Last year Taiwan made a new friend-the Republic of the Marshall Islands. Throughout the process, from exploratory talks to the formal establishment of diplomatic relations and then the signing of a bilateral agreement on promoting and protecting investments, Taiwanese business people played an important role. Long before the two governments extended the hand of friendship, these "unofficial ambassadors" for Taiwan had crossed the sea to this ocean paradise, put down roots and prospered.

What attractions does this beautiful Pacific archipelago hold, and what opportunities does it offer? How have Taiwanese business people built their livelihoods here, and what can their experience contribute to future bilateral economic cooperation?

The Marshall Islands have been described as a glittering necklace dropped onto the blue velvet of the Pacific by a heavenly hand. Looking from the air at the two island chains which make up this country, the swathes of deep green coconut palms swaying in the sun-drenched wind really do make them look for all the world like fiery emeralds.

The national bank president

The Marshall Islands are located between Guam and Hawaii, and form part of Micronesia. They have a population of something over 60,000. There is little crime, and the people are down-to-earth and hospitable. Before gaining their independence in 1986, the islands were governed as a US protectorate under a 1945 UN resolution.

There are currently only 50-odd Taiwanese resident in the Republic of the Marshall Islands (RMI), but they play an important role in the country's financial, fishing, construction, retail and auto industries.

Patrick Chien, president of the Bank of the Marshall Islands (BMI), is the islands' longest-standing resident of Taiwanese origin. Because of his background as a Southeast-Asian-born overseas Chinese and his experience working for the Chang Hwa Bank and the Chase Manhattan Bank, 18 years ago when Taiwan's Lai Lai group established BMI, Chen was sent to open up what was then "unexplored territory" for Taiwanese business.

Setting up in a foreign country was no easy task, particularly given that before BMI was established, the Bank of Hawaii and the Bank of Guam had already divided up the local financial market between them. Because the local savings rate was low but the borrowing rate was high, Chen decided that the only way to gain the upper hand as a latecomer was to offer more efficient lending operations. "Since I had already taken out local citizenship, I felt I should regard the people here as my compatriots, and treat every loan application as an urgent request from a friend in need of money," he says. In only a decade, BMI became the islands' leading financial institution. In 1994 the RMI government decided to nationalize the bank, and chose Patrick Chen as its president.

Jane's Group

The key to Chen's success was establishing friendly, harmonious relations with local people, and this is also how the Marshall Islands' largest Taiwanese enterprise, Jane's Group, succeeded in gaining entry to the local construction materials, retailing and motor-vehicle markets.

Jane's Group president Almon Chien first went to the Marshall Islands 17 years ago as an employee of a Taiwanese company contracted to lay underground cables there. Chien liked the islands' peaceful environment so much that after the two-year project was completed he decided to stay.

At that time the Marshall Islands had just gone over to self-rule, and basic infrastructure construction was in full swing. Taking advantage of his own construction industry background, Chien set up a construction company and joined in the building boom.

"The pace of life on the Marshall Islands is slow, but people from Taiwan are used to things being done quickly and efficiently. At first this difference in attitudes to time often caused tensions between me and my employees," he says. But living in another country, one has to adjust to the lifestyle. After both sides made compromises and arrived at a pace of work which was "not too quick, but not too slow either," they worked together happily.

As the company took on more and more construction projects, Almon Chien found the administrative work too much to cope with, so he wound down the construction side of the business and concentrated solely on importing building materials. To his surprise this simpler focus caused his business to expand substantially, and he began to recruit relatives and friends from Taiwan. Gradually the number of Taiwanese immigrants in Jane's Group grew to over 30, forming by far the largest group among the RMI's Taiwanese residents.

In 1995 Almon Chien tried his hand at another business, with his first supermarket.

"Most groceries and household goods here are imported, and in the past traders took excessive profits, so prices were always high. I thought: Since we need such goods for our own families, why not open our own supermarket?" Chien recounts. The first step in running the business was to lower costs. He broke with the established practice of local American-run supermarkets of employing Americans, and instead hired local workers at lower wage rates. By paying for goods in cash he also lowered his purchasing costs. With its lower prices, Jane's Supermarket did a roaring trade, and this forced other supermarkets to lower their prices to compete. "At least inasmuch as we offered employment and brought down prices, local people welcomed us," says Chien.

Last year Jane's Group also branched out into vehicle sales. Attracted by the steady growth in the local auto market, Almon Chien got in touch with Taiwan's China Motor Corporation, and started up a dealership.

"On the one hand I was more familiar with Taiwanese cars, and on the other I naturally felt it was better to work with other Taiwanese!" He says he currently sells 30 to 40 vehicles a month.

Rich fisheries

Taiwanese business people who came here in the past all had to "go it alone," winning the trust of local people by their warmth and enthusiasm. Leo Liu, the ROC's ambassador to the RMI, says that Taiwanese business people's harmonious relations with local people have very effectively paved the way for future investment. After the recent signing of an investment protection agreement, large-scale investment in the fishing industry is currently being actively pursued with the strong backing of both governments.

