱正式加入世界貿易組織（W T O），便定期接受「貿易政策

檢討機構」（T P R B）對經貿政策與實務的檢視。台灣之前只在2006年接受過一次貿易政策檢討，但今年夏季第二度接受調查時，WTO報告列出四年來的多項具體進展。T P R B主席稱許台灣成功的外貿導向發展策略，以及可觀的經濟成長與外貿政策所帶來的榮景。 TPRB共33頁的報告列出多項進展：．藉修正法律與強化執法，改善了智慧財產權保障，特別是著作權與專利；．落實稅務改革以簡化稅制、擴大稅基，並降低營業所得稅稅率；．提高法制透明度，包括以公報與網頁公開多數法律與規範；．持續推動自由化，包括服務、投資與海關等領域；．藉經濟合作架構協議（E C F A）的談判，強化兩岸經貿關係，並進一步開放貿易與投資。同時，T P R B報告也強調，台灣必須持續提升國際競爭力，以吸引更多國外直接投資，支撐經濟持續發展。報告建議台灣深化結構改革，取消非正式投資障礙，以及改採國際最佳慣例。舉例來說，報告發現台灣的產品標準 2009年時僅有18%符合國際標準，甚至低於 2005年的25%。除了WTO的報告，本期TOPICS也報導了世界銀行最新的「全球經商環境報告」，兩份報告都是非常有價值的參考：的確，台灣持續改善企業經營環境，但也有存在已久的老毛病，特別是行政管理效能，以及接軌國際最佳慣例。事實上，WTO報告的結論，十分接近台北市美國商會「2010年台灣白皮書」的結論。今年六月發布的白皮書指出，台灣確實明顯改善投資環境；但如同總論「邁向卓越的經濟」所指出的，台灣不能自滿於「優秀」，面對國際激烈競爭，台灣必須放眼「卓越」。不論是白皮書產業優先議題，還是W T O的 T P R B報告與世銀的經商報告，都對台灣吸引國內外投資的應有作為提出明確建議。我們期待政府依此建議採取明快行動，以確保台灣的經濟發展動能持續不斷。 6

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BY Ja n e R i cka R d s

MACROECONOMICS

TIER MORE CAUTIOUS ON GDP FORECAST Taiwan’s economic growth will drop 4.78 percentage points to 4.12% next year due to slowerthan-expected global growth, the Taiwan Institute of Economic Research (TIER) said in mid-November. The institute’s GDP forecast for this year is 8.91%. Its 2011 forecast is below that of the Economist Intelligence Unit, which put the figure at 4.2%, and of Global Insight, which set it at 4.5%. The government’s own forecast is a more optimistic 4.59%. TIER President David Hong told a seminar that on the bright side, unemployment would improve next year and salaries would show positive growth, something Taiwanese residents have not seen for a long time. That would boost consumer confidence and therefore private consumption, which would grow at 2.74%, he said. Private investment, spurred by warming cross-Strait ties and consequent business opportunities, would also be stimulated, but the growth rate would be limited to 1.68% because of the high baseline in 2010, TIER said. The think tank is also warning that the weakening U.S. dollar may

add to inflationary pressure, with the consumer price index likely to rise next year by 2.04%, higher than the expected 1.32% for this year. Hong noted that if the U.S. dollar continues to depreciate, it would cause global raw material prices to rise. TIER further cautioned that the U.S. policy of “quantitative easing” to expand the money supply may somewhat retard Taiwan’s growth. China’s GDP growth is also expected to slow next year, which would impact Taiwan’s exports. TIER foresees exports growing by 6.4% next year, down from this year’s estimated 31.32%, with imports increasing by 6.89%, compared with 37.66% for 2010. The huge growth rates in trade this year were due to the abnormally low levels in 2009. CROSS-STRAIT

TWO SUSPECTS ACCUSED OF ESPIONAGE A Taiwanese military intelligence officer and an alleged double agent for China were taken into custody in early November. Details were unclear, but local media reports said the detained officer, Colonel Lo Chi-cheng, allegedly transferred classified data over several years to a Taiwanese man who has business

Taiwan sTock exchange index & value

THE BLUE LINE SHOWS CHANGES IN TURNOVER AND THE SHADED AREA CHANGES IN THE TAIEX INDEX.

8500

160

8250

150

8000

140

7750

130

7500

120

7250

110

7000

100

6750

6500

6250

October chart soUrce: twse

Unit: ntD billion

interests in China. The data was then reportedly passed on to Chinese intelligence. The two suspects were arrested and their homes searched after investigators reportedly witnessed the two men exchanging classified data in a Taipei street. A spokesman for the Ministry of National Defense said the case would have only a limited impact on military intelligence activities. Nevertheless, the China Times said the incident was probably the highest-level case of espionage involving the military in 20 years.

TEARS AND TANTRUMS AT TOkyO FILM FESTIVAL Taiwanese and Chinese film stars and movie industry executives got into a bitter row in late October just hours before the start of the 23rd Tokyo

Film Festival, one of the most important in Asia. The argument started when Jiang Ping, the head of the Chinese delegation, demanded that Taiwan’s contingent be labeled as “China Taiwan” or “Chinese Taipei” rather than “Taiwan,” and insisted that the Taiwanese were part of the Chinese delegation. Chen Chih-kuan, director of the Taiwan Government Information Office's Department of Motion Pictures, insisted on maintaining the original designation. While the dispute raged, celebrities from both delegations lost the chance to walk the festival’s green carpet on its opening night. Photos of Taiwanese actress Vivian Hsu, sobbing at the disappointment, received wide media attention. Back in Taiwan,

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INDICTMENTS MADE IN JUDICIAL SCANDAL

DISASTER STRIKES — October’s Typhoon Megi brought heavy rains that caused landslides along the coastal highway in Yilan County in northeastern Taiwan, engulfing a tour bus. photo : ap photo/ taiwan oUt

government officials and lawmakers responded by expressing outrage at the Chinese delegation's behavior. Premier Wu Den-yih called it “rude,” while President Ma Ying-jeou’s spokesman issued a stronglyworded statement that the Chinese delegation's attitude had “seriously hurt the feelings of the Taiwanese people and did not benefit the peaceful development of cross-Strait relations.” Beijing tried to play down the incident, but the opposition Democratic Progressive Party said it was a sign that China’s suppression of Taiwan in the international arena remained unchanged. The DPP called for the suspension of all negotiations and agreements with China, including the Economic Cooperation Framework 8

Agreement (ECFA) signed in June. DOMESTIC

36 DIE IN TyPHOON, INCLUDING PRC TOURISTS Deadly typhoon Megi whirled through Taiwan in late October, after killing over a score of people in the Philippines, dumping as much as 1.2 meters of rain in northeast Taiwan and killing 36, including 20 Chinese tourists. The Chinese visitors were killed after their bus, which was driving along the narrow, winding Suhua Highway, was forced off the road and plunged into the sea. Whole sections of the Suhua Highway, which runs along Taiwan’s east coast, were destroyed. Other tour buses and vehicles were stranded on sections of the road cut off by land-

slides. Many passengers were airlifted out by helicopters, as hundreds of rescuers took part in a search for survivors and victims, using ships to scour the nearby waters and excavators to dig in the mud. Agricultural losses from the typhoon were estimated at NT$95 million (US$3.2 million), the National Fire Agency said. In early November, around 2,000 Hualien residents protested in Taipei over what they said was the Suhua Highway’s unsafe conditions. Just over a week later, the Environmental Protection Administration’s environmental impact assessment committee (EPA) gave conditional approval to plans to improve the highway, one of the fastest actions in the history of Taiwan environment impact assessment procedures.

Three senior Taiwan High Court judges and a former Kuomintang county commissioner were indicted in early November on corruption charges in Taiwan’s worst judicial scandal in over a decade. The Special Investigation Panel of the Supreme Court Prosecutor’s Office said it was seeking a prison term of 24 years and a fine of NT$1.5 million (US$50,000) for High Court Judge Tsai Kuang-chih, who was accused of taking bribes from former Miaoli County Commissioner Ho Chi-hui, who was also indicted. They also asked for 18 years’ imprisonment and a NT$1.5 million fine for High Court Judge Chen Jung-ho and 11 years and a NT$2 million (US$66,000) fine for High Court Judge Lee Chun-ti, both charged with graft. It was following the judges’ sensational arrest in July that President Ma announced plans for the government to set up an anti-corruption agency. Ho is charged with bribing the High Court judges in an attempt to overturn a guilty verdict he received from a lower court for taking kickbacks. In another graft case, prosecutors requested 11 years’ imprisonment for former Taiwan High Court judge Fang A-sheng.

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CHEN SHUI-BIAN FACES 11 TO 19 yEARS IN JAIL An announcement from Taiwan’s Supreme Court in mid-November means that former President Chen Shui-bian will be spending at least 11 years behind bars. The appellate court handed down verdicts on two cases, with sentences amounting to combined prison time of 19 years. The verdicts are not subject to further appeal. A Supreme Court spokeswoman told TOPICS that the court would weigh arguments to be presented by the prosecutors before deciding whether the sentences would be served concurrently or successively. In one case, the proindependence former president and his wife, Wu Shu-jen, were sentenced to 11 years in prison on charges of accepting bribes relating to a land deal in Lungtan, Taoyuan County. In the other, they were sentenced to eightyear terms for accepting bribes in exchange for helping a businesswoman secure an appointment at a securities firm. But the Supreme Court also sent three verdicts back to the High Court for reconsideration, citing contradictory and inconsistent reasoning, among other factors. Originally Chen was given a life sentence for various corruption cases by

the Taipei District Court in September 2009. Chen has been detained since December 2008, while wheelchair-bound Wu has remained free for reasons of ill-health. The former president is scheduled to serve out his sentence at the Taipei Prison, while Wu will be sent to a women’s prison in Taichung or Kaohsiung. Her farewell meeting with her husband attracted much local media attention. I N T E R N AT I O N A L

CITy AIRPORT FLIGHTS TO TOkyO RESUME Flights between Taipei’s in-city airport, Songshan Airport, and Tokyo’s Haneda Airport resumed in late October after a break of almost 32 years, as part of a move to further boost tourism and economic ties with Japan. Previously, the air connection existed only between the Taoyuan International Airport and Narita International Airport, both located far outside city limits. The new flights will save commuting time and, said Taipei Mayor Hau Lung-bin, will contribute to development of a “golden Northeast Asia flight circle” in conjunction with flights between Songshan and Shanghai’s Hongqiao Airport. Hau also said the government is hoping to launch flights between the Songshan Airport and

Gimpo Airport close to Seoul. Former Japanese Prime Minister Shinzo Abe visited Taipei for the opening of the route, while also meeting with President Ma, other government officials, and opposition political figures. BUSINESS

AWARDS GIVEN FOR LOCAL PROCUREMENT At the Ministry Economic Affairs’ annual Appreciation Banquet for the international procurement offices (IPOS) of multinational companies procuring large quantities of goods from Taiwan, Minister Shih Yen-Shiang

presented the first-place Excellent Procurement Model Award for 2010 to Hewlett-Packard (HP). The second-place award went to Dell, third place to Toshiba, fourth place to Samsung, and fifth place to Sony. In the Special Procurement Model Award category, Nvidia was the first-place winner, Broadcom second, and Qualcomm third. HP was also given the Collaborating Partner Award, and shared the R&D Innovative Partner Award with IBM, Sony, and Synopsys. Corning Display Technologies won the New Development Partner Award, and Google, IBM, and Microsoft shared the

President Ma Ying-jeou greets former Japan Prime Minister Shinzo Abe, who came to Taipei for ceremonies marking the launch of direct flights between Taipei's Songshan Airport and Tokyo's Haneda Airport. photo : ap photo/ sUn chUng -ta/p ool

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WANT WANT GROUP ACQUIRING CNS A consortium led by

economic indicaTors Unit: US$ Billion Current Account Balance (2010 Q2) Foreign Trade Balance (Jan-Oct) New Export Orders (Oct.) New Export Orders (Jan.-Oct.) Foreign Exchange Reserves (end Oct.)

10.56 21.2 35.98 298.76 383.84

Year Earlier 10.29 25.5 30.84 227.7 341.22

Unemployment (Sept.) Overnight Interest Rate (Oct. 29) Economic Growth Rate (2010)F Change in Industrial Output y-on-y (Jan-Aug)p Change in Industrial Output y-on-y (Jan.-Aug) Change in Consumer Price Index y-on-y (Oct.) Change in Consumer Price Index y-on-y (Jan.-Oct.)

5.05% 0.23% 8.24% 23.40% 32.70% 0.56% 0.88%

6.04% 0.10% -1.91% -8.95% -20.35% -1.89% -0.87%

note:

p: preliminary f: forecast

soU rces: Moea, Dgbas, cbc, boFt

2010

Imports

Europe

34.2

15.68 17.96

2009

2010

21 23.6

U.S.

2009

205.2 226.44

2010

23.5

2009

TOTAL

15.8 15

42.9

28.5

2010

11.8

30.29

66.93

2009

ASEAN

138.1 163.6

Japan

95.01

HK/China

20.4 25.8

Air Products, a leading U.S. company supplying specialty chemical and gas products for industrial uses, announced in late October that it signed a letter of intent with Taiwan’s Ministry of Economic Affairs. The document signified the company’s commitment to identify investment opportunities in Taiwan’s semiconductor, solar energy, and TFT-LCD manufacturing industries, as well as to foster long-term cooperation with Taiwanese companies and research institutes, Air Products said

Taiwan's JanuarY- ocTober Trade Figures (Year on Year comParison)

14.2 19

AIR PRODUCTS SIGNS LETTER OF INTENT

in a statement. The two sides will also work collaboratively with Taiwan’s Industrial Technology Research Institute (ITRI) in the development of gas and semiconductor fluid cleaning technologies. The LOI was signed by Taiwan’s Deputy Economics Minister Lin Sheng-Chung and Air Products CEO John E. McGlade at the company’s global headquarters in Allentown, Pennysylvania. “We are especially pleased with the growth of Air Products San Fu, our Taiwanese affiliate, which is today the largest industrial gas company in Taiwan,” said McGlade, who served as vice president of Air Products San Fu Industrial Gas Division based in Taipei in the late 1980s.

20.02

Best Value Creation Award. “AmCham congratulates the winning companies among our members – HP, Dell, Sony, Broadcom, Qualcomm, IBM, Synopsys, Corning Display, and Microsoft,” said AmCham President Andrea Wu.

2009 Exports

Taiwan’s Want Want Group, a maker of instant noodles and other snacks that has recently been investing in media businesses, said in late October it would purchase a majority stake in Taiwan’s leading television cable company, China Network Systems (CNS) from the private equity company MBK Partners. The announcement followed an auction in which Want Want competed against such other bidders as Bain Capital, Permira, and Macquarie, the Financial Times reported. The paper quoted sources as saying the deal was worth US$2.4 billion, which would make it the biggest cable television deal in Asia.

JEFFREy kOO JR. GETS NINE yEARS IN PRISON Former Vice Chairman

2010

2009

2010

Unit: US$BN Source: BOFT

of Chinatrust Financial Holdings Jeffrey Koo Jr. in mid-October was sentenced by the Taipei District Court to nine years in prison on charges of driving down the prices of shares of the Mega Financial Holding Co. during an attempt by Chinatrust to take over the rival institution in 2005 and 2006. The court said he manipulated Mega’s share price using structured notes in an effort to have Chinatrust combine with Mega to create Taiwan’s secondlargest financial group by market value. Koo’s lawyer said he would appeal the ruling. The Koo family is one of Taiwan’s most powerful clans; Jeffrey L.S. Koo, the former chairman of Chinatrust and the defendant’s father, is one of Taiwan’s most prominent business figures.

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Issue s

More Gains in the Ease of Doing Business Taiwan continues to climb up in the rankings in the annual World Bank survey.

he annual Doing Business report issued by the World Bank is always a useful indicator of how well Taiwan is doing in providing a business-friendly environment capable of attracting both local and foreign investment. The recently released report for 2011 continues the trend of constant improvement that has been evident in recent years. Overall, Taiwan – referred to as Taiwan (China) by the World Bank – was ranked in 33rd place among the 183 economies surveyed, its best showing ever. When the 2010 report was issued a year ago, Taiwan was announced as being in 46th place, a big gain from the mediocre ranking as number 61 the year before. Due to changes in methodology in the survey, however, Taiwan’s position for 2010 was recalculated as number 34 – probably largely because the “Employing Workers” category in which Taiwan came out poorly was dropped from the survey. For the first time, the survey included a section measuring the degree of change in countries’ regulatory environment over the past five years. In this exercise, Thailand and Hong Kong had the highest scores in the region, while Taiwan was slightly behind Korea but ahead of Malaysia, the Philippines, and Japan. Reviewing the past year in particular, the report credits Taiwan with some major progress, including easing “business start-up by reducing the time required to check company names, register retirement plans, and apply for health, pension and labor insurance,” reducing the corporate income tax rate, and simplifying “tax return forms, rules for assessing corporate income tax, and the calculation of interim tax payments.” But within the Asian region, Taiwan continues to rank behind a number of other countries in the overall ease of doing business. Singapore for the fifth straight year took the top spot worldwide, while Hong Kong passed New Zealand to move from third place into second. Other nearby countries ranking ahead of Taiwan were Korea (16th), Japan (18th), Thailand (19th), and Malaysia (21st). Of the nine separate categories by which economies were evaluated this year, Taiwan did worst (95th place) in “Dealing with Construction Permits.” Using the example of building a warehouse, the survey found that applicants here must go through 28 different procedures, such as obtaining permits and undergoing inspections, compared with an average of 18.7 procedures in the East Asia & Pacific region as a whole, and only 15.8 procedures for OECD countries. The cost in Taiwan of going through the approval process (as a percentage of per capita income) was well below the regional average, but considerably higher than the level in developed countries. Another category in which Taiwan was relatively weak (90th

SUMMARY OF TAIWAN'S PERFORMANCE Ease of… 2011 Rank 2010 Rank Doing Business (Overall) 33 34 Starting a Business 24 28 Dealing with Construction Permits 95 94 Registering Property 32 30 Getting Credit 72 69 Protecting Investors 74 73 Paying Taxes 87 96 Trading Across Borders 17 15 Enforcing Contracts 90 90 Closing a Business 10 11 Note: 2010 results have beeN readjusted siNce release of last year's report

source: doiNg busiNess 2011

經商環境持續改善台灣在世銀「經商環境報告」的排名再提升

世

界銀行每年的「全球經商環境報告」總能明確指出，台灣過去一年是否盡了力，以改善經商環境、吸引國內外投資。最近公布的2011年度報告，再度反映台灣近年的持續努力。雖然世銀仍以台灣（中國）稱呼，但整體來說，台灣的排名已是183個經濟體的第33名，創下歷史新高。世銀去年發布2010年度報告時，台灣原本排名第46 名，已經遠優於2009年度的第61名。不過，因為分析方式的改變，世銀今年重新修正2010年的排名，將台灣改列34名。排名上修的主因，應是台灣表現最差的「勞工雇用」，已經不再納入評比。 2011年度的報告，首度納入法規環境的專節，以比較各國過去五年的改變程度。泰國與香港表現最佳，台灣稍微落後南韓，但領先馬來西亞、菲律賓與日本。專就去年來看，世銀年報列出台灣幾項重大改革：簡化新創事業程序，以更短時間完成公司名稱核對、勞工退休準備提交、健保勞保勞退的加保；降低營利事業所得稅率；報稅程序、企業收入計算方式、稅款扣繳計算也獲得簡化。但與其他亞洲國家相比，台灣的排名仍落後於許多鄰國：新加坡連續五年居全球首位，香港取代紐西蘭成為第二；南韓第16名，日本第18，泰國第19，馬來西亞第 21。

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Issues place) was “Enforcing Contracts,” which looks at the efficiency of the judicial system in resolving a commercial dispute. In Taiwan, the plaintiff must go through 47 different procedures to bring suit to enforce a claim, as against an average of 37.3 for the region and 31.2 for the OECD – though significantly in Taiwan those steps could be completed more quickly and at less cost than in the other areas. Two years ago, after Taiwan embarrassingly was ranked in 119th place in the “Starting a Business” category, the Council for Economic Planning and Development (CEPD) assigned a task force to study ways to simplify the process. As a result, the number of days needed to complete the steps for opening a new company was cut from 42 days to 23, and this year’s report found it has now been reduced further to only 15. Taiwan now ranks in a respectable 24th place worldwide in this category. “AmCham hopes that the same kind of gains could be made in some other categories where Taiwan currently is lagging behind,” says Andrea Wu, the Chamber president. “The Doing Business survey provides a very practical guide to what needs to be done to achieve greater governmental efficiency. Now it’s just a question of making full use of that resource.”