The seas around the Marshall Islands have rich fishery resources, with large stocks of shellfish, sea cucumber and lobsters, and of migratory fish such as tuna and sailfish. Taiwanese fishing vessels have been working the area for many years. Today there are two Taiwanese-invested fishing companies in the Marshall Islands. One, Ting Hong Oceanic, has an exclusive contract with the RMI government for line fishing of tuna by foreign vessels. Therefore other investors wishing to exploit this resource need to set up joint-venture companies with local partners. Marshall Islands Ocean Development Inc. (MIOD) is one example.

MIOD president Robert Chen says that in recent years the RMI has made developing the fishing industry one of the main planks of its economic development strategy, and to foster overseas investment it is encouraging international joint ventures. Koo Kuan-min, president of Koo's Holdings Company, which recently acquired a 15% stake in BMI, says that to protect local firms many South Pacific Forum countries place restrictions on overseas enterprises establishing wholly-owned subsidiaries. But many of these countries also face shortages of capital and technology, so they encourage foreign investors to set up joint ventures with locals. This approach of marrying outside capital and technology with the rich local marine resources is one of the more feasible models by which the Taiwanese fishing industry, faced with limited opportunities at home, can develop overseas operations. The RMI, which has just established diplomatic relations with the ROC, is an ideal place for such investment.

Currently a consortium of three Taiwanese companies, led by Koo's Holdings, is discussing cooperative investment plans with the RMI government. They expect to invest US$100 million over five years to buy ten new vessels with which to fish the waters around the islands.

"The Marshall Islands have a severe shortage of water for industrial use, so it is not appropriate to set up fish processing operations there such as canning factories. But their geographical location makes them suitable to be developed as a Pacific base for Taiwan's fishing industry, if they are amenable to this kind of cooperation," says Koo Kuan-min.

The early bird catches the worm

Investment in the fishing industry is appropriate for companies with large capital resources, but the sector is not one which most small and medium-sized enterprises with no fishing industry background can easily branch out into. However, as Ambassador Leo Liu points out, the RMI is still a developing nation. It does not have many different industries, but this represents an opportunity for all kinds of businesses. For instance, Jane's Group has been highly successful in all its ventures, from construction materials to retailing to motor vehicle imports. There are no end of commercial opportunities.

Robert Chen, who has good relations with both the RMI government and the local business community, says that because the RMI was formerly a US protectorate, many of its exports to the US still enjoy preferential treatment. For instance, products such as ready-to-wear garments or leather bags and cases are not subject to any quotas. Following the RMI's shift of diplomatic recognition to the ROC, a PRC-invested garment factory there is about to close down. For companies in Taiwan's highly-developed garment industry, this presents an opportunity for overseas expansion. However, notes Robert Chen, the PRC state-owned garment factory was not well managed, and in its one year of operation only obtained orders for 3,570 sports shirts. If a Taiwanese firm wants to take over the factory, it will have to work harder at selling into the US market.

The RMI government is currently drawing up a plan to privatize state-run enterprises such as telecommunications, power and water utilities, banks, agricultural produce processing factories and inter-island ferry services. With the close friendship between the two governments, these also offer glittering opportunities for Taiwanese businesses to go into the Marshall Islands.

Reverend Moses Li, who was sent to the Marshall Islands by the Presbyterian Church in Taiwan, wrote in a letter home: "My elder daughter once complained in her diary: 'Other kids get to emigrate to New Jersey, but we have to go to a faraway island.' But a few days ago when she came back from school she said happily: 'You know what? Marshallese society is matriarchal, and the boys in our class all dress up really pretty-they're even vainer than the boys in Taiwan!' This adolescent girl seems to have discovered a difference between our two cultures. My younger daughter has taught her classmates to dance a traditional Chinese fan dance. On the day of their performance, she and her classmates gyrated around the stage in unison as they danced their dance. They looked like the fronds of the coconut palms waving in the wind. . . ."

Marshallese can travel to the US without restriction, and they have full access to higher education there. The cost of schooling is also less in the Marshall Islands than in the US, and there are two or three children from Taiwan in high school here. Without Taiwan's intense academic competition, and with the easygoing and hospitable nature of the Marshallese, the Taiwanese children quickly make friends with local children. What Taiwanese business people have developed here is not merely commercial opportunities, but also an exchange of friendship and culture between the peoples of two Pacific islands.

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Koo Kuan-min (center), president of Koo's Holdings Company, holds up a certificate confirming his company's acquisition of an interest in the Bank of the Marshall Islands. This marks a new beginning for Taiwanese companies' involvement in the islands' development. Second from the right is BMI president Patrick Chen.

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Almon Chien (second from right) moved to the Marshall Islands 17 years ago. He has not only been successful in business, but has also gathered around him the islands' largest clan of first-generation Taiwanese immigrants.

Almon Chien （second from right） moved to the Marshall Islands 17 years ago. He has not only been successful in business, but has also gathered around him the islands' largest clan of first-generation Taiwanese immigrants.