— By Don Shapiro

2011年採用的九項標準中，台灣在「營建許可」項目的名次最低，全球第95。以倉儲設備營建為例，報告指出申請必須經過取得許可、完工查驗等28道手續，但亞太區平均只要18.7道手續，經濟合作暨發展組織（OECD）會員國平均更只要15.8道。台灣的營建許可申請成本，以佔國民平均所得的比例而言，雖然遠低於區域平均，但卻明顯高於已開發國家。台灣表現較弱的項目還有全球第90名的「契約執行」，其評比標準是司法機關解決商業糾紛的效率。台灣必須經過47道程序才能執行判決，亞太平均為37.3 道、OECD國家31.2道；不過，在台灣，與其他機關作業程序相比，完成各項司法訴訟程序的時程較短，費用也較低。值得一提的是「新創事業」項目。兩年前，台灣的全球排名只有119名，行政院經建會自此組成專案小組加緊簡化行政程序。之後，新創事業申辦程序的總天數由 42天縮短為23天，而今年的報告發現，總天數已經又縮短到15天。台灣2011年度的排名已經提升到全球第24 名。台北市美國商會執行長吳王小珍表示，「商會希望政府也能積極改善那些表現仍然不佳的項目」，「世銀經商報告是政府提升效能的務實指標，剩下的問題只在是否願意充分利用」。 — 撰文／沙蕩

Cutting Greenhouse 企業的溫室氣體減量計畫 Gases at the Company 「溫室氣體減量法」立法目標之一，是在 Level 2025年之前，將台灣的總排放量降回到 A joint chamber presentation reports on what one petrochemical producer has done to shrink its carbon footprint.

he draft for a proposed Greenhouse Gas Reduction Act, which calls for decreasing Taiwan’s CO 2 emissions to the level of 2000 by 2025, has been firmly stuck in the Legislative Yuan since 2008. But that hasn’t stopped the China-American Petrochemical Co. (CAPCO), a joint venture between BP and the state-owned CPC Corp. Taiwan, from beginning voluntarily to cut down on greenhouse gas emissions. In a recent presentation to a luncheon meeting held jointly by AmCham Taipei and the European, British, French, and AustraliaNew Zealand Chambers, CAPCO president Alexander “Sandy” Duncan made the argument that investing in reducing a company’s carbon footprint can actually benefit its bottom line. In the talk, entitled “Corporate Sustainability – Meeting the Energy, Greenhouse Gas, and Carbon Trading Challenge,” he noted that the issue is important for Taiwan because the island has only 0.33% of the world’s population but accounts for 1% of global CO2 emissions. President Ma Ying-jeou and his government staunchly support

2000年的水準；但草案2008年送進立法院後，迄今仍然無法完成審查。儘管如此，部分企業已經先走一步，例如B P與台灣中油合資的中美和石油化學（CAPCO）就決定自行推動溫室氣體的減量目標與計畫。

台

北市美國商會與歐洲、英國、法國、澳洲紐西蘭商會近期合辦的一場午餐會上，中美和總經理鄧肯指出，與外界印象相反，投資降低碳排放技術與設備，事實上有利企業經營。名為「企業永續經營–面對能源、溫室氣體與碳交易」的演說中，他指出溫室氣體議題對台灣非常關鍵，因為台灣人口雖然僅佔全球的0.33%，但卻製造出全球1%的二氧化碳排放量。馬英九總統與行政部門積極推動溫室氣體減量法，但立法委員的態度遲疑，因為包括石化在內的國內產業強烈反對，認為此法將嚴重影響台灣經濟競爭力。美國商會基礎建設委員會曾在「台灣白皮書」中指出，政府的目標設得太高，最終將難以落實。但就企業而言，鄧肯以CAPCO的經驗主張，石化業者並非不能兼顧溫室氣體減量與合理成本效益。他

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Issue s

passage of the act, but legislators have been hesitant to enact it in the face of heavy opposition from local industries, including the petrochemical sector, which fear an adverse impact on Taiwan’s economic competitiveness. In AmCham’s annual Taiwan White Paper, the Chamber’s Infrastructure Committee has termed the government’s plans over-ambitious to the point of being impractical. But at the corporate level, Duncan said CAPCO’s experience proved it was possible for petrochemical companies to reduce their greenhouse gas emissions and also be cost-efficient. “There are many businesses in the petrochemical sector who do not believe this is possible,” he said. “We can do this and also improve financial returns and employment.” Duncan said CAPCO was the first company in its industry to begin managing emissions, setting up a greenhouse gas taskforce in 1999. It has since been engaged in carbon trading within the BP system in Europe on a quarterly basis, and reports its greenhouse gas inventory to the Taiwan government yearly. CAPCO, 61.43% owned by BP, considers energy efficiency in all its operations, Duncan says, for example by including the cost of dealing with the carbon footprint when making investment decisions. The company, which operates factories in Kaohsiung and Taichung, has reduced its greenhouse gas intensity by 30% between 2003 and 2009 and actually saved money in the process, winning the BP regional Helios Awards for its greenhouse gas program in 2005 and for its Energy Program in 2007. Duncan’s presentation mentioned that the company has saved large amounts of money on electric power through a project to revamp its reactors that was conducted between 2004 and 2006. The installation of heat-recovery facilities from 2005 to 2009 saved substantial amounts of both liquid natural gas and electric power. In all, the various improvement projects involved capital expenditure of US$37 million, but produced an average annual internal rate of return of 45%. The company plans to spend a further US$25 million over the next two to three years in reducing its carbon footprint, said Duncan. From 2010 to 2012, it will also contribute to the Greenhouse Gas Inventory registry on the Environmental Protection Administration website and continue to come up with other energy management plans. While Taiwan has a long way to go in improving its energy efficiency, Duncan said, its proficiency in high tech and the existence of government support means it is well-poised to develop green energyrelated industries, such as LED lighting and hydrogen fuel cells. As part of its investment in alterative energy sources and management, CAPCO is taking part in a Bureau of Energy project for carbon sequestration – the effort to capture carbon from the atmosphere and store it permanently where it will not affect global warming. In preliminary studies, it is examining geological structures on the western side of the island, such as abandoned or dried-up gas fields, as potential storage sites. But Duncan stressed the volatility of the alternative energy business. “Uncertain price environments influence decisions on whether to move into alternative energy or not,” he said. Although it would not be feasible for a petrochemical company to move completely to reliance on alternative energy, he concluded, CAPCO’s experience shows that making existing energy systems more efficient through “good housekeeping and management” presents an effective way to reduce a company’s carbon footprint — By Jane Rickards

說，「許多石化業者質疑可行性，但CAPCO確實達成，同時還改善財務收支與勞工聘雇」。鄧肯強調，CAPCO是第一個著手管理排放量的石化業者，早在1999年就成立溫室氣體專案小組。 CAPCO除了每季透過BP在歐洲的體系進行碳交易，也每年向台灣政府回報溫室氣體總量。鄧肯指出，B P對C A P C O的持股達61.43%，要求每項業務都必須考量能源效益，例如投資決策就必須納入碳足跡處理成本。高雄與台中都有設廠的CAPCO，2003年至2009年間，已經減少30% 的溫室氣體密集度，而且在過程中達到降低成本的目標；2005年的溫室氣體計畫與2007年的能源計畫，都贏得B P亞太區的太陽神獎（H e l i o s Award）。鄧肯表示，2004年至2006年的反應爐翻修計畫，大幅節省了CAPCO電費支出；2005年至2009 年裝置熱回收設備，同時節省大量液化天然氣與電能。整體而言，各項改善計畫雖然花掉3700萬美元，但年平均內部投資報酬率達45%。鄧肯指出，CAPCO未來兩至三年已編列2500萬美元的預算，以進一步減少碳足跡。2010年至 2012年，CAPCO仍將回報至行政院環保署的「國家溫室氣體登錄平台」，並持續提出其他能源管理計畫。鄧肯認為，台灣的能源效率雖然有待積極提升，但有精進高科技與政府支持，代表台灣很有機會發展綠能相關產業，如L E D照明與氫燃料電池。 CAPCO發展與管理替代能源的投資項目，包括參與經濟部能源局的碳封存計畫，自大氣中捕捉二氧化碳，然後將其永遠存放地底或其他地點，避免全球暖化加劇。初步研究階段，計畫小組探勘本島西海岸可能存放地點的地質結構，包括廢置或耗竭的天然氣井。不過鄧肯也強調，替代能源產業波動極大，「價格變動難以捉摸，會影響業者投資替代能源的意願」。他說，雖然石化業者不可能將業務全部轉往替代能源，但CAPCO的經驗顯示，以優良經營管理提升現有能源系統的效能，的確能有效減少企業產生的碳足跡。

— 撰文／李可珍

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ADVERTORIAL

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COVER STORY

Update on the iTaiwan Projects 愛台十二建設的進度 phoT o : TaoYuan aIrp orT

uring Ma Ying-jeou’s presidential election campaign and in the early period of his administration in 2008, much was heard about his plans for the iTaiwan 12 infrastructure projects. In seeking to review the progress of the projects, Taiwan Business TOPICS finds that it is difficult to make a clear assessment because of the broad scope of the program and the sometimes imprecisely defined nature of some of the initiatives. But the good news is that the number and value of projects open to the private sector are due to increase.

馬英九競選總統期間與2008年剛就任後，愛台十二建設經常成為討論焦點。但試圖追蹤相關進度的過程中，TOPICS雜誌發現很難做出確切評斷，因為建設項目太廣、界定有時又不夠明確。但好消息是，開放給民間承包的項目與金額將會持續增加。 BY JANE RICKARDS

撰文／李可珍

phoTos : puB lIc c ons Tr uc TIon c oMM I ssIo n

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Cover StoRY Creating a “fast and convenient islandwide transportation network” is one of the projects’ priorities.

he global financial crisis took its toll on export-reliant Taiwan, but if there was any silver lining, it was that the government was impelled to look for ways to stimulate growth through spending on infrastructure, where there was plenty of opportunity for new development. The iTaiwan 12 Projects, originally part of President Ma Yingjeou’s election campaign platform and consisting of various existing government plans plus the Kuomintang administration’s new ideas, f o r m e d M a ’s g r a n d v i s i o n f o r modernizing Taiwan. The name iTai-

wan was something of a bilingual pun, since in Mandarin it sounds very much like “love Taiwan,” while in English the “i” can be taken to represent “investment” or “infrastructure.” The projects became even more prominent during the financial crisis and were a focus of the 2008 Taiwan Business Alliance Conference, where officials highlighted the projects in a bid to solicit foreign investment. The overall price tag as put at NT$3.99 trillion (US$133 billion) over eight years, with NT$$2.65 trillion (US$88.3 billion) investment from the government and NT$1.34 trillion

球金融風暴影響依賴外銷的台灣經濟，但如果說有任何正面影響，那應該是政府被迫開發基礎建設以振興經濟，畢竟這塊領域還有很大的發揮空間。「愛台十二建設」代表馬英九政府對台灣進一步現代化的願景，最早是在總統大選期間提出，除強化已有公共建設項目，也增加了國民黨內的新構想。愛台十二建設的命名利用中英文的諧音，中文取其「愛台」，英文的「 iTaiwan」則代表投資（investment）與基礎建設（infrastructure）。金融風暴使愛台十二建設更顯重要，也成為「2010投資台灣高峰會」的焦點，因為政府決定將相關計畫開放外資參與。總體經費約為八年3.99兆新台幣（1330億美元），政府負擔 2.65兆元，民間募資1.34兆元。但以2010年現在的眼光來看，在台外商多半認為進展有限。因為計畫涵蓋範圍太廣，從桃園航空城、智慧台灣，到農村再生、海岸新

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(US$44.7 billion) from the private sector. But fast-forward to 2010 and the impression in the foreign business community is that not much has been done. In fairness, the projects are so broad-ranging (see the accompanying box) – from expanding the Taoyuan Airport, to developing ICT industries, to rural village revival, seashore regeneration, flood control, and river rectification (not covered in this story for reasons of space) – that there is no clear answer as to whether this impression is in fact correct. Some iTaiwan 12 projects are quietly proceeding under the radar, such as plans to upgrade the international airport, while others are being relatively ignored due to the stellar recovery of exports and complications relating to party politics. One thing that is clear is that the government’s focus within the iTaiwan projects has shifted to improving tourism infrastructure in light of the opening

生、防洪治水（此項目因本文篇幅有限不做討論），實在難以判斷外商印象是否完全符合事實。部分項目在外界不太關心的狀況下持續推動，例如桃園國際機場的擴建，但其他項目則相對停滯，因為外銷力道已經恢復，或是政治局勢導致無以為繼。不過很明確的一項調整是，愛台十二建設最受政府重視領域已經變成開發觀光基礎設施，這是因為開放中國觀光客以來，今年一至八月已經有創記錄的360萬外籍旅次。 11月底的五都選戰，甚至是2012年的總統大選，也是影響因素之一。台灣經濟研究院景氣預測中心副主任孫明德表示，感覺上政府的重心都放在最有能見度的項目上，例如交通改善與新的大眾捷運系統進度很快，因為中央與地方政府都能因而提高政績，但民眾不容易察覺的下水道系統，進度就慢很多。中華經濟研究院副院長王健全則說，討好選民必須靠短期計

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what are the i-taiwan 12 projects?

1. fast and convenient islandwide transportation network 2. Kaoshiung port-city reconstruction 3. taoyuan international air city 4. central region new High-tech industrial cluster program 5. intelligent taiwan to Chinese tourists and the record 3.6 million foreign visitors in the first eight months of this year. The end-of-November municipal elections and even the 2012 presidential election are also playing a part. Gordon Sun, an economist with the Taiwan Institute of Economic Research (TIER) and member of a Ministry of Economic Affairs (MOEA) advisory council, says his impression is that the government is focusing on aspects of the iTaiwan 12 projects that are most visible to the public. For example, improvements in transportation systems and new mass

rapid systems (MRTs) are progressing most rapidly, as this gives political mileage to officials at the local or central government level, while things like sewage systems, which are hidden from the public eye, are progressing much more slowly. The need to impress the electorate means that “the government goes for short-term rather than longterm projects,” adds Chung-hua Institution for Economic Research (CIER) vice president Wang Jiannchyan. Paul Lee, chairman and CEO of Global Construction International and co-chair of AmCham’s

畫，而非長期計畫。華眾營造工程公司董事長兼執行長、台北市美國商會基礎建設委員會共同主席李雨朴指出，短視近利的做法將導致未來的缺水。他說，「新加坡的海水淡化設施已經完備，但台灣說了15年，卻一點成績都沒有」。愛台十二建設僅針對離島提出海水淡化建設。而且，受制於政府財政狀況，基礎建設的經費似乎還在減少。中經院的王健全表示，官方數據是，預算赤字為國內生產總值（GDP）的33%，約 4160億美元；但非官方的數字高很多，加入退休金等隱藏債務，赤字可能在G D P的50%至100%之間。台經院的孫明德指出，除了2005年與2009年金融危機期間，台灣的公共投資自1998年來年年減少，「每一年都低於前一年度，代表政府用於公共建設的錢並沒有民眾以為的那麼多」。台經院分析行政院主計處的資料後認為，公共建設預算今年年減2.41%，明年年減3.85%。國營企業的投

6. industrial innovation corridors 7. urban and industrial park regeneration 8. farm village regeneration 9. coastal regeneration 10. Green forestation 11. flood prevention and water management 12. sewer system construction

資今年雖成長8.75%，但明年負成長6%。 2008年時負責愛台十二建設的行政院經建會，要求TOPICS詢問行政院公共工程委員會，因為相關業務已經移交。但很多問題，工程會都要求去問經建會，而經建會的回答是，政府持續檢討，並希望增加2000億新台幣的民間參與。台經院的孫明德認為，政府與民間合作的「興建–營運– 移轉」（B O T）等方式，未來將取代政府直接投資。

貪瀆減少幾位受訪者認為，馬英九執政的正面發展之一是，公共建設的貪瀆行為已經比以前少很多。栢誠國際的台灣區總經理焦中和指出，台灣在國際透明組織（TI）貪腐印象指數（CPI）的排名已有改善。2009年度，台灣排名全球第33，優於2009 年的第37名與2008年的42名；台灣在亞太區排名第六，落後於新加坡與澳洲等國。焦中和表示，

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Cover StoRY The building of sewage connections and treatment plants has gone more slowly than planned.

infrastructure committee, says he fears that this short-sightedness may lead to a future water shortage. While Singapore has a water desalinization infrastructure in place, “Taiwan has been talking about it for 15 years but nothing major has been done,” he says. (The iTaiwan projects touted in 2008 mentioned desalinization plants only for the offshore islands.) Strapped for cash, the government in fact seems to be decreasing its spending on infrastructure. Officially the government’s accumulated fiscal deficit equals 33% of GDP, which stands at around US$416 billion, says the CIER’s Wang. The unofficial figure may be even higher, anywhere between 50% and 100% of GDP due to hidden debts such as pensions, he notes. Aside from 2005 and a peak in 2009 during the financial crisis, Sun points out,

public investment has shown negative growth every year since 1998. “Each year it has been smaller than the year before – government spending is not nearly as much as what people think.” This year, for example, growth in public investment is forecast to stand at -2.41% and next year at -3.85%, according to TIER figures derived from data from the Directorate General of Budget, Accounting and Statistics. Investment by public enterprises, while growing 8.75% this year, is forecast to be -6% next year. The Council for Economic Planning and Development (CEPD), which in 2008 took the lead in coordinating the iTaiwan projects, referred TOPICS to the Public Construction Commission (PCC), which it said was now the responsible agency. The PCC, in turn, referred many questions back to the CEPD, where-

貪瀆問題改善，台灣在栢誠國際總部的風險評估中也獲得更好成績，這是因為總部認為35名以內都算是非常良好。台經院的孫明德認為，台灣如果能夠成立廉政署，情況應該還會更好。然而，外界仍不免質疑政府能否推動愛台十二建設的效率。所有項目中，馬政府最關心的莫過於「全國便捷交通網」，排除機場捷運後、總經費達1.9兆新台幣，應是所有項目中預算最高的。但栢誠國際的焦中和指出，台中捷運五年前就已經宣布，中國也在同時間開始規模更大的武漢廣州高鐵計畫；然而，武廣高鐵已經通車一年，但台中捷運今年九月才開工。建設遲緩的原因之一台灣高度政治化的環境以及頻繁的選舉，讓執政者太過在乎對手陣營的批評。不論是中央或地方政府的政黨輪替，也往往讓公共建設突然轉彎，讓業者難以落實長期規劃。此外，競選時的部分主張，真正執政後才會發現很難落實。撥款程序也很費時。中經院的王健全指出，立

upon a CEPD spokesperson said in brief comments that the government has been reviewing the cases and hopes to raise the private investment portion by NT$200 billion (US$6.6 billion). Gordon Sun predicts that public-private partnership options such as build-operate-transfer (BOT) are more likely to predominate in future rather than direct government investment.

Decline in corruption One positive aspect since President Ma took office, several interviewees said, is that the corruption that in the past had

法院批准愛台十二建設相關經費的速度太慢–經建會資料顯示，2008年通過1106億新台幣，2009 年則為1700億新台幣。王健全指出，就算預算通過，政府還必須經過公共工程發包程序，又要花更多時間。受訪者認為，官僚體系推動公共工程計畫總是非常保守、怕擔風險。中經院的王健全認為，政府應該獎勵績效良好的公務員，並強化跨部會協調，因為每個部會都很本位主義，看不到整體情勢。華眾的李雨朴抱怨，政府在梅姬颱風過後決心推動「蘇花改」，但20年來的政府都在說要做、卻什麼也沒動，非要台灣民眾與中國觀光客發生死亡意外，才願意加速推動。台灣公共建設難以擴大國際參與的主要問題則在，許多國際廠商難以跨越文化與法規的無形障礙。愛台十二建設中的「桃園航空城」雖然進度緩慢，但政府顯然非常重視。包含第三航廈增建在內的航空城計畫，除了必須使機場能以國際水準

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infrastructure Improvement of the island’s railway system, especially on the east coast, is also under way.

often plagued infrastructure projects has decreased greatly. Robert Chiao, Taiwan general manager of Parsons Brinkerhoff International, a leading engineering consulting firm, points to Taiwan’s improved ratings in Transparency International’s Corruptions Perceptions Index. Ranked 33rd in the world this year, up from 37th in 2009 and 42nd in 2008, Taiwan this year occupies 6th place in the Asia-Pacific region, behind such nations as Singapore and Australia with very clean reputations. This result has affected Taiwan positively in risk assessments conducted by Parson Brinkerhoff’s head office, says Chiao, as the company views any ranking above 35 as excellent. TIER’s Sun notes that this situation may improve further if Ma proceeds with plans to set up an anti-corruption agency. Government efficiency in carrying out the iTaiwan program still comes in for criticism, however. Among the 12 broad project categories, the government is putting particular emphasis on the “fast and convenient islandwide transportation network,” and at NT$1.9 trillion or US$64 billion (excluding the airport

MRT), also appears to be spending the most on it. But Chiao notes that Taichung’s MRT project was announced five years ago, around the same time that China began construction of its much bigger Wuhan-Guangzhou highspeed rail system connecting the central and southern regions. The Chinese rail system has been up and running for almost a year, while work on the Taichung MRT only began this September. Among the many reasons cited for the inefficiency is the over-politicization and frequent elections in Taiwan, which makes officials ultra-sensitive to criticism from competing politicians. A shift in administration from one party to another – either nationally or in a given city or county – sometimes also leads to sudden changes in infrastructure policy, making it difficult for companies to adhere to long-

服務日增的國際旅客，還必須解決現有航廈設施老舊的問題。11月初的兩次停電，其中一次導致行李轉盤系統停擺一個半小時，讓機場設施再度成為批評焦點。國營的「桃園國際機場公司」11月一日正式接手機場營運管理。栢誠國際的焦中和說他很期待，因為交通部自此將能聘雇專業人士處理機場計畫、設計、營建等問題，不必將就超級保守的官僚。負責桃園機場的交通部政務次長葉匡時認為，營運結構改變將能增加彈性，但也保留政府資源介入的空間。但他希望民眾能更有耐心，因為改頭換面還需要幾年的時間。華眾的李雨朴認為，台灣工程師都很在乎細節與技術面，但外商在概念設計上明顯較強。機場園區綱要計畫的擬定者是日本的野村綜合研究所、台灣的中興工程顧問公司、德國法蘭克福機場管理機構Fraport AG。交通部的葉匡時說，綱要計畫九月一日已經送交立院審議。雖然相關預算還需立院同意，但葉匡時認為立院應該不會反對，畢竟民眾都瞭解桃園機場的確落後國際。

term plans. In addition, some projects that originate as campaign promises in the end turn out not to be feasible. The appropriation process is also time-consuming. CIER’s Wang says the Legislative Yuan has been very slow to pass the budget for the iTaiwan projects; according to the CEPD, around NT$110.6 billion (US$3.7 billion) worth was passed in 2008 and NT$170 billion (US$5.7 billion) in 2009. Even after the budget is passed, “the government must create public procurement plans, that also takes time,” Wang says. Government bureaucrats also tend to be highly conservative and risk-adverse when planning infrastructure projects, interviewees said. Wang suggests that public servants should be rewarded for good performance, and that cross-ministerial coordination needs to be strength-

A pumping station constructed as part of the Flood Prevention and Water Management portion of the projects.

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Cover StoRY ened. “The ministries are too egocentric – there is no big picture,” he says. Pointing to the plans to upgrade the Suhua highway recently announced by the government in the wake of a deadly typhoon, Paul Lee notes that government planners had talked about improving the highway for 20 years – but nothing was done until over a score of people were killed, including Chinese tourists, and then suddenly government processes were fast-tracked. Another key problem faced in internationalizing Taiwanese infrastructure projects is that many foreign companies face cultural and regulatory barriers if they want to get involved (see sidebar). One iTaiwan project that is progress-

ing slowly – but that the government appears to be taking quite seriously – is the Taoyuan International Airport City, which includes plans for a third terminal. Besides the need to accommodate growing numbers of tourists at the airport at international standards of service, public complaints about the old-fashioned nature of the facilities have been numerous. Two power blackouts in early November, including one in which baggage-handling systems came to a complete halt for one-and-a-half hours, were widely publicized. On November 1, airport operations were transferred to a new staterun corporation. Chiao says he is opti-

mistic about this change, as it means the Ministry of Transportation and Communications (MOTC) can now recruit airport professionals to work on planning, design, and construction, rather than rely on the usual ultra-conservative bureaucrats. Yeh Kuang-Shih, the MOTC vice minister who is heading the new company, adds that the revised operational structure provides more flexibility, while still leaving the government in a position to inject additional resources if necessary. But he urges the public to be patient, saying “It may take a few years to complete the transformation to a new image.” While Taiwanese engineers tend to be

Upgrading the Taoyuan International Airport and improving road and rail access to the airport are key iTaiwan features.

phoT o : TaoYuan aIrporT

桃園機場第三航廈桃園機場第三航廈同樣受到廣泛注意。新建工程將依世界貿易組織「政府採購協定」（GPA），開放給外國廠商競標。10月28日公告的資訊徵求（RFI），共有65家業者回覆，國內國外各半。交通部替第三航廈設定的目標之一是，將轉機旅次由現在佔總量10%，提高到30%至40%。第三航廈每年可服務4300萬旅次，與第二航廈整合，可將機場每年旅次提高至6000萬旅次。交通部回覆給 TOPICS的說明指出，在二、三航廈發揮功能後，已經30年的第一航廈將可轉為他用。預計2018年完工的第三航廈，總經費約600億新台幣，但交通部的葉匡時表示，政府尚未決定採用BOT模式，或是完全由民間執行。他說，「經費來源還在研商階段」，交通部希望明年中能提出第三航廈的正式規劃。交通部的葉匡時表示，機場改善計畫還包括現有兩條跑道翻新、增建第三跑道，以及新蓋一棟

兼具辦公室與店鋪的商業大樓。此外，交通部計畫將45公頃的自由貿易區擴大到200公頃。桃園航空城計畫由交通部與桃園縣政府負責，交通部在當地有2000公頃土地，縣府除可提供額外的4000 公頃土地，也已成立招商專責機構。航空城的另一個要素是快速便利的交通，只有國際機場與週邊城市緊密連結，國際機場才有發展空間。葉匡時指出，51公里長的桃園機場捷運工程已完成63.8%，完工後將有效串聯台北車站與高鐵桃園站；這條總經費達935億新台幣的機場捷運線共有22個站，由日商丸紅公司承包。三重至中壢的高架段預訂2013年六月通車，三重至台北車站的地下段則為2014年八月。全國便捷交通網是愛台十二建設的關鍵之一。除了機場計畫，還包括最近剛通車的台北捷運蘆洲線，可以串聯台北市區與三重蘆洲的交通網，以及14站、15.4公里的第一階段台北捷運環狀線，可聯結新店、板橋、五股。造價401.8億新台幣的環狀線，原本是由台北縣政府尋找民間業者

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detail-oriented and technically superb, says Paul Lee, foreign companies are typically better at conceptual designs. The master plan for the air city has been prepared by Japan’s Nomura Research Institute in conjunction with Taiwan’s Sinotech Engineering Consultants and Fraport AG, the owner-operator of the Frankfurt Airport. This master plan, says Yeh, was sent to the Executive Yuan September 1 and is waiting approval. The budget must also then be passed by the Legislative Yuan, but Yeh says he expects legislative support since “most Taiwanese realize their airport is below international standards.”

Coming: the third terminal Construction of the third airport terminal, which will be open to foreign bidders under the WTO’s Government Procurement Agreement (GPA), has also received wide attention. Some 65 companies, about half local and half foreign, responded to a request for information on October 28. The third terminal is needed to support MOTC’s aim to increase transit traffic from less than 10% of overall passenger volume to around 30% to 40% in the years ahead. Together with Terminal 2, the 43 million passengers that Terminal 3 will be able to accommodate per year would give

Construction and improvement of highways has helped to bind the various regions of Taiwan more closely together.

the airport total annual capacity of 60 million passengers. At that point, Terminal 1, which is over 30 years old, could be used for another purpose, MOTC said in a memo prepared for TOPICS. The overall budget for Terminal 3, with an estimated completion date of 2018, is around NT$60 billion (US$2 billion), but Yeh says the government has not decided whether it will use a BOT method or allow the project to be completely privatized. “There is still discussion as to how to finance the proj-

ect,” he says, adding that MOTC hopes to have a formal proposal ready for Terminal 3 by the middle of next year. The airport upgrade also involves modernization of the two existing runways, plus the construction of a third, as well the building of a commercial center for offices and shops, Yeh says. In addition, MOTC plans to expand the existing free trade zone at the airport from 45 to 200 hectares. The whole Aviation City or “Aerotropolis” project is being carried out jointly by MOTC,

合作，但最後由中央政府接手；交通部表示整體工程進度為16.78%。全國交通網的其他計畫還包括東部鐵路電氣化與雙軌化，整合高速公路與快速道路系統。交通部舉出的例子還包括道路改善、自行車道與其他改善計畫。

智慧台灣台經院的孫明德指出，政府其實也很重視愛台十二建設的「智慧台灣」項目，雖然WiMAX發展似乎碰到問題。智慧台灣的重點包括，人才培養與資通訊（ICT）產業提升、文化與創意產業，以及智慧型運輸系統。經濟部工業局是中央政府中參與最深的單位。工業局參與的另一項愛台十二建設計畫為「中部高科技產業新聚落」。工業局提供給TOPICS的資料顯示，政府2006年至2013年以246億新台幣協助機具產業轉型為高附加價值。工業局指出，

The gateway to an industry park “regenerated” under one of the 12 projects.

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Cover StoRY

In relation to the Intelligent Taiwan portion of the projects, the government this summer sponsored a conference on development strategies for the information service industries.

which owns around 2,000 hectares in the area, and the Taoyuan County government, which is contributing a further 4,000 hectares and has set up a development corporation to seek to lure more business into the area. Another critical element of the Aviation City is to assure fast and convenient transport links between the international airport and other cities, a key element of a truly international airport. Yeh notes that the 51-kilometer-long MRT system linking the airport with the Taoyuan High Speed Rail station and Taipei Main Station, is already 63.8% complete. The main contractor on the NT$93.5 billion (US$3.1 billion) project, which will have

22 stations, is the Marubeni Corp. of Japan. The first-stage elevated section, from Sanchong in Taipei County to Jhongli, is due to start operation in June 2013, followed by inauguration of the underground section between Sanchong and Taipei Main Station in 2014. The islandwide transportation projects are considered to be one of the most important parts of the iTaiwan initiative. Aside from the airport links, these include the newly opened Luzhou line of the Taipei MRT, connecting the city with western suburbs such as Sanchong and Luzhou. Also included is the first phase of a 14-station, 15.4-kilometer circular MRT line around the outskirts

2009年以後的政府經費為5.15億新台幣，僅佔整體的一小部分，其他皆來自民間投資。計畫目標在進一步結合機具與ICT產業、促進產學合作，以及強化中台灣地區的研發能力。政府官員2008年提及愛台十二建設的「產業創新走廊」時，曾指出宜蘭科學園區、工研院中部分院、深層海水產業園區等九項計畫。工業局指出，多數計畫都已經開工，新竹生醫園區則已經開始營運召商。唯一的例外是深層海水產業園區，政府希望2011年能以B O T方式在南台灣開辦。愛台十二建設的另一項重點是下水道建設，以改善台灣下水道接管率遠低於亞太其他國家的窘境，特別是部分國家的經濟發展程度還遠不及台灣。政府2008年宣布將大幅增加下水道新建經費，目標是每年增加3%的家戶接管率–2009年的

of Taipei, starting in Xindian and passing through Banqiao to the Wugu Industrial Park. This NT$40.18 billion (US$1.3 billion) project, financed by the central government after the Taipei County government was unable to find private bidders, is currently 16.78% complete, MOTC says. Other components of the islandwide transportation portion of the iTaiwan projects involve electrification and systemization of the eastern railway, better integration of the freeway and expressway systems, and so on. The MOTC cited numerous examples of work underway on road upgrades, new cycling paths, and other improvements.

接管率為21.27%，2010年達到23.77%，2011年達 26.77%。經建會2008年當時的計畫是，投資13億新台幣以新建28套下水道系統。美國商會一位會員表示，她兩年前曾經參加過下水道計畫的政府說明會，之後她將此一消息轉告法律事務所的海外客戶，發現許多人都很有興趣進一步瞭解。但當她繼續詢問，卻被告知計畫已經取消。然而她的一位同事幾個月後參加另一場政府說明會時，帶回的資料卻還是有下水道計畫，讓她不禁懷疑政府的內部協調是否出現問題。工程會主委范良銹解釋，因為民進黨執政期間建立的民間參與機制，會因延後付款與保證年獲利10%，而導致政府負擔增加，因此取消了下水道計畫。他說，「這種作法全球罕見」，已經發包的合約可以繼續，但尚未執行的一律取消。政府

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infrastructure

Intelligent Taiwan TIER’s Gordon Sun says the government is also paying attention to the “Intelligent Taiwan” iTaiwan project, although the WiMAX initiative seems to be in trouble. The “Intelligent Taiwan” effort entails manpower cultivation and the promotion of the ICT sector, “cultural and creative industries,” and intelligent transport systems. MOEA’s Industrial Development Bureau (IDB) is most deeply involved in this program on the government side. Another iTaiwan project with IDB participation is the “Central Region New High-tech Industrial Cluster Program.” In material provided to TOPICS, the Bureau said it is currently implementing a plan, scheduled to run from 2006 to 2013, to promote high value-added machinery with an overall budget of NT$24.6 billion (US$820 million). The government-invested portion is fairly small – NT$515 million (US$17 million) from 2009 onwards, the IDB says – with the rest coming from the private sector. The program involves more closely integrating the machinery industries with ICT industries, strengthening their cooperation with local universities, and fostering more R&D activity in the central Taiwan region. When describing another iTaiwan project called “Industrial Innovation Corridors” in 2008, government officials mentioned nine new projects in this cate-

Redevelopment of the Tainan City waterfront.

gory, including an Yilan science park, a central Taiwan branch of the Industrial Technology Research Institute (ITRI), and a Deep-sea Water Industry Development Industrial Park. According to the IDB, most of these are already under construction, and the Hsinchu Biomedical Science Park is already open and attracting foreign business visitors. An exception is the Deep-sea Park, which the government hopes will start construction in southern Taiwan in 2011 as a BOT project. Originally a key goal of the iTaiwan projects was to improve Taiwan’s low level of sewage treatment compared with other countries in the region, including some that are not nearly as econom-

ically developed. In 2008, the government announced plans to greatly step up spending in this area so as to raise the household connection rate by 3% per year. Projected estimates had the proportion of households with sewage connection rising from 21.27% in 2009 to 23.77% in 2010 and 26.77% in 2011. A total of 28 systems were to be constructed by private participation with investment of NT$1.3 billion (US$43.3 million), the CEPD announced in 2008. One AmCham member noted that after attending a government presentation about the iTaiwan projects two years ago, she notified some her law firm’s overseas clients about the sewage proj-

A facility in Taoyuan County that is part of the “creative corridor” being developed on the island.

計畫修改機制，明年重新招標。馬政府上台兩年，基礎建設的民間參與出現升溫跡象。工程會的范良銹說，明年將有2000 億新台幣的基礎建設計畫開放民間參與，包括「興建–營運–移轉」（B O T）與「營運–移轉」

（O T）等方式。他認為，營業所得稅率由25%降低為17%，以及促進民間參與公共建設的獎勵制度，將能吸引更多廠商投入，公程會也已備妥專供國外廠商使用的英文版計畫說明。范良銹所提及的計畫，主要為都市更新與運輸系統改善，包括開發國有土地或設施，目的都在協助觀光產業發展。例子之一是基隆火車站與碼頭的109億新台幣更新計畫，增加航運業活力與新設購物中心。基隆港參與兩岸航運後，當地可望新建更多休閒與商務設施。招標文件預計年底前公告，明年正式簽約。

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Cover StoRY ects, and found they were interested in obtaining more details. But when she made further inquiries, she was told that the projects had already been canceled. Despite that, one of her colleagues attending another government presentation months later returned with handouts that still publicized the same projects, leaving her wondering about the government’s internal communications. PCC Chairman Frank Fan, who is also a minister without portfolio, explains that the projects were called off after his commission found that the private-participation system set up under the previous Democratic Progressive Party administration would actually increase the government’s burden by deferring payments and guaranteeing 10% annual profits for companies taking part. “This isn’t done anywhere else in the world,” Fan says. Contracts already given out using this system were allowed

to continue, he notes, but the rest of the projects were taken back by the government, which will now do the designs itself and then put the projects up for tender next year. As the Ma administration settles in after two years in office, there are indications that private participation in infrastructure will speed up. In fact, Fan says that next year NT$200 billion (US$6.7 billion) worth of infrastructure projects will be opened for private participation, including BOT and operate-transfer formats. He sees the reduction in the

the Cultural Anthropology of taiwan’s Public Construction

ince Taiwan’s accession to the World Trade organization’s Government procurement agreement (Gpa) in July 2009, an impressive number of tenders have been opened up to companies from Gpa members, mainly advanced industrialized countries. public construction commission (pcc) figures show that as of october, a total of 2,654 projects valued at nT$321.1 billion (us$10.7 billion) had been opened for international bidding, but foreign companies were only able to win 436 of the contracts, worth nT$25.3 billion. and although u.s. companies accounted for half of the total, virtually all were for trade items. Foreigners were rarely chosen to participate in the construction projects, and when they were, the business was dominated by Japanese companies. paul lee, chairman and cEo of Global construction International and co-chair of amcham’s Infrastructure committee, notes that of Taiwan’s construction projects¬–Gpa-related or otherwise– undertaken by foreigners, about 60% have been carried out by Japanese firms. They have

built, for example, a major portion of Taiwan's highly efficient mass rapid transit systems. Taiwan's public construction business is largely an insider ’s game, and Japan's dominance stems from cultural differences between Taiwan and the West, particularly the united states, and the similarities the island shares with Japan. american companies typically prepare to compete on technical merits, are sticklers for the black-and-white details in a written contract, and are not accustomed to looking to their own government for assistance (unlike many of their European and asian counterparts). lee notes that Japanese companies are often able to navigate their way around a key obstacle for u.s. competitors–the absence in many Taiwan public contracts of a ceiling on liability (in the case of project delays or deficiencies) and the failure to exclude consequential damages. “normally in the u.s. or in other legal systems, the amount of liability is capped so it would not exceed the value of the contract,” lee says. “But Taiwan passes so much risk to the contractor that some

business income tax rate from 25% to 17% and the government’s introduction of a system of tax breaks and incentives for participation in large infrastructure projects as increasing Taiwan’s attractiveness to would-be bidders. Extensive English-language information on these projects, directed at foreign companies, is available from the PCC. The projects Fan referred to mainly involve urban renewal and improvement to transportation facilities, and are largely targeted at tourism industries. One example is a NT$10.9 billion (US$363 million) renewal project around the Keelung Railway Station and wharf, involving shipping-related businesses and a core shopping area. With Keelung harbor opened to cross-Strait transportation, it is looking to add new recreational and business facilities. Invitations to bid are due to go out this year, with the contract to be signed in 2011.

foreign companies tend to shy away from this market.” In this respect, Taiwan is one of the most difficult countries in the world to work in, he adds. In Taiwanese construction culture, lee explains, the belief prevails that the contractor should be responsible for everything. Japanese contractors are able to handle this issue, as they understand that with good government connections (guanxi), they can resolve liability issues informally without going through legal channels. “In the oriental way of doing things,” lee says, “you settle it outside (official channels), using your negotiation abilities or personal skills to mitigate losses.” Western and especially u.s. companies, with their vast legal departments reviewing every aspect of the business, do not enjoy the same flexibility. Gordon sun, an economist with the Taiwan Institute of Economic research, agrees that it is much easier for other asian countries, particularly Japan, to gain a foothold in public construction projects in this market. In fact, he says, it is actually often pre-determined which company will win the bid–and announcing a tender is often the last, not the first, step in the process. he says Japanese officials frequently visit Taiwan government agencies to learn about national infrastructure plans well before they are made public. “Europeans and americans go through regular channels when making a bid on a tender,”

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infrastructure

he says, “but Japanese companies have networks with government officials and always know what is going on.” In addition, the contract award may be more influenced by informal connections than by technical merit. americans are even at a disadvantage when compared with many European rivals, says lee. To avoid the perception that they are showing favoritism to any bidders, Taiwan’s risk-adverse civil servants prefer going through government-to-government channels, even though the foreign government representatives they talk to are expected to endorse a few particular companies as most suitable. The British Trade and cultural office frequently performs this role, whereas the u.s. government tends to more active in seeking to create a level playing field for all players rather than going to bat for individual companies. lee concedes that part of the fault may lie with american business for not requesting help, a reflection of an attitude in the united states of being suspicious of government intervention. It is also difficult for an organization such as amcham to fill that void, he says, since government employees “prefer to deal with other governments.” sun notes that for asian economies such as china, Taiwan, Korea, and Japan, it is common for bureaucrats and the private sector to work in unison to promote business oppor-

tunities. But when american officials call on high-level Taiwan counterparts, it is only to talk about political and security matters, not infrastructure projects. If there could be closer coordination between u.s. companies and the u.s government, sun adds, “I think their orders would be much higher.” aside from these cultural differences, various regulatory barriers make it difficult for foreign companies in general to participate in Taiwan’s pubic construction projects. although Taiwan is complying with Gpa requirements, amcham member companies would like to see more done to ease the way for foreign companies to compete – for example, making it standard practice to provide bilingual bidding documents and ensuring that overseas companies have sufficient time to study the project and submit an offer. lee says that tenders are sometimes announced just three weeks before the deadline, but interested parties may need up to a week just to translate the lengthy documents of 500 pages or more. Further, another week or more may be needed to have the bid proposal authenticated by a Taiwan government office in the bidding company’s home country, especially if the company headquarters is located in a city without a Taiwanese mission. once the qualifications are stamped, they must be mailed to Taiwan, which takes another few days. The

timeframe is too rushed for many u.s. companies to consider the tender and decide whether to compete, lee says. In addition, foreign architects and engineers wishing to participate in the Taiwan market must have a local license, but the exams are all in chinese language. robert chiao, general manager of the Taiwan branch of parsons Brinkerhoff International, also cites barriers imposed on foreign companies wishing to take part in projects below the Gpa threshold. contracts for such projects can be awarded to foreign companies only if they have entered into a joint venture with local counterparts. chiao points out that the majority of his employees are Taiwanese, with local qualifications, but his company is excluded from local projects as it is classified as an american branch office. In June, pB officially asked the pcc to reconsider this policy, but the reply in late october was that Taiwan is not obligated to open up such projects. chiao says the pcc held a meeting, attended by representatives of domestic industry, to discuss pB’s request, but the local companies were naturally against the idea because they wished to limit their competition. lee stresses that internationalizing Taiwan’s construction projects would ultimately raise infrastructure quality and be beneficial in raising living standards and the level of economic development. — By Jane Rickards

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ADVERTORIAL

Helping Foreigners Make Life in Taipei Even More Comfortable Do you know where to go for help when you experience trivial issues in your daily life in Taipei? The Taipei City Government’s “1999 Citizen Hotline” provides Taipei residents with a convenient, friendly, 24/7 service window regarding life and work issues in Taipei. Just dial 1999, and you can easily inquire all matters concerning municipal government services. Whether you call from a landline, mobile phone, or IP phone, the call is free (except for calls from a public phone or a mobile phone with pre-paid card). At any time of day or night, at least one English-speaking service representative will be on duty, so that whenever a foreigner calls, the Hotline is ready to offer friendly and professional service. For foreign residents of Taipei, it is a ready source of help.

One Call Brings Comprehensive Service Foreigners living in Taipei City can use the “1999 Citizen Hotline” to seek information regarding issues of all kinds, including questions about residence certificates and visas, or how to find the right channel for help when embroiling in a labor-management dispute. For those concerned about how to dispose of old furniture when relocating, just dial 1999, and it’ll direct the call to the dispatch service of a designated sanitation department team for help.

The “1999 Citizen Hotline” offers versatile services. Foreigners who are in Taipei for business or leisure purposes can also call 1999 with queries about the MRT and bus routes and transfers, or about key tourist sites within Taipei City, for example. In addition, many Taipei taxi drivers with language difficulties when communicating with foreign passengers can also access the “1999 Citizen Hotline” for help in translating. For foreigners who are relatively unfamiliar with Taipei City, the service is a friendly and ready helping hand. The “1999 Citizen Hotline” is also designed to take calls regarding problems with 20 types of municipal services affecting life in Taipei for the general public. In such cases, a call to 1999 prompts the service representatives to make immediate contact with the relevant city departments to request action. Callers, for instance, may report parking violations, out-of-order streetlights or traffic signals, roadside trees in need of trimming, problems with household water services, the location of potholes, damaged manholes or roadside ditches, excessive noise at public facilities, cases of pollution, large discarded objects in need of disposal, uncollected garbage, clogged rainwater drainage channels, excessive noise caused by people or animals, damages to riverside biking routes, damaged traffic signs, and other such problems. The 1999 service center not only quickly dispatches personnel to address the issues in question, but when the case is completed it follows up with a text message to notify the caller about the action taken. The

The “1999 Citizen Hotline” is foreigners’ best guide to life in Taipei.

service has been a critically acclaimed success.

Regional Recognition for Achievement After more than four years of operation of the “1999 Citizen Hotline,” the Taipei City Government in 2008 launched an optimization and upgrading project to strengthen the Hotline’s public service – and at the same time, to learn from New York City’s samples, the 311 hotline help service. The objective was to further improve the public's interaction with the Taipei City Government by bolstering the existing municipal information service, while strengthening each department’s ability to handle call-forwarding, appeals, and suggestions, as well as other civil service functions.

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ADVERTORIAL

The “1999 Citizen Hotline” call center in operation.

At that point, the service was added for dispatching personnel to deal with citizens’ reports of problems in 20 different categories. The newly improved and convenient service inaugurated in 2009 received the “2009 Asia Pacific Customer Relationship Excellence Award for Best Public Service Award” from the Hong Kong Asia Pacific Customer Service Consortium (APCSC). It was the first time ever for a Taiwan government organization to have been recognized with such an honor, and it was the only such award given out last year to a government agency anywhere in the AsiaPacific, underscoring the Taipei City Government’s performance excellence

When a cab driver has trouble communicating with a foreign passenger, the “1999 Citizen Hotline” can help translate.

in public service. The Hotline’s friendly, convenient, comprehensive service has earned it a satisfaction rating of as high as 86%. Initially, in 2005, the number of incoming calls averaged about 50,000 per month. Following the optimization and upgrading project of 2008, that number has now surpassed 190,000 as of the end of October, 2010. Clearly, the “1999 Citizen Hotline” has already had a deep impact on the lives of Taipei residents, winning it widespread approval. The “1999 C itiz e n H otline ” is not merely a means of providing public information. Equally important is its electronic filing system for all communications received from the

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public, enabling a transparent tracking of performance in the communication flow from one agency to another regarding citizens’ calls about government services. As a result, an accurate, speedy, and efficient channel of communication has been established between the people and government, enhancing government departments’ public relations and service efficiency, and assuring that the services entrusted by the public to the government are performed successfully, with more direct interaction. Reinforcing public confidence in the government in such practice will empower public opinion to serve as an even more important frame of reference for policymakers.

“1999 Citizen Hotline” Sign-language Video Service

Following last year’s Deaflympics, the Taipei City Government has been actively working to further expand its sign-language service for the hard of hearing. After a test period of more than half a year, in June this year it formally launched the service, becoming the first city government in Taiwan to offer a sign-language hotline for the benefit of the hearingimpaired population. This service allows the deaf to communicate with “1999 Citizen Hotline” representatives by viewing one another via a webcam – utilizing internet technology to perform a humanitarian service and enabling the Taipei City Government to fully express its care and concern for the needs of its citizens. The call center constantly strives to improve its performance and service quality.

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taiwan busines s

Fast-growing Market for Pet Supplies A sea-change has occurred in recent years in how Taiwanese view their animal companions. Pets are now pampered by their indulgent “parents.”

BY TIMOTHY FERRY

h e n C h e l s e a Y. H . We n g o p e n e d h e r P e t ’s D r e a m Park “pet hotel” five years ago in Taipei, she admits she had a customer base almost exclusively of resident foreigners. “Local people just didn’t understand what we were doing,” she says. “Western people were familiar with the concept, but locals couldn’t understand the difference between a ‘pet hotel’ and a kennel.” Rather than simply boarding the pet, Weng says she provides a fun-filled destination for people’s dogs (she has another facility exclusively for cats), with the animal’s welfare at its heart. During a recent tour of the facility on BaDe Road, some dog boarders could be seen playing in the indoor common recreation area, others relaxing in private lounges, and some even enjoying a dip in the swimming pool. Weng say she had to exert a lot of effort at the beginning in educating

people on the benefits of her facility, but she now has a strong client base. Many clients board their dogs while they are on long-term stays in China, while others just bring their four-legged companion over for an afternoon of recreation. The success of Weng’s business is indicative of the sea-change in recent years in how Taiwanese view their animal companions. From a nation that once roused international condemnation for its rampant brutality towards stray dogs and cats, Taiwan has evolved into a society of indulgent “pet parents.” Casual observers can readily see examples of owners pampering their pets to the extreme, pushing them in strollers and fitting them out in the latest fashionable clothing. “ Ta i w a n , a s a v e r y d e v e l o p e d market, follows a lot of the same trends as Japan,” notes Martin Bahr, Marketing Leader for Procter & Gamble’s

Iams and Eukenuba brands. “A lot of the trends we saw in Japan 10 years ago are coming to Taiwan now.” Much has been made of Taiwan’s low birthrate – one of the lowest in the world, along with Japan’s. This factor has led not only to an increase in the number of pet-owning households, but also to a rise in the amounts of money people are willing to spend on their pets, particularly among the 25-45 year-old age bracket. The Taipei Pet Appliances Association (TPAA) estimates that Taiwanese pet owners spend at least US$50 per month on their animal companions – a figure that’s expected to rise over the next two years to between US$70 and US$90. Sandy Lin, Business Development Manager in Taiwan for Hill's Pet Nutrition, agrees that the Taiwan market is similar to Japan “in its choices about the breeds, grooming, and size of pets.” In an email interview, she noted that

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Taiwanese pet owners in both countries “choose to keep their pets wellgroomed and enjoy acquiring a variety of accessories and toys for their pets.” While these trends may be making Taiwan an attractive market for multinational pet products manufacturers, they also run the risk of degrading into simple faddishness. Weng considers this view of pets as a cute fashion accessory, heedless of the pet’s welfare, as a further similarity between Taiwan and Japan. Sean McCormack, founder of the Taiwan chapter of the Society for the Prevention of Cruelty to Animals (TSPCA), notes that consumers often make impulsive decisions about buying a pet based on what they see in the media. “Any time a particular dog is portrayed in a certain way in a movie or on TV, everyone wants to go out and get one, without actually thinking about whether they can handle that dog or not,” he says. The result is a high incidence of pet abandonment. According to McCormick, purebred dogs are disproportionately represented in dog pounds. “About 18 months after the initial trend [of purchases], you start to see a second trend in the animal shelters,” he says.

Languishing in shelters A visit to the Taipei Animal Shelter in Neihu corroborates his point. Golden and Labrador retrievers, huskies, beagles, even dachshunds – all breeds that sold for as much as NT$100,000 (US$3,000) as puppies from pet shops – languish in cages, awaiting either

MY PET IS MY CHILD — Increasingly, dogs and cats in Taiwan are enjoying the good life, well-fed and well-cared-for by doting owners. photo : mars

adoption, or more likely, the euthanizing needle. Dr. Lin Hsiu-I, chief veterinarian at the shelter, says that up to 100 dogs and an equal number of cats are brought there every month. They are vaccinated, neutered, and cared for in what is considered to be the finest pet shelter in Taiwan, and where they face better-than-average odds of being adopted by new owners. But after the animal has resided for 12 days in the shelter, a euthanasia board is convened to determine its fate. “I hate to do this, but we have no other choice,” says Lin. By law, the shelter is required to accept any animal rescued by the animal control officers, and without euthanasia, it would quickly be overrun with abandoned pets. But even here, there is cause for hope. Lin observes that the numbers of pets being brought in has gradually declined over recent years, probably because people are making more educated decisions about the kinds of pets they are getting.

Part of the social education of society are the statements screened preceding movies that focus on pets, pointing out the responsibilities of pet ownership and encouraging viewers that want a pet to adopt an animal from a shelter. The efforts seem to be succeeding. Pet owners are increasingly opting for smaller breeds of dogs that are more appropriate for urban lifestyles – and for cats. In 2009, Taiwan’s Council of Agriculture (COA) estimated that there were 1.3 million dogs, 60% of them small breeds, and 304,000 cats in Taiwan. Josephine Chen, head of personnel and corporate affairs for Mars Inc., owner of the Pedigree, Whiskas and Royal Canin pet food brands, says that while dog products continue to outsell cat products by a margin of 6:1, the cat market is definitely seeing substantial growth. She attributes the trend largely to the demands of a busy society. Dogs require lots of attention, “but cats pretty much look after themselves,” she notes. Not everyone is encouraged by this

AWAITING ADOPTION — Many animals wind up in shelters, abandoned by owners who made impulsive decisions to buy pets without understanding the commitment involved.

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trend, however. An agent representing smaller foreign brands in Taiwanese pet shops notes that smaller breeds eat less, and so are essentially of lower value in the pet food market. His is a minority view, though, and most players in Taiwan’s pet products market appear optimistic about the future. According to a report on the industry by the U.S. Commercial Service, Taiwan’s total pet products market is projected to reach US$535 million in 2010, up from US$510 million in 2009 and US$490 million in 2008. Imports account for 80% of the total, and have increased in value 5-10% annually along with the total market over the past few years. The import value rose from US$385 million in 2008 to US$400 million in 2009, and is expected to reach US$420 million this year. Similar 5-10% annual gains are projected for the next few years. The United States has maintained a dominant 50-55% share of the total import market on the strength of its official certification process. Taiwan currently lacks a standardization process for pet food, giving American companies possessing U.S. Department of Agriculture (USDA), Food and Drug Administration (FDA), and Association of American Feed Control Officials (AAFCO) certification a distinct advantage. Europe, Japan, Australia, China, and Southeast Asia are the other major sources for imports.

DISTRIBUTION CHANNEL — In the United States, most pet food is sold through supermarkets, but the Taiwanese tend to rely primarily on specialty shops. photo : mars

Ta i w a n ’s l o c a l p l a y e r s , m e a n while, own 20% of the total market, accounting for sales of US$125 million in 2008, US$130 million in 2009 and an expected US$135 million in 2010, gains that parallel the growth in the import market. Major players include Uni-president’s Pet Life brand and Fwusow Industry’s Pro’s Choice, Fwusow, Perfect, and Happy brands. These brands have been increasing their promotional efforts with activities such as dog Frisbee-catching competitions and free vaccinations, but the U.S. Commercial Service does not expect them to make significant market gains in the next few years, citing a lack of technical know-how and capital investment, the common perception that they are of lower quality, and the lack of a government certification process. One special characteristic of the Taiwan market is the distribution channel. Unlike the U.S., where most people buy their pet food in supermarkets, the Taiwanese tend to rely on specialty shops, including veterinary clinics and pet supply stores. Jose-

phine Chen regards this preference as a reflection of the care that Taiwanese consumers show their pets, noting that the local market is relationship and service driven. “It’s a bit like people going to the pharmacist to get a recommendation,” she says. “It doesn’t mean the product is better than in a grocery story, but they feel more comfortable getting a recommendation from a professional.” The U.S. Commercial Service’s report estimates that 55% of the pet food in Taiwan is sold through pet specialty shops, while some industry insiders put that number as high as 70%.

Veterinary channel One international player that has leveraged its channel distribution to great success is Hill’s Pet Nutrition, now owned by Colgate-Palmolive. Hill’s was one of the first to introduce its brands, Science Diet and Prescription Diet, to Taiwan – bringing them into the market in 1987 and 1990, respectively – and it has enjoyed considerable success ever since. Distinct among pet

COMPETITIVE MARKET — Signs outside a veterinary clinic advertise two different brands of imported pet foods..

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food manufacturers, Hill’s sells its products around the world exclusively through veterinary clinics and high-end pet specialty shops. These are “outlets dedicated to pet welfare to ensure that each pet gets an appropriate recommendation for a pet food that meets its nutritional needs,” noted Hill’s representative Sandy Lin by email. I t ’s n o t a l l s m o o t h s a i l i n g f o r importers in Taiwan, however. One issue faced by foreign manufacturers are quarantine restrictions that are often more stringent for pet food than they are for feed for farm animals destined for human consumption or sometimes even for regular food items. The COA’s Bureau of Animal and Plant Health Inspection and Quarantine (BAPHIQ), the government agency responsible for import controls on these products, has what many in the industry consider to be inconsistent regulations regarding imported pet foods. Mars’ Josephine Chen notes, for example, that pet food importers are required to have a BAPHIQ inspection team visit the factory site – wherever in the world it is located – to ensure that it meets standards, but animal feed importers are not required to go through the same procedure. Further, in the interest in limiting cross-contamination of avian influenza, poultry livers from the United States are banned from use in pet foods, but again are permitted for animal feed. BAPHIQ has reportedly been reluctant to address these issues, raising concerns that the quarantine standards are being used as trade barriers to protect the domestic industry. “If it’s a quarantine requirement, it must be based on facts – on science – but so far, quarantine officials have been unable to explain these issues in scientific terms,” she says. BAPHIQ administrative staff declined to accept an interview, citing schedule conflicts. Chen says the quarantine restrictions add up to making Taiwan a less competitive market than some other Asian countries, limiting manufacturers’ ability to introduce new innovative products. Nonetheless, the issue has not dampened companies’ enthusiasm for

the Taiwan pet products market, with new entrants still joining the fray. Players are now employing a host of indirect means to promote their products. For example, P&G’s Martin Bahr says that some of the company’s retail partners have transformed their pet shops into leisure destinations for the family to experience and enjoy, and even welcome customers to bring along the family dog. He describes the “Influence Triangle” of pet shops, vets, and breeders as the core of its marketing efforts. “A lot of our marketing doesn’t go direct to the consumer,” says Bahr. “Instead, it goes via a pet shop clerk who talks to the consumer, or a veterinarian who talks to someone who goes into the vet clinic, or through a breeder when someone buys a dog through that breeder.” Another way that brands are

reaching out to consumers is through social media. Industry insiders note that Taiwanese consumers are quite likely to express their passion for their pets on pet-oriented blogs, and also peruse other people’s blogs searching for tips on pet nutrition and care. Bahr describes how the Iams brand used the blogging network to publicize a new immune system booster added to their pet food. They sent free samples of the new product to many bloggers, inviting them to share their thoughts on the product online. Over 600,000 consumers viewed these pages, helping to spur sales significantly “We see Taiwan as one of the priority markets in our Asian portfolio,” says Bahr. “Having the seen the fantastic growth in the pet industry in Japan makes me very, very positive about what’s in store in Taiwan for the future.”

SOCIAL TRANSFORMATION — Just a decade or two ago, “pet food” in Taiwan meant table scraps. Now there is a wide choice of product on the market for owners to choose from. photo : mars

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book

The Story of Taiwan’s Charitable Powerhouse The shy nun now known as Master Cheng Yen had the drive and vision to build Tzu Chi into a medical, educational, and relief organization with international reach.

BY MARK CALTONHILL

Tzu Chi: Serving with Compassion By Mark O'Neill John Wiley & Sons, Inc., Singapore, 2010 Paperback; 224 pages ISBN: 978-0-470-82567-9

here is a woman in Taiwan, so shy, it is said, that as a teenager she would not even look at her refection in the mirror. Yet today her image adorns the walls of classrooms, hospital wards, and religious meeting halls not only throughout this island nation but also in dozens of countries around the world. Her visage is also beamed into 6 million Taiwanese homes and nearly as many overseas by means of her own television station. To her many followers, this woman is a humble Buddhist nun whose compassion to relieve others’ suffering, message of love, and mission to save the planet resonate in the hearts and minds of people from different continents, different faiths, and different socio-economic classes. Yet she also has detractors who view her as a revolutionary seeking to overthrow the established economic order, an extremist using her saintly image for ulterior motives, and a totalitarian who, in the words of one of her closest lieutenants, wants “everyone in the

world to become a member” [of her organization]. Born Wang Chin-yun in Taichung County in 1937, the woman is now known to just about every Taiwanese as Master Cheng Yen. She is the founder and leader of the Taiwan Buddhist Tzu Chi Charitable Association for the Relief of Suffering (“Tzu Chi” for short), the largest NGO in the Chinesespeaking world, which boasts more than 100 schools, a university, seven hospitals, a bone marrow bank, and a nationwide recycling program with 200,000 volunteers, as well as the same small nunnery that has been Cheng Yen’s home for more than four decades. Whether she is saintly or Machiavellian, both, or something in between, hers is clearly a fascinating and important story. Most people in Taiwan know its outlines: how in 1966 as a young nun she learned of an Aboriginal woman who miscarried after being turned away from a hospital because she lacked the registration fee, and how she then vowed to spend her religious

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life relieving people’s suffering. But how this vow grew into Tzu Chi, an organization of 10 million members worldwide that helps the poor, the ill, and victims of natural disasters in 70 countries, is at best less well known and at worst distorted by members’ enthusiasm into little short of hagiography. Moreover, if Cheng Yen and Tzu Chi wish to transcend the Chinese-speaking world and fulfill their desire to become global players on the NGO scene – similar to the Red Cross or Médecins Sans Frontières (Doctors Without Borders) – then they will need to make themselves better known, and in the English language. With this objective in mind, former Reuters and South China Morning Post journalist Mark O’Neill spent 12 months researching the group in Taiwan, Indonesia, South Africa, and the United States. Tzu Chi – Serving with Compassion is the account of what he found. O’Neill begins his narrative with Cheng Yen’s childhood, when her education was interrupted and her personality molded by World War II. Her religious nature is introduced with her vowing as a teenager to be vegetarian for the rest of her life if her prayers were answered and mother survived an operation for a perforated ulcer. That she came from a poor background, “by [the age of] two was already smart,” and despite blossoming as a local beauty showed no interest in the boys who pursued her or whose families tried arrange marriage for her, all add to the sense of messianic destiny. As her mother is quoted as saying: “Her dreams for the future were different from those of other girls her age – instead of a husband and children, she was waiting for a chance to live in a much grander and holier manner.” It was the death of her father in 1960, however, that ultimately led to her decision to “leave home” (出家or become a nun). The driving motivation for this, and perhaps much of her subsequent life, seems to have been a sense of guilt that she had caused his death by taking him home by pedicab from his office sofa where he lay stricken with

high blood pressure. He was then diagnosed with the brain hemorrhage that killed him within 24 hours. Cheng Yen’s journey toward the cloistered world of a praying and contemplating monastic was diverted first by meeting an influential reformist monk who urged her to adopt a mission of “helping all living beings,” and then by her move to Taiwan’s east coast to work among the impoverished Aboriginal people. It was at a Hualien hospital that this mission crystallized after she asked why there was a bloodied bed with no patient. The foundation’s program started humbly enough. In 1966, the first recipient of its aid was the 86-year-old widow of a “mainlander” – those soldiers, civil servants, and others who had retreated to Taiwan with Chiang Kai-shek at the end of the Chinese Civil War. The women was given NT$300 per month, and volunteers prepared her meals and washed her clothes. In the first year, Cheng Yen and her group of 30 housewife disciples collected NT$28,768, which they used to help 15 needy people. O’Neill explains Tzu Chi’s quick growth as due first to the dedicated 17-hour days and 365-day years worked by Cheng Yen and the other nuns in her inner circle, which attracted and inspired an ever-increasing number of lay followers. Second, these followers included a number of super-rich businessmen or their wives, which gave the foundation the financial resources for grander schemes, even as it continued to publicize itself as relying on half-NT per day contributions. Third, Cheng Yen’s imagination and her desire to ease suffering on a large scale meant that her plans outstripped even these mammoth sums. With a build-it-and-the-money-willcome mentality, in 1979 she proposed the construction of a 600-bed hospital in Hualien at a cost of NT$60 million (around US$2 million). And sure enough, although it eventually cost NT$800 million (US$26.7 million) and had only 250 beds and, initially, no doctors, the Hualian Tzu Chi General Hospital opened its doors to the first patients in 1986. After financially

A 2006 photo of Master Cheng Yen after the announcement that she would be a w a r d e d t h e N i w a n o Pe a c e P r i z e b y Japan’s Niwano Peace Foundation. photo : cna

rocky times early on, the advent of the government’s mandatory health insurance scheme in 1995 means that only 10% of its income now comes from patients directly. The hospital is now self-sufficient and no longer draws on Tzu Chi’s resources. With an endowment (as of 2005) of more than NT$26 billion (US$867 million), of which the foundation can tap the interest but not the principal, plus annual donations of around NT$10 billion (US$333 million), Tzu Chi is now the wealthiest charity in Taiwan. Medical care, Cheng Yen’s original motivation, has now become just one of five main fields of mission, the other four being disaster relief, education, recycling, and the bone marrow bank. Tzu Chi’s first, small foray into disaster relief came in 1969 in response to a fire in an Aboriginal village in Hualien County that killed 42 people and left 785 homeless. The group quickly raised NT$300,000 to buy blankets, clothing, and other items, and

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later returned to help build new houses. But relief work is undoubtedly what the foundation is now best known for overseas, following contributions to victims of flooding in Bangladesh and China (1991); famine in Mongolia (1992); flooding in Cambodia, Nepal, and Alaska (1994); the September 11 attack in the United States (1999); the tsunami in Indonesia (2004); Hurricane Katrina (2005), and many others.

Furor over aid to China Tzu Chi’s whiter-than-white public image rarely meets open criticism, but Cheng Yen’s decision to send aid to China drew the most fire in the organ i z a t i o n ’s a l m o s t h a l f - c e n t u r y o f activity. With ballistic missiles pointed at Taiwan and a threat to invade the “renegade province” any time the Beijing authorities deem appropriate, in the early 1990s China was viewed by a great many Taiwanese as a hostile and belligerent neighbor. Sending food, money, and technical assistance there incited much opposition back home, and Cheng Yen personally took to public platforms and airwaves around Taiwan to explain her mission of peace. Although the missiles have proliferated, popular objection to mainlandbound aid has now largely subsided, and Taiwanese donated NT$21 billion (US$700 million) for victims of the Sichuan earthquake in 2008, the most from any outside source. Tzu Chi says it has also overcome the suspicions of the Beijing government that it would use its charitable missions to proselytize Buddhism. Arriving on the scene two years ago, it was the first and is still the largest foreign NGO operating in China. As part of his research, O’Neill and his wife traveled to three other countries in which Tzu Chi is on the rise – Indonesia, South Africa, and the United States –where they stayed with members of the organization. In addition to observing examples of their projects in each place, he hoped to assess the foundation’s chances of breaking onto the world stage – whether it can transcend the Chinese-speaking communities in these countries and become

a truly global player. Although he makes no firm pronouncement on this subject, he does not seem to think it particularly likely. Back in Taiwan, he looked at two more recent developments. The main thrust of the organization’s environmentalism is its recycling centers. Run by volunteers, the money generated is plowed back into Tzu Chi’s other missions. Cheng Yen is quoted as saying that, in addition to helping save the planet, this work gives the volunteers, who are mostly middle-aged and elderly, a sense of purpose, and helps overcome people’s arrogance and ego. Perhaps most interesting of all the organization’s projects is the Tzu Chi Bone Marrow Bank (since renamed the Tzu Chi Stem Cells Center). It was started in 1993 and is now the fifth largest in the world, with a donor base of more than 300,000. O’Neill says it had saved 1,476 lives by the end of 2007, more than two-thirds of them outside of Taiwan. To accomplish this achievement, Cheng Yen had to lobby the Taiwan government to change the law to allow for transplants between non-related individuals. The issue also brought her into conflict with established Buddhist groups, which held that the body is sacrosanct and should be kept intact. O’Neill reports that Tzu Chi members were abused and attacked in the street in the early days of the program, but at no point does he show any signs of checking the claims of his interviewees, all of whom are Tzu Chi followers. This is one of the main problems of this book. To be fair, in his preface he mentions that his salary and expenses were paid by a Tzu Chi member, and concludes by saying “All information are provided and confirmed by Tzu Chi Foundation.” But this should not relieve him of his journalistic responsibilities. More pertinently, it means that one reads the book with a growing sense of wariness, and frankly, most of the book’s information comes straight from the organization’s own literature, much of which is already available on the internet in English.

O’Neill’s second shortcoming is in his background knowledge – perhaps not surprising for a China-based writer on economic matters – both regarding Taiwan’s cultural climate and geography, and Buddhism and religion in general. The misspellings of personal and place names, and misuse of religious terms, do not inspire confidence. His unchallenging repetition of Tzu Chi claims means the book meets neither academic nor journalistic standards. The other main problem with O’Neill’s closeness to his subject is the lack of balance. Although Tzu Chi is widely respected in Taiwan and beyond, its activities, and more so its attitude, are not without their critics. For example, he repeatedly states that the organization is uninterested in proselytizing Buddhism, yet if he read reports in Taiwan’s newspapers he would know this is exactly what it has been accused of. Most recently, in building houses for Aborigines made homeless by last year’s Typhoon Morakot, it is said to have used Buddhist iconography and texts, and forbidden the inclusion of Christian symbols. Other criticisms of the foundation focus on its intense self-promotion, with some saying its participation in international relief efforts is aimed at attracting new members, and with them new sources of funding. Similarly, promotion of Cheng Yen’s image and the constant repetition of her daily teachings are felt to border on a “cult of personality.” And while Tzu Chi’s finances are above scrutiny, O’Neill’s claim that it is more efficient than nearly all other similar NGOs fails to take into account that members must pay their own travel and other expenses. In conclusion, supporters of Tzu Chi will love this book and hope that it will help the group become a global player. For the general reader, its use is limited to gaining a basic familiarity with the organization’s impressive achievements. — Mark Caltonhill, a Taipei-based freelance writer, is the author of Private Prayers and Public Parades – Exploring the Religious Life of Taipei.

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photo : ford lio ho

photo : Cheng shin r ubber

Cars, Tires, and Components

photo : merCedes benz

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april 2006 â&#x20AC;˘ taiwan business topics

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A Report on the Automotive Sector 2010/12/2 10:23:59 AM

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A Report on the Automotive Sector

Auto Market: Back to Stability It’s been a good year for the car manufacturers, and a great one for the imported brands. BY DON SHAPIRO

photo : merCedes benz

in this survey • Auto Market: Back to Stability p.38

• Tire Makers Expanding Vigorously in China p.41

• Foreign Brands Cater to Diversifying Local Demand p.42

• China’s Aftermarket Brings Big Opportunities for Auto-Parts Makers p.44

fter roller-coaster volatility in the Taiwan car market in recent years – with sales hitting a peak of 515,000 units in 2005 only to fall all the way to 230,000 in 2008 – the local automotive market now appears to have settled into a period of stable growth. Last year ended with a sales record of about 294,000 vehicles, up 28% from the year before, boosted by the government’s incentive program reducing the commodity tax by NT$30,000 (about US$1,000) on purchases of new cars with engines of 2-liter capacity or less. This year, even without that inducement for car buyers, the industry seems headed for a further 5-10% growth to between 310,000 and 320,000. Consumer confidence appears to have been restored, helped by Taiwan’s robust economic growth this year, plus the improved state of cross-Strait relations, as witnessed by the signing of the Economic Cooperation Framework Agreement (ECFA) by Taiwan and China earlier this year. Among the local auto manufacturers, the most optimistic forecast has sales hitting 340,000 units next year, while the least optimistic – which gives greater weight to the possible impact of difficulties in the world economy – puts the figure at 320,000. The most likely range is considered to be somewhere between 320,000 and 330,000 “For next year we foresee moderate

growth, but in fact it is very, very difficult to forecast,” says Lars Pauly, the Mercedes Benz Taiwan vice president for sales and marketing. “In the U.S. and some European markets, it is quite obvious that some people cannot afford cars any more. Here it’s more a question of the sentiment or mood of the consumers and not their budget.” If the stock market or property prices go up significantly, that may enhance people’s willingness to make a big-ticket purchase, he notes. A notable characteristic of the Taiwan auto market is the number of old cars still on the road (see the accompanying chart), and market conditions would clearly look much better if there was a faster turnover. According to Ministry of Transportation & Communications (MOTC) data, more than 46% of the 6.8 million registered motor vehicles on the island were more than 10 years old as of the end of 2009, and the proportion is now undoubtedly even higher. A study conducted by Hotai Motors, which markets Toyota and Lexus brand cars in Taiwan, attributed the phenomenon largely to the outstanding quality and reliability of Taiwan-made vehicles in recent years. In response to a Hotai survey, owners of older cars generally said they saw little reason to purchase a new model as long as their existing automobile was continuing to perform satisfactorily.

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A Report on the Automotive Sector

But while most of these ageing cars do not look like clunkers – “the Taiwanese are very good at maintaining their vehicles,” observes Chen Min-Teh, secretary-general of the Taiwan Transportation Vehicle Manufacturers Association (TTVMA) – they are far from meeting current levels of fuel-efficiency, carbon emissions, and safety standards. Chen notes that the emissions generated by one 10-year-old model are equivalent to that of four cars equipped with the latest-technology engines. The auto industry has been urging the government to adopt a program of encouraging owners of older-vintage cars to switch to new models for the sake of energy conservation and decreasing Taiwan’s carbon footprint. An added benefit would be to stimulate the economy and help spur the development of Taiwan’s auto industry. Chen notes that with the commodity tax set at 25% of the cost of a car, there is room to provide some tax rebate as an incentive. “The government has been considering this idea, but it’s worried about the impact on public finances,” he notes. So far it is reserving its subsidization program for purchases of electric vehicles. Japan has used the stick rather than the carrot by raising the inspection fees charged for older cars.

reportedly are now spending much more of their time in Taiwan. Within the import segment, a big change has been the increased demand for niche models, such as roadsters, coupes, cabriolets (convertible coupes), and station wagons. “In the past, the size of the car was the main driver – it had to be big and have status,” says Pauly. “Now it’s more about design and technology. In our model mix, we previously very much concentrated on mainstream products – mid-size and big-size sedans – but now for the import brands you see the sales of these niche models growing significantly.” Except for a large SUV model sold only in the United States, the Mercedes lineup in Taiwan now includes every kind of car the company manufactures, he notes. Among locally made cars, SUVs and other recreational vehicles have also done extremely well this year, growing 44% in sales in the first 10 months. And the “heavy truck” segment, which includes buses, rose by a hefty 62%, largely on increased demand for tour buses to accommodate the flood of Chinese visitors. The buses are mainly imported from Japan or Europe, though some are built domestically based on chasses from Kuozui Motor, the Toyota joint venture. Also noteworthy was the success of

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taiwan's aGeinG car popuLation Percentage & number of cars over 10 years old (in millions) %

number

2000

17.60%

5.6

2001

21%

5.73

2002

26%

5.92

2003

30.20%

6.13

2004

33.90%

6.39

2005

36.60%

6.67

2006

38.90%

6.75

2007

41.20%

6.77

2008

44.20%

6.73

2009

46.10%

6.77

Source: MotC

a new entrant to the market, the Luxgen brand vehicles, developed locally by the Yulon Group in cooperation with partners from Taiwan’s high-tech industry and some international collaborators. Although it launched its first model only in September last year, Luxgen was able to capture an impressive 3.4% market share during 2010, becoming one of the top six brands in the market. Emphasizing both luxury and intelligent technology, Luxgen is currently offering three different models – its flag-

Big year for imports In terms of market trends, one of the major developments evident during the past year was the heightened sales of imported models, particularly luxury cars by such brands as Mercedes Benz and BMW. Imports, which normally account for about 20% of the overall market, this year increased their share to more than 24% – and Mercedes reported a staggering 70% increase in sales in the first 10 months of 2010 over the same period last year. One factor sparking this growth appears to be the return to Taiwan of many affluent businessmen who had been living and working in China in recent years. With direct cross-Strait flights now so convenient, and with their mainland operations now well-established and requiring less of their personal supervision, many of these entrepreneurs

Ford Lio Ho executives showing their enthusiasm over the launch of a new model of Ford Ranger. photo : ford lio ho

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meet the standards of Japan ship Luxgen7 CEO unveiled this and Australia.” October, Luxgen7 MPV, and Already an unusually Luxgen7 SUV, all in both concrowded market – the domesventional and electric versions. tically made brands include The brand facing the bigFord, Mazda, Honda, Toyota, gest challenge this past year was Mitsubishi, Nissan, Suzuki, Toyota, perennially the market and now Luxgen – Taiwan may leader. Though still on top with become the scene of even more a 31.5% market share, Toyota competition if Volkswagen saw its share plummet from the decides to enter the fray with 37.9% of a year ago following local assembly, as some media a series of recalls internationreports have suggested. But ally. Most of those cases did most industry observers doubt not affect models made or sold that such a project would be in Taiwan, but the Toyota repviable without the opening utation still took a big hit in of cross-Strait trade in autothis market. “Any other brand mobiles to permit sufficient would not have suffered that economies of scale. much, but in the past Toyota Many in the industry were had always had one of the best disappointed that the Early images for quality, and was Harvest list in the recently conperceived in Taiwan as the precluded Economic Cooperation mium car in the mass market,” Framework Agreement (ECFA) s a y s a n i n d u s t r y o b s e r v e r. signed between China and “Toyota will come back, but this Taiwan did not include built-up is isn’t something that can be vehicles (although it did include achieved in a matter of weeks or 33 categories of auto parts). “I months.” hope we could have an arrangeRoger Chiu of Hotai Motors’ Mercedes Benz now offers a full lineup that includes both ment with China allowing trade external affairs division says the niche models and its mainstream products. photo : MerCedeS benz in built-up cars in the ratio company’s aim in the coming of 10 to 1, reflecting the relayear is to regain half the lost tive size of the two markets,” market share – moving back up says the TTVMA’s Chen. “The mainto 34% of the market – through intenthe first 10 months came to 27,578 units, land imports about 400,000 vehicles a sified advertising and promotion. It is according to TTVMA data, compared year and Taiwan around 40,000, so that currently offering an incentive program with just 6,800 in the same period last would be fair. But China still wishes to for existing Toyota owners, providing a year and 9,655 for the whole of 2009. Of protect its market, and there are also discount of NT$10,000-$20,000 on purthe total, over three-quarters were Toyota safety and environmental factors to be chases of a new car, and a somewhat models, the result of the Japanese parent worked out, since the regulations on the smaller bonus for referring a friend who company’s decision to use the Kuozui two sides are still quite different.” makes a purchase. He said the company facility in Jhongli to support its internaOther sources suggest that another also hopes to leverage Toyota’s strength tional supply network. Most of the rest obstacle is China’s unwillingness to recin hybrid technology in introducing new were Ford Escapes, shipped to Japan, ognize the Japanese and European models that should appeal to Taiwanese Australia, and Russia. brands assembled in Taiwan as Taicustomers’ high-tech sensibilities and For the local Ford Lio Ho joint venwanese vehicles, since their local content interest in innovation. At first these will ture, cracking the Japanese market rates have dropped since Taiwan’s accesbe imports, but currently under planning several years ago was an especially proud sion to the WTO in 2002. If that is the and due to roll off the production line in achievement. “It took a long time to go case, the brand with the best chance to two to three years, says Chiu, will be a through the Japanese homologation probe exported from Taiwan to China once Taiwan-made hybrid Camry. cess – the Japanese are so detailed and tariff concessions make it economical thorough – but when we did it demonwould be the new Luxgen. strated that Ford Lio Ho craftsmanship Exports grow as well Besides cross-Strait policy, the autohad already upgraded to another level,” motive industry is also paying close says Anderson Liu, the company’s genAlong with the increase in imports attention to the government’s proposed eral sales manager. “It’s helped our sales this year, Taiwan also enjoyed a record introduction of an energy tax, which volume in Taiwan that our vehicles can year in automobile exports. Exports in

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A Report on the Automotive Sector

would add NT$1 to the cost of gasoline at the pump each year for a total of 10 years. So far the Legislative Yuan has not acted on the proposal, but concerns with fuel efficiency and carbon emissions are an international trend that Taiwan cannot isolate itself from. “My assumption is that in the midto long-term, we will see [some sort of energy-tax regime] here,” says Pauly of Mercedes. “The import brands are prepared for that, because we face this challenge in all other markets.” He notes the company’s plans to introduce a new engine in its S-class vehicles at the beginning of next year that will reduce fuel

consumption by 25%. In its global product development, Ford has also placed a great deal of stress on improving fuel efficiency. “We’re going to launch a new technology in Taiwan called EcoBoost in the next few months that improves fuel efficiency by 30-35% compared to current models,” says Anderson Liu. “It’s a smaller engine, but turbocharged for higher horsepower.” Initially the EcoBoost engines will go into Ford Lio Ho’s flagship Mondeo models. One international trend that does not seem evident in Taiwan, at least as yet, is a shift in consumer preference

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from bigger sedans to smaller ones to save fuel – possibly because fuel prices on the island remain relatively low compared with other countries in the region, or with Europe. Nevertheless, the annual survey that Ford Lio Ho conducts of its customers shows that “low fuel consumption” consistently ranks as the number-one factor when prospective buyers consider their next car purchase. In this year’s survey, it was the top concern of 31.3% of the respondents, followed by “good brand image” with 19.6%, “reasonable price” with 16.8%, “good exterior design” with 16.5%, and “good safety record” with 15.1%.

Tire Makers Expanding Vigorously in China Although the mainland is becoming increasingly important in their operations, Taiwanese companies are also making new investments at home. BY PHILIP LIU

aiwanese tire-makers are vigorously expanding their production capacities in China in order to meet the surging demand in that market, a major driver behind their phenomenal growth in recent years. Cheng Shin Rubber, Taiwan’s leading tire maker, for instance, is building a new automobile-tire plant at a cost of US$30 million in Chongqing. Scheduled to open next year, the factory is aimed at serving the Sichuan Province market with its population of 200 million people. The company has also decided to establish a new plant in Changzhou in Fujian Province, capable of turning out 600,000 bicycle and motorcycle tires a day, as well as an automobile-tire plant in Xiamen with annual capacity of 10 million tires. These new plants are designed to meet the huge demand in the Chinese market, which is overstraining the capacities of the company’s five existing plants in Kunshan, Xiamen (two plants), Shanghai, and Tianjin. The new facilities are a continuation of the company’s fast expansion in the Chinese market in recent years, along with China’s meteoric rise to become the world’s largest auto market. The expansion did not let up even during the global financial crisis, which wreaked havoc on auto markets in industrially

developed nations. Today, Cheng Shin has become a leading tire manufacturer in the Chinese market, where it is an OEM (original equipment) supplier to major automakers and boasts a 10% share in the aftermarket. Of the output of the company’s Chinese plants, 70% is sold domestically, with the rest exported mainly to the United States, Europe, and the ASEAN countries. Cheng Shin’s vice chairman, Lo Tsai-jen, says that after completion of the expansion projects, Cheng Shin may become the largest tire company in China. The Chinese market has become the mainstay of Cheng Shin’s global operations, accounting for some 66% of total revenue. The company sells its products in the Chinese market under the twin brands of Cheng Shin (in Chinese characters) and “MAXXIS,” via 5,000 outlets throughout the nation. The largest distributor of the company, in Guangdong Province, boasts annual sales even larger than the total domestic sales of the company in Taiwan. The company took in profits of NT$11.2 billion (US$362 million) from its Chinese operations last year, the second highest figure among listed Taiwanese firms – trailing only Hon Hai’s NT$40 billion (US$1.3 billion). Due to its strong presence

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in China, MAXXIS was rated the seventh most valuable Taiwanese brand in 2010, similar to its 2009 ranking, in a survey conducted by the Bureau of Foreign Trade of the Ministry of Economic Affairs (MOEA). The MAXXIS brand value was estimated at US$391 million. In 2009, the company recorded consolidated revenue of NT$84.5 billion (US$2.7 billion), making it the 10th largest tire company worldwide, up from 14th place a decade ago. The contribution of its Chinese operations, plus a drop in raw material prices, enabled the company to take in after-tax net profits last year of NT$14.3 billion (US$461 million), or NT$8.15 per share, making it a typical “China-harvest” stock on the local bourse. Kenda Rubber Industries Co. is also expanding in China. It is enlarging the capacity of its plant in Kunshan in Jiangsu Province, with the goal of increasing daily production from the current 18,000 tires to 20,000 by year-end and 22,500 by the second quarter of 2011. The additional output is to be used to supply Zotye Auto and other indigenous automakers. In a recent breakthrough, the company was chosen as a supplier to General Motors Shanghai.

Rising domestic share In addition, Kenda is building a new automobile-tire plant in Tianjin, with daily capacity of 20,000 tires, scheduled for inauguration in the second quarter of 2011. These new capacities target the Chinese domestic market and will further boost the share of domestic sales in its Chinese operation, which came to 43% for the first half of this year. They will also raise the share of automobile-tire sales, now less than 30%, reducing Kenda’s heavy reliance on lower-margin motorcycle and bicycle tires, produced mainly at its Shenzhen plant. With the input from the Chinese operation, the company last

year saw its after-tax net profits skyrocket 484% to NT$2.5 billion (US$81 million), or NT$4.56 per share, on revenue of NT$19.3 billion (US$623 million). Another Taiwan tire-maker, Federal Corp., plans to expand its Jiangxi auto-tire plant, which now produces 5 million tires a year, by mid-2011 as part of its effort to develop the domestic market, especially the aftermarket, in China. As a result, the share of the domestic sales of the Chinese operation this year surpassed the 50% mark, with OEM and aftermarket business each accounting for half of the total. For its part, the Nankang Rubber Tire Corp. this year has expanded its Changjiagang automobile-tire plant in Jiangsu Province to a daily capacity of 24,000 tires, compared with 30,000 tires at its Xinfeng plant in Taiwan’s Hsinchu County. The bulk of the output from the Changjiagant plant is sold domestically, through 32 distributors and 2,000 retail outlets. The Taiwanese companies’ expansion projects are meant to meet demand not only from China’s OEM market but also the fast expanding aftermarket. Taiwanese tire makers are also expanding the capacities of their Taiwanese plants, also largely to help satisfy the demand from the Chinese aftermarket, taking advantage of tires’ inclusion in the Early-Harvest list for free-tariff status under the recently signed Economic Cooperation Framework Agreement (ECFA) between Taiwan and China. The expansion projects are also meant to fill orders for the U.S. market, following the U.S. government’s imposition of punitive tariffs on Chinese-made tires for three years starting from September 2009. Chinesemade tires are now subject to a 35% surcharge on the 4% tariff in the first year, dropping to 30% and 25% in the second and third years. As a result, orders formerly filled in China are being transferred to the companies’ factories in Taiwan. Another factor behind the domestic investment projects is expansion of

FOREIgN BRANDS CATER TO DIvERSIFYINg LOCAL DEmAND

n an effort to consolidate their dominant market position as consumers become more demanding, the leading foreign car-tire brands are launching new models in taiwan featuring higher fuel efficiency, safety, and maneuverability. bridgestone taiwan, the largest oem (original equipment) sedan tire supplier in the market – it has more than a 60% share of that segment – rolled out its green tire, eCopiA ep 100A, in the third quarter this year. due to its unique material formula, environmental structural design, and

special surface pattern, the model boasts low rolling resistance (making for high fuel efficiency) and has improved capability in gripping wet ground. in a driving trial from taipei to Kaohsiung, a distance of 420 kilometers, cars equipped with the new tire consumed 6% less gasoline than with existing models. the low rolling resistance can also prolong the new tire’s product life by 15%, according to the company. moreover, in tests the tire enabled cars to stop on a wet surface in 6% shorter distance than existing models.

french-based michelin, a leading international brand with a strong presence in taiwan’s aftermarket, has launched its pilot sport 3 model in taiwan, suitable for sports cars. it is capable of shortening the braking distance by 7% on both dry and wet ground, thanks to its excellent roadgripping capability. the new models made a debut at a time when the local market has been recovering robustly from the recession that followed the global financial tsunami of 2008. the upturn in demand has also enabled foreign brands to hike their retail prices, reflecting soaring international rubber prices, one step ahead of their domestic peers. local retail prices of bridgestone, for instance, jumped 6-8% on April 1, when those of michelin also

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that have been shifted from its Chinese plants to avoid the punithe companies’ product lineup, notably to incorporate items tive tariff. Further expansion of the automobile-tire capacities in with higher added value. Taiwan will be needed in order to meet customers’ demand and Cheng Shing has broken ground on a radial automobile-tire achieve economies of scale, according to the company. plant in Yunlin County that will cost NT$12 billion (US$387 Nankang has decided to install a production line for heavymillion) to build. Its annual capacity of 1.75 million to 2 million duty motorcycle tires at its Hsinfeng plant in Hsinchu County, tires is expected to create a total of 3,300 job opportunities. The which is now dedicated to the production of auto tires, in line company will also build a TBR (truck and bus radial) tire plant with its policy of diversifying its product lineup. It also plans to in Changhua County to meet the growing demand for these set up a new bicycle-tire plant, scheduled for inauguration next higher value-added products. The scale of the project has yet to year, and to set up a European subsidiary. be decided. To expand its global sales, Cheng Shin is launching a new brand, “PRESA,” targeting younger customers. The goal is for going green the new brand to generate revenue equivalent to 20% of that of ‘MAXXIS,” according to Cheng Shin’s president, Chen Jung-hua. Taiwanese companies are also developing “green” tires to Industry analysts say that the expansion projects and the meet new European Union requirements concerning fuel effiimpact of the new brand should enable ciency, wet-grip performance, rolling the company to pass the NT$100 billion resistance, and noise, coming into effect mark (US$3.2 billion) in annual revenue in 2012. Cheng Shin last year launched within two years. such a green tire, dubbed Waltz MS 800, Cheng Shin has also stepped into the and Kenda is joining hands with Federal Indian market, where it is now an OEM and TSRC Corp., Taiwan’s major synsupplier to Mahindra & Mahindra, the thetic rubber maker, in developing green second largest Indian automaker, and to tires. Their version is scheduled to hit the TATA Motors. market next year. At Kenda, work is underway at Meanwhile, Taiwanese tire makers installing an automobile-tire producare expanding their capacities in Thaition line at its Yunlin complex (currently land and Vietnam, with an eye to the engaged only in production of motorcycle rising demand from the ASEAN market, and bicycle tires), at a cost of NT$1.3 bilthe United States, and Europe. Cheng Shin lion (US$42 million). The line, capable of plans to further enlarge its Vietnamese turning out 4,500 tires a day following its plant and its second facility in Thailand, Cheng Shin Rubber’s new “green” tire, inauguration in the second quarter of next just opened last year. Most of the output the Waltz MS 800. year, will fill orders for the U.S. market of Cheng Shin’s Thai plants, mainly for photo : C heng Shin rubber

advanced 4.5%. the turnaround is most evident at bridgestone taiwan’s two factories, one in hsinchu and the other in Changhua County, which are running at full capacity to meet the heavy demand. that is in sharp contrast to the situation in the first half of 2009, when they were forced to suspend operations amid sluggish sales. Current daily capacity has reached 11,300 tires. founded in 1982 as a subsidiary of the giant Japanese tire-maker, bridgestone taiwan now employs 585 people and maintains a sales network consisting of 1,300 distributors. As of the end of 2009, it had produced a total of 55 million tires in taiwan. bridgestone became the only foreign tire brand maintaining a manufacturing

facility in taiwan, following the closure by goodyear taiwan of its factory in taoyuan County on July 1, in line with the u.s. parent company’s global strategy of shifting manufacturing operations to lower-cost emerging countries. the company now imports tires from southeast Asia (indonesia, thailand), europe, and Japan, which are sold via its 700-800 franchised outlets throughout the island. goodyear taiwan came into being in 1972 through the acquisition of a local tire company. the company took a beating in the taiwanese market in september, when one of its 165/65r13 eAgle CA plus tires fractured during a high-speed test conducted by the bureau of standards, metrology, and inspection of the ministry of economic Affairs (moeA). As a result, 1,190 tires in

the same production batch were banned for sale or recalled. michelin operates only a bus and truck tire retreading factory in taiwan. it has a workforce of 90, for selling imported tires or tires outsourced to the nankang rubber tire Co. michelin entered the taiwanese market in 1999, also through the acquisition of a local tire company. Yokohama tire taiwan was set up in 1996 and has 600 contracted retail outlets throughout the island. in addition to sales in the aftermarket, it is also an oe supplier to Kuozui motors, which assembles toyota cars.

— By Philip Liu

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sedan tires, is exported, with domestic sales accounting for only 25%. Recently, the Thai plants successfully penetrated the supply chain for the New March model made at Nissan’s Thai plant for shipment back to Japan. The company’s Vietnamese plant is currently producing motorcycle and bicycle tires, mainly for domestic sales, but will add production of truck tires in the future. To finance its expansion, the Thai subsidiary of Hwa Fong Rubber floated 35 million units of Taiwan depository receipts early this year, at NT$12.5 per unit, raising a total of NT$437.5 million (US$14 million). Set up in 1987 and listed on the Thai stock market in 2003, the company had after-tax net profits of 115 million baht (US$3.9 million, at US$1=NT$29.8) on revenue of 1.8 billion baht (US$60 million) in 2009. It is turning out 9.5 million bicycle tires and 6 million motorcycle tires a year, mainly for the Thai market and other ASEAN countries. In addition to the Thai plant and its factory in Taiwan, the company manufactures in Changshou in China’s Jiangsu Province. After a booming 2009, Taiwanese tire makers are seeing their profits shrink this year due to the inability of price hikes to make up for soaring material prices. The output of natural rubber has plummeted this year as a result of natural disasters in Southeast Asia and China’s Hainan Province. Commodity speculation was also a factor in causing the price of natural rubber to jump nearly 30% during the period from mid-July to mid-October. Prices of synthetic rubber followed suit. The mainland’s China Rubber Industry Association estimates that material prices of tires will

soar 40% this year, double the increase in tire prices. In the first half this year, Cheng Shin took in after-tax net profits of NT$5.3 billion (US$171 million), on consolidated revenue of NT$47.4 billion (US$1.5 billion), with earnings per share reaching NT$2.54, much lower than a year earlier. Kenda had profits of NT$1.52 per share, also much lower than a year ago, while Nankang’s NT$0.16 per share was a far cry from its NT$0.69 in 2009’s first half and Federal’s NT$0.42 per share was more than 50% lower than last year. The rise in material prices, though, is a boon for TSRC Corp. and Chimei Corp., Taiwan’s two major synthetic-rubber makers. TSRC plants in both Taiwan and China are still humming at full capacity, in order to meet heavy demand. Industry sources estimate that the company’s consolidated revenue will soar by more than 50% this year to reach NT$34 billion (US$1.1 billion), 60% of it from the Chinese market, and that its after-tax net profit will reach NT$4.7 per share. TSRC is vigorously expanding capacity. It has formed a joint venture with Lanxess of Germany to set up an NBR plant in Nantong, Jiangsu Province, scheduled to become operational in the first quarter of 2012 with annual capacity of 30,000 metric tons. It has also joined hands with an Indian state oil firm and Marubeni Corp. of Japan to establish an ESBR plant in India’s Haryana Province at cost of US$180 million, with initial annual capacity of 120,000 metric tons. The facility is scheduled for inauguration in mid-2012.

China’s Aftermarket Brings Big Opportunities for Auto-Parts Makers Already strong in the world market, Taiwan companies are getting a further boost from cross-Strait trade and the development of auto-electronics. BY PHILIP LIU

ne of the major beneficiaries of the Economic Cooperation Framework Agreement (ECFA) recently signed between Taiwan and China will be the Taiwanese autoparts industry. The pact will enable it to enjoy wide-open access to China’s fastexpanding after-sales market (AM). Thanks to their inclusion in ECFA’s “early-harvest list” of items receiving

priority treatment for tariff cuts or market opening, 33 types of Taiwanmade auto parts will see their tariffs in China halved to only 5% in 2011 and eliminated completely in 2012. This advantage comes at a time when the Chinese auto-parts aftermarket is poised to take off, due to the huge increases in auto ownership in recent years. New auto sales in China are expected to hit

16 million units this year, making it the largest car market in the world and boosting auto ownership to 70 million vehicles by year-end. The ownership level is forecast to continue to expand at a compound average growth rate of 15% in the coming years. The free-tariff status will enable Taiwanese auto-parts manufacturers to supply the Chinese aftermarket directly

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from Taiwan at reasonable cost instead of having to invest on the mainland to gain access to the market. Especially for higher value-added products, these companies will benefit from being able to utilize the existing production capacity and product molds of their manufacturing bases on the island. The Tong Yang Group, Taiwan’s leading auto-parts supplier, for instance, has now shelved plans to rely on its factory in Nanjing to serve the Chinese market south of Yangtze River and instead will supply that area from its Taiwanese plants. For that purpose, Tong Yang is expanding its capacity in Taiwan for making plastic parts by 50% to reach 7.2 million units annually, and for sheet metal parts by 75% to 4.2 million pieces this year. In addition, it has obtained a 10,000-ping (360,000 square-foot) plot of land, for use as a warehousing and logistics center, mainly for the Chinese market. TYC Brother Industrial Co., Taiwan’s leading maker of automotive lights, is similarly planning to ship AM products to markets south of the Yangtze River from Taiwan directly, while using its factory in Changchun in the northeastern province of Jilin to meet the needs of the northern portion of the country. It is preparing to build a warehouse in southern China to store products shipped from Taiwan, and plans to sell in China under its own brand, as demand for higherquality, branded products is expected to expand following the entry of major U.S. and European non-life insurance firms into the Chinese market, according to Wu Chun-chi, chairman of TYC Brother. The foray into the AM sector will further expand the presence in the Chinese market of major Taiwanese auto-parts manufacturers, which until now have focused their activity on the mainland on the OE (original equipment) business for major Chinese automakers. Tong Yang, TYC, Depo Auto Parts (another lighting supplier), and Tung Thih Electronic (auto electronics), among others, have already developed a solid OE business in China, growing rapidly along with the fast expansion of the Chinese auto industry in recent years. Tong Yang, for instance, is in the pro-

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The Tong Yang Group maintains a large logistics center, mainly to help it serve the mainland Chinese market. photo : tong yang group

cess of adding two new plants – one in Guangzhou in partnership with First Automobile Works and the other in Changsha in Hunan Province in cooperation with Guangzhou Auto – to a manufacturing network in China that currently consists of 16 factories. The company’s Chinese operation registered some US$335 million in revenue in the first nine months of this year, almost equivalent to the level for all of 2009, and contributed US$15.2 million in profits to the group, a record high. Judging from the growth rate in the past several years, the Chinese operation’s revenue will soon overtake that of Taiwan, which reached NT$15.1 billion (US$487 million) last year. The entire group, which also has manufacturing operations in Thailand, achieved NT$30.l billion (US$971 million) of revenue in 2009, up 12%, with beforetax net profits reaching NT$1.9 billion (US$62 million), or NT$4.25 per share. The AM business accounted for 56% of

the revenue last year. The progress in the Chinese aftermarket will further consolidate the prominent status of the Taiwanese autoparts industry in the global aftermarket. The industry’s output value jumped 35% to NT$100.2 billion (US$3.2 billion) in the first half of 2010. Due to the relatively small size of the domestic market, the vast majority of the industry’s output (82% by value last year) is shipped abroad, mainly for the aftermarket. In the first half this year, the export of Taiwan-made auto parts leaped 29.7% to NT$83.4 billion (US$2.7 billion), a remarkable improvement over 2009 when export value tumbled 8.45% to NT$139.7 billion (US$4.5 billion). The United States took 37.2% of the exports last year, followed by Japan with 6.81%, China with 4.06%, Germany with 2.98%, and Australia with 2.96%, according to the Taiwan Transportation Vehicle Manufacturers Association (TTVMA).

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Emerging markets While developed countries remain the major overseas outlets for Taiwanese auto parts, inroads are also occurring into emerging markets. Wu Shu-chen, vice general manager of Tong Yang, reports that during the Automechanika 2010 trade fair, held in mid-September in Frankfurt, Germany, the company netted substantial orders from Russian and East European buyers. Hu Yuan-lung, vice general manager of Depo Auto Parts, notes that the company this year has enjoyed a 20% growth in export orders – from Asia, the Middle East, and Africa – as many buyers in those regions have switched to Taiwan sources of supply because the sharp appreciation of the renmimbi and rising labor costs in China have narrowed the price gap between Taiwanese and Chinese products. To meet the increased demand, the company has built a new mold plant at a cost of US$30 million and will install new production equipment to expand capacity., Customs statistics show that the shipment of Taiwan-made auto parts to Russia jumped 29.5% to US$33.4 million in the first seven months this year. During the same period, exports to Saudi Arabia soared 58% to US$54.4 million, while they reached US$80 million (up 99%) for the United Arab Emirates, US$21 million (up 48%) for Turkey, and US$15 million (up 66%) for Iran. Wu Yung-feng, chairman of the Tong Yang Group, notes that Taiwanese autoparts makers hold a 85-90% share in the global aftermarket. He attributes that dominant status to four major features: large-variety, small-volume production; rapid and flexible product-development capability; quality molds at medium-tolow cost; and close linkage with other domestic industries. Tong Yang alone accounts for a 70% share in the global aftermarket for plastic parts and 26% for sheet metal parts, according to Wu. Reflecting the prominent status of the Taiwanese auto-parts industry in the global market, the Taipei International Auto Parts & Accessories Show has emerged as one of the three most important international auto-parts trade

taiwan's top 10 auto parts export markets First 8 months of 2010 rank

country

amount

Growth

United States

41.4

36.9%

23.7%

Japan

7.1%

32.8%

China

5.4

4.7%

64.6%

Germany

3.6

33.7%

Australia

3.3

2.9%

41.9%

United Kingdom

2.9

2.6%

23.2%

Italy

2.8

2.5%

21.9%

Canada

2.5

2.2%

15.5%

9 10

Mexico

2.27

36.1%

Netherlands

2.26

1.99%

19.8%

Source: Customs data

exhibitions, along with AAPEX in Las Vegas and Automechanika Frankfurt. The 2010 edition was held April 12-15 at the Nangang Exhibition Hall of the Taipei World Trade Center, attracting 1,050 exhibitors – taking 2,730 booths – from Taiwan and 13 other countries, including China, South Korea, Thailand, Britain, Malaysia, the Philippines, the United States, and Indonesia. In addition, Taiwanese exhibitors figure prominently at both AAPEX and Automechanika. A total of 400 Taiwanese exhibitors, for instance, attended Automechanika 2010, accounting for fully one-tenth of the overseas participants. It was the second largest foreign contingent of exhibitors, trailing only Italy. Currently the Taiwanese auto-parts industry is getting an injection of fresh momentum from the emerging autoelectronics sector, which enjoys the backing of the island’s strong ICT (information-communications technology) manufacturers. Taiwan’s auto-electronics sector has a history of only four or five years, but has grown rapidly after attracting the involvement of numerous major domestic technology firms, including such heavyweights as Hon Hai, Quanta, United Microelectronics (UMC), and ASUS. These companies have been attracted by the high margins, long product life, and huge potential afforded by the auto-electronics market, espe-

cially at a time when they are witnessing the continuing thinning of margins for their existing products, including PCs and mobile phones. Industry players liken auto electronics to the nerves and joints of a car, while the engine represents the heart. For buyers of these products, the primary concern is quality and safety, rather than price, resulting in higher margins. In addition, the product lifecycle can last five to 10 years, compared with just a matter of months for ordinary electronics products. Further spurring the global autoelectronics market has been the policy in many developed countries in recent years to require the installation in new vehicles of various safety- and environment-related devices, such as TPMS (tire-pressure monitoring systems), electronic auto-body stabilization systems, OBD (on-board diagnosis) and OBM (on-board management) systems for monitoring waste emission, and emergencynotification systems. The installation of related electronic devices can enhance the fuel-consumption efficiency of cars by 20-30%.

A boost from smart cars A major factor behind the rosy outlook for the global auto-electronics market is the growing trend toward smart and environmentally friendly cars. Future cars are expected to be equipped with

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more and more applications of wireless, software-monitoring, and audiovisual transmission technologies. Chang Pao-cheng, general manager of Taiwan’s China Productivity Center, predicts that auto electronics will account for 25% of the total cost of a car in five years, with the share even reaching 40% for some high-end models. Some industrial experts envision that gasoline-electric hybrid vehicles, which feature an even heavier use of auto-electronics devices, will capture a 60% share of the global auto market by 2025 and that production of traditional gasoline engines could be terminated by 2035. After several years of effort, Taiwan has gradually developed a complete autoelectronics supply chain, especially in the sector of in-car electronics devices. Output value reached NT$200 billion (US$6.5 billion) in 2009, according to the Ministry of Economic Affairs (MOEA). The major products include auto-electronics components, electronic ignition devices, monitoring devices, in-car communications devices, in-car audio-visual entertainment devices, HUD (head-up displays), instant-speed devices, GPS (global positioning systems), and driving assistance systems. Some of these Taiwanmade products have gained a solid position in their respective sectors. To foster the development of the local auto-electronics industry, the Taiwan External Trade Development Council (TAITRA) in recent years has been holding AutoTronics Taipei alongside the Taipei Auto Parts & Accessories Show. At the 2010 show, 100 companies exhibited in 230 booths, including 24 exhibitors that occupied 47 booths in the special “hybrid car/electric car parts” area. MOEA is encouraging the local autoelectronics industry to seek to penetrate the Chinese market first before extending its reach to major European and U.S. automakers. Wang Wei, director of the Telematics Promotion Office (TPO) under the MOEA, says the combination of the Taiwan ICT industry’s cutting-edge technologies and the scale of China’s auto market will foster immense business opportunities, Chang Chia-hsiang, deputy TPO director and director of the emerging

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Inside a factory of the Tong Yang Group, Taiwan’s leading auto-parts supplier. photo : tong yang group

intelligence research unit at the Institute for Information Industry (III), sees Taiwanese firms as having a competitive advantage in tapping the Chinese market, especially in light of the Chinese government’s plan to foster indigenous auto brands, for which Taiwanese firms have a very good chance to join their supply chain. Tsai Yu-chin, chairman of Mobiletron Electronics, an auto-electronics component maker, foresees that the Taiwan government’s liberalization of regulations on cross-Strait investment will lead to mutual investments between autoparts makers on the two sides of the Strait, facilitating the effort of Taiwanese auto-electronics firms to enter the supply chains of China’s state-run automakers. Further, the auto-electronics sector will receive a strong boost from the government’s initiative to foster development of the local electric-car industry. In mid-April this year, the Executive Yuan approved a “development strategy and action plan for electric smart cars.” The goal of the program is to attain annual output of 60,000 electric smart cars by 2016 and 1.2 million by 2030, including 1 million for export, thereby making Taiwan the world’s fifth largest exporter of electric smart cars. The government will appropriate a budget of NT$9.7 billion (US$313 million) for the program

over seven years for such purposes as subsidizing domestic purchases of electric cars and supporting electric-car demonstration programs. Yu l o n M o t o r h a s b e e n t h e l o c a l leader in the march towards the electric-car market. It has rolled out two seven-seat models of self-developed electric cars bearing the Luxgen brand. It has identified these as smart cars based on their inclusion of such ICT equipment as built-in 3.5G communications modules, audio-visual entertainment devices, satellite navigation devices, 360-degree surrounding view systems, night vision devices, back-up systems, and centrallane deviation warning systems. Industry players point out that unlike the dominance of the global gasoline-car market by major auto-making countries, such as the United States, Japan, and Germany, developers of electric cars around the world are all standing at the starting point, giving Taiwan a rare equal opportunity to tap the huge market potential. Development of the local electriccar industry will foster the growth of the auto-electronics industry. Yulon’s Luxgen electric car, for instance, contains a number of key auto-electronics parts developed by domestic companies, including motors made by Fukuta Elec. & Mach. and electric-control devices by Chrome ATE Inc.

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photo : Chris s towers

Slithering through Myths and History in Snake Alley No longer quite as colorful as in its somewhat bawdy past, HuaXi Street remains a unique cultural adventure worth experiencing.

BY DIANA TSAI

ehind the glass windows surrounding me are dozens of thick, green and yellow pythons, languorous yet menacing, apparently unaware of the mice frantically trying to escape their cages just inches away. This is a sight I could imagine at a zoo, but tonight I am nowhere near a zoo. Rather, I am walking through Taipei’s Snake Alley – as a two-block stretch of HuaXi Street in downtown Taipei’s WanHua District has come to be called – where store upon store advertises snake products: snake soup, snake blood shots, and stir-fried snake dishes. A family friend, Steven, who works for a pharmaceutical company in

Taipei, later fills me in with a bit of background. He explains that snake remedies have for centuries been present in the traditional medicinal and herbal remedy culture of Asia. Even though Western-style drugs have long been the most widely used form of treatment in Taiwan, traditional medicines managed to retain their importance, especially among the older generation. The one Western remedy that truly replaced the local version, he said, was a performance enhancing rather than curative drug: Viagra. Before Viagra, snake remedies were popularly used as sexual performance enhancers. But Viagra’s efficacy was

simply too obvious to be doubted, and contributed to a massive drop in business at the snake market. Today, Snake Alley is primarily a tourist attraction, filled with foreigners gawking at the snakes. Snake Alley used to be a bustling area due to its prime location next to Taipei’s biggest red light district. Before heading out for a night of entertainment, customers would come to Snake Alley to socialize, relax, and boost their sexual stamina with snake concoctions. This was a trend for decades until ex-President Chen Shui-Bian became mayor of Taipei in 1994. Chen implemented a strict crackdown on animal

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abuse as well as controls on prostitution. Both these policies adversely affected the snake market, which relied on red-light district clientele. After Steven’s briefing, I am ready to explore Snake Alley more fully. The street is glittery, lit up with neon colors, and I walk past numerous booths selling jewelry and small goods before I catch sight of slithering reptiles on either side of me. I stop in front of a restaurant where the laoban (owner) is holding a microphone and sitting behind a tank containing a huge python. A small crowd has gathered around the entrance, hoping to see a killing. The entire spectacle has the macabre joviality of a circus act, and is clearly no longer primarily about medicinal remedies. The laoban calls over his assistant, the daughter of the previous owners of the restaurant, to help answer my incessant questions and provide me with some samples of the restaurant’s specialties. I call her Jiejie (older sister) throughout the night, and she explains that I happened upon the oldest restaurant in the neighborhood, this year celebrating its forty-second birthday. Jiejie starts me off with the full sampler, featuring six different shots of snake mixtures. I’m relieved I brought some friends visiting from the United States with me – consuming six shots by

myself would not be good news for me (or the lucidity of this article). The first is a double shot – a cherry-red concoction featuring snake blood and honey. I hold my breath as I take a sip, anticipating the metallic taste of blood. I am surprised to find that it is actually quite delicious: sweet, airy, and light. Jiejie informs me that the purpose of snake blood is to provide balance for the body. According to the yin-yang theory of balancing “cold” and “hot” foods, snake blood is of a “cold” nature and can help clear the body of hot imbalances, especially during Taiwan’s sweltering summers. Next up is a grayish brown fluid, a single shot this time. This is apparently snake bile, and is believed to improve eyesight and prevent laohuayen, the deterioration of eyesight associated with old age. It tastes like tea with just a hint of sugar, not nearly as gnarly as I would expect liver juice to taste. Not bad so far. The third shot makes me nervous: snake venom. It’s milky, viscous, and truthfully a bit intimidating. I soon find out there is nothing to worry about; snake venom must be absorbed by bodily tissues and the bloodstream to prove fatal, and does not take effect through

consumption into the digestive tract. The venom is mixed with kaoliang, which becomes quite evident as soon as I down the shot – it tastes essentially like watered-down kaoliang. Jiejie tells me that snake venom is believed to cure pimples and other skin imperfections, and supposedly it engenders a soft, fair complexion sought after by all Taiwanese women. Of the remaining three shots, two are purely herbal – ginseng and assorted herbs respectively. The ginseng is to retard the effects of old age, while the assorted herbs are intended to strengthen the body. The final shot – the one I am most reluctant to take – looks similar to apple juice, and as I sniff it gingerly, Jiejie tells me how it is made. “We take snake penis, and steep it in rice wine for two to three months,” she starts, and I instantly become slightly nauseous. It seems the snake-penis drink is popular with tourists, who often buy it as a gift for friends back home (whether those friends ever consume it is another story.)

photo : diana tsai

PICTURESQUE SPECTACLE — Snake Alley is just a few blocks long, but after sundown it can be packed with the hungry and the curious.

photo : Chris stowers

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TRAVEL & LEISURE

photo : diana tsai

photo : Chris stowers

photo : diana tsai

AN EVENING IN THE ALLEY — Whether or not they intend to partake of a plate of snake meat or down a few shots containing snake venom, visitors enjoy the showmanship that goes into promoting the shops’ products.

The purpose of the concoction, Jiejie continues, is to build strong bones and relieve yaosuan beitong, or lower-back aches, among elderly people. When pressed for more details, she says snake penis is also believed to be a sexual stimulant, consistent with the Taiwanese belief that ingesting a given part of an animal’s body will aid that particular part in our own bodies. At least, this is the logic behind eating monkey brains to become more intelligent, and fish eyes for better eyesight. The explanation completed, Jiejie waits for me to try the shot. I wince and down it. The taste is actually somewhat reminiscent of whisky mixed with green tea, despite the fact that the liquor used is rice wine. As the evening goes on, I wonder if the reputed effect will become evident, but eventually I conclude that it is basically a myth. Jiejie points to two pills beside the shots. These are snake oil pills. “Good for your throat,” she says. “Singers come here especially to buy them.” I make a mental note to try some before my next night of karaoke at a Taiwanese KTV.

Time to eat After the shots, I am served a snake meat soup, a clear broth exuding medicinal fumes, plus four or five curled chunks of meat. I take a bite and am rather unpleasantly surprised to find dozens of thin bones inside each piece. This is much too painstaking an exercise for a flavorless piece of meat, and I opt out of finishing the soup. Jiejie brings two more dishes for me to sample: sauteed snakeskin and stir-fried snake meat. The snakeskin is sauteed with basil and red peppers, and smells delightfully aromatic. The skin is chewy and tastes like a tougher, more sinewy version of fish skin, but leaner and without the fat. Eating the dish conjures up images of snakes slithering around the slopes of the Sandimen mountains. Finally, I get to the snake meat. Jiejie proudly points out the skill and technique involved in making this savory dish. “We are the only restaurant that removes all the bones,” she

tells me. “It’s something the other restaurants don’t take the time to do.” This meat is truly delicious, smothered with basil and a sauce similar to shachajiang, the thick, mildly spicy brown sauce often used with stir-fried beef. The meat is firmer than chicken and tighter than fish; the texture is closer to eel, but without the xingwei or fishy flavor that some eel dishes carry. A delectable end to my snaketasting adventures. Over the years, Snake Alley has lost some of its traditional allure and local clientele. Jiejie tells me that the alley’s slogan used to be “Two steps, three steps,” because allegedly one could walk only two steps before passing a snake vendor or three steps before passing a snake restaurant. The vendors started closing shop about 20 years ago, so today the neighborhood primarily features restaurants making their living from curious visitors. Still, for the adventurous tourist, Snake Alley remains a novel place to gain a unique cultural experience.

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Just Published!

The AmCham Taipei Membership Directory 2011 Copies of the new edition of the Membership Directory have been mailed to all AmCham members. The contents include: • Index by industry categories • Alphabetical corporate listings – including many with full company profiles • Alphabetical individual-member listings • AmCham Taipei committees and committee co-chair contact info • AmCham Taipei Articles of Association • Reference section with listings for Taiwan government agencies, U.S. state and foreign trade offices, emergency numbers, etc.

To order copies, contact the AmCham office: Tel. +886-2-2718-8226 x212 or email: amcham@amcham.com.tw Extra copies for members: NT$1500 Non-member price: NT$6500

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The Convenient Way to Tour is on a Bus

t o u r i s m B u r e a u , r e p. o f C h i n a

nyone who has traveled in Taiwan in the past few years has surely seen them: fleets of shiny new buses, lined up at key tourist spots around the island or driving down scenic highways and through national parks. Perhaps you have wondered why so many people seem to be enjoying bus tours, rather than driving or flying to the most popular and scenic destinations in Taiwan. Actually, there are many reasons for the newfound popularity of bus tours. For one, the guides (whether English-, Chineseor Japanese-speaking) are polite and wellinformed, and as seasoned travelers know, historical and cultural facts and other detailed information are essential to enjoying any destination. Temple deities and icons, favorite local foods and how they are prepared, indigenous or Hakka or Taiwanese cultural traits, local plants and animals, and many other subjects all take on new meaning when they are illuminated by knowledgeable explanation. So that’s one good reason to board a bus. Another one is convenience. No matter how well prepared a tourist may be, travel can be a hassle. There are hotel rooms to find and book, cars to rent, maps to buy, questions about which sites to visit, and many decisions to make. But on a Taiwan

Tour Bus trip, tourists have only one decision to make: which tour to book. After that, they need only to relax and enjoy the ride. The freedom from making so many decisions frees the spirit to enjoy the experience. Serendipity is another good reason to jump aboard a tour bus. Because someone else is planning the trip, guests will visit sites they would not have seen otherwise. These are exactly the sights that Taiwan specializes in – one-of-a-kind local cuisines; wax umbrellas, woodcarving, ceramics or other handicrafts unique to a particular area; scenic vistas; tucked-away temples; or local museums offering unexpectedly rich displays highlighting a remote town. The companies that plan the Taiwan Tour Bus itineraries, as it turns out, are experts in selecting such sites. Please note that these are not the oldfashioned buses of yore. The new Taiwan Tour Bus fleets are comfortable and modern, with restrooms, video screens, roomy seats, and broad picture windows. Bus tours have come a long way in the last decade, and today’s tours feature better guides, fewer stops at souvenir shops, and often smaller buses. The roads of Taiwan are likewise swift and smooth, and traffic is not the challenge that it was a few years ago. The popularity of bus travel has received

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s e e i n g ta i w a n

a kick-start from a program called Taiwan Tour Bus, a series of bus tour options that are booked through travel agencies, and are carefully screened by the Taiwan Tourism Bureau. The tour operators include long-established agencies like Edison Travel Service, Merry Travel Service, Suntour Travel Service, Golden Founders Travel Service, South East Travel Service, and others. Most trips are either halfday or full-day tours, although twoand three-day excursions can also be arranged, with the travel agent booking the hotel rooms as well, often at a sharp discount. The price for all Taiwan Tour Bus holidays includes transportation, guide service, and travel insurance; some meals and admission tickets may not be included, depending on the individual tour. Guests can almost always book a tour, without worrying about insufficient numbers; if there are fewer tourists, the companies will send smaller vehicles, such as vans, to accommodate them. The operators will pick up guests at airports, train stations, and hotels throughout the island. The choices presented by Taiwan Tour Bus are comprehensive, and cover every major destination in Taiwan, along with many minor ones. More than 30 trips are available, including excursions that feature city life,

farm ecology, hot springs, fine dining and local cuisine, shopping, mountain scenery, adventure sports, and visits to annual festivals. The Taipei-based tours, for example, include stops at the National Palace Museum, Taipei 101 Tower, Chiang Kai-shek Memorial, and Longshan Temple, a quartet of sights that amounts to a comprehensive snapshot of modern Taiwan. The National Palace Museum showcases thousands of years of Chinese history; Taipei 101 highlights the island’s technological prowess; the Chiang Kai-shek Memorial illuminates the turbulent history of 20th Century China and the founding of modern Taiwan; and Longshan Temple provides a glimpse into the island’s deep cultural traditions, in which folk religion plays a key role in daily life. Taipei-based tours also venture into the surrounding countryside, allowing city residents to visit wellknown sites they may not otherwise have seen. These include Yeliu, an area on the northeast coast known for its sea-sculpted sandstone formations; Jinguashi, known for its old gold mines and scenic vistas; and Jiufen, a tiny hillside town with a rich history and an appealing collection of coffee shops, souvenir stands, and small cafes. Another Taipei-based option takes tourists to Sanxia Old Street and the nearby

Zushi Temple (one of the finest in all Taiwan) and then to Yingge, a village famous for its ceramics workshops and souvenir stores. Similar excursions are available from many other towns in Taiwan. From Taichung, travelers can make convenient visits to Sun Moon Lake and Lugang; from Hualien, they can see Taroko National Park, the Rift Valley, and Taitung; and from Tainan, along with the historic city sights, tours include visits to Chiku Salt Flats, a former salt mine that is now a haven for migrating birds, and the Alishan Mountain Recreation Area, an alpine retreat that is the staging area for pre-dawn visits to see the Sea of Clouds, one of Taiwan’s most iconic sights. Altogether, the Taiwan Tour Bus itineraries provide a comprehensive network that makes these and other sights readily available. The list of possibilities is long: Kenting National Park and the nearby National Museum of Marine Biology; the Love River in Kaohsiung and the nearby Hakka village of Meinong; Wuling Farm and Guishan Island near Ilan; Sanyi woodcarving village and the Hakka village of Neiwan north of Taichung; and the teagrowing town of Lugu and the bamboo forest of Xitou, in Nantou County. These trips and many more, are all available from the seat of a bus.

Please call the Tourism Bureau for details, at 0800 011 765, or see the website at www.taiwantourbus.com.tw, for information on schedules, itineraries, and booking.

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Focus on Digital Convergence

mCham Taipei held its 2010 Telecommunications Symposium on November 5 at the Shangri-La’s Far Eastern Plaza Hotel with the theme of “Moving Taiwan’s Digital Convergence Forward.” A group of distinguished speakers and panelists from government, industry, and academia dealt with Taiwan’s response to the technological advances that are rapidly breaking down barriers among different communication platforms. The program attracted nearly 100 participants, and in a post-event survey about 80% of the respondents rated the symposium as either “excellent” or “good.” The event was sponsored by Chunghwa Telecom, Ericsson, Nagra Kudelski, and Taiwan Broadband Communications (TBC). Thomas Ee, TBC’s CEO, said the program accomplished its purpose of stimulating more communication between government and industry. One of the key points to emerge from the session was the government’s proposed timetable for enactment of legislation to provide the regulatory framework for the era of convergence. In his opening remarks, Chung Char-Dir, Deputy Executive Secretary of the Executive Yuan’s Science and Technology Advisory Group, reported that the government’s target is to have such a bill passed by the Legislative Yuan by June, 2014. June Su, Counsel of Tsar & Tsai Law Firm and co-chair of AmCham’s Telecom & Media Committee, said afterwards that industry welcomes the setting of that definite timeline, “even if waiting another four years seems a bit

longer than necessary.” Until concrete policy and legislative direction are in place, she said, industry players will be hesitant in making very ambitious business plans. Another important message brought up in the discussion, said June Su, is that telecom and broadcast businesses are equally important – and in fact are in a synergistic relationship – in enabling the converging progress in the industry to take place. One of the keynote speakers, Jessica Chou, Deputy Director and R&D Advisor-in-Chief at the 21st Century Foundation, called on the National Communications Commission (NCC) to follow the international trend of adopting incentive-style regulations to give industry inducements to continue to invest. In the absence of such a regulatory environment, she said, Taiwan is falling further and further behind other countries in the region in broadband coverage and digital TV penetration. Various panelists also urged the NCC not to limit itself to a role as an enforcement agency for consumer welfare, but also to concentrate on its responsibility for setting policy direction and guiding the development of the industry. The AmCham Telecom & Media Committee plans to follow up on the symposium by scheduling a meeting with the new NCC Chairwoman, Su Heng, and other commissioners. “We have the sense that the NCC commissioners are looking to engage with industry and want to get things done,” says Ee. “So we are looking forward to furthering our dialogue.”

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november 2010 â&#x20AC;˘ taiwan business topics

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Are You Reading a Borrowed Copy? The cost of a year's subscription to Taiwan Business TOPICS is so economical – NT$1,500, or about what you might pay for a single business lunch – that there's no need to have to rely on your friends or colleagues to see the magazine. As a subscriber, you'll have your own copy mailed directly to your home or office, so you'll be sure not to miss any of the vital information carried in TOPICS.

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