Walking on the streets of Taipei often gives people the feeling that they are in the wrong place. In department stores that are Japanese-Chinese joint ventures, in Japanese hypermarkets, everywhere one rests the eyes there are Japanese clothes, electronic gadgets, pots, bowls and tableware--even candy and cookies. The people of Taipei have been taken prisoner by Japanese brands. As Ke Tzechieh, a seventeen-year-old lover of pop music, puts it, "If the Japanese didn't sell us Aiwa walkmen, I don't know how I could go on living?"

When one puts this phenomenon into figures, the trend is even more alarming--and all the more so for a nation so proud of being regarded as an "economic miracle" in the international community. According to statistics of the Ministry of Economic Affairs, in the first three quarters of 1991, the ROC trade deficit with Japan reached US$6.94 billion dollars, surpassing by 1.2 billion the surplus of US$5.74 billion the country has with the United States. This deficit is an embarrassing nightmare for the ROC, a nation that is export-oriented and can only rest peacefully when seeing a surplus.

The Empire Strikes Back: To prevent this deficit from getting worse, ROC financial agencies have been incessantly thinking of countering strategies, but import limits and other such defensive measures always lack long-term results. Thus, as soon as a "Mini-Europe Plan," which was described as "getting to the root of the problem" and "the empire strikes back," was proposed, it became the object of great hope, hope that it would be the key to opening the gate of exports to Japan.

"The Mini-Europe Plan" is the result of research on how to reduce the trade deficit with Japan, commissioned by the Ministry of Economic Affairs at the end of 1989 and carried out by the American management consulting firm of Mckinsey & Co.. Its principal method is to struggle to get European brand names to manufacture in Taiwan or to produce and sell with the ultimate aim of opening up the Japanese market.

While Japanese are known around the world as fierce economic animals, they do have a weak spot--a special love of European name brands. Huang Li-li, who studied photography at Nihon University for five years, points out that Japan has been influenced by European culture since the Meiji Restoration and down to the present still venerates Europe. The extent to which Japanese worship European name brands has already reached a level that can be described as crazy. For example, Louis Vuitton handbags, which cost upwards of NT$10,000, seem to be a standard accessory for just about every Japanese woman. And in Europe, long queues of Japanese tourists can be seen in front of any LV shop.

"There are even those who have collected the entire line from wallets to suitcases," she says.

Japanese Fascination with Brand Names: Focusing on this Japanese adoration of European brand names, "The Mini-Europe Plan" hopes to obtain the rights to European brand names and produce products in Taiwan that can break open the Japanese market. If the plan is carried out, it may kill two birds with one stone: not only make a reduction in the long-term trade deficit with Japan but also raise the level of production in Taiwan through learning from the original European manufacturer.

In the past most people have thought that if Taiwan wants to raise its level of production, it must cast aside such "sunset industries" as clothing, furniture, shoe manufacturing and leather goods. "The Mini-Europe Plan is aimed at giving these traditional industries a second spring," says Frank Huang, chairman of the executive committee for the plan.

It has been nearly two years since the Industrial Development Bureau of the Ministry of Economic Affairs assigned the executive committee of CETRA the task of developing the Mini-Europe Plan in 1990. Related government units estimate that it will be another five years before completing the European Design Center, which will cultivate design talent, perform market analysis and promote Taiwan to European brand name companies. Its most import task will be promoting Taiwan as a place for these companies to find partners. Ho Ming-lang, the director of the fourth division of the Industrial Development Bureau, says that currently 23 European brand name manufacturers have been selected for discussions, which are actively being carried out with ten firms and have already been successfully carried out with five.

"Some of these manufacturers have already invested in production in Taiwan and already brought products back for sale, testing if our production quality can pass the test of Europeans," he says.

Inferior Skills: Because business secrets are involved, before they feel secure about success, the European companies who have come for joint ventures in Taiwan are not willing to make an early announcement and risk damaging their product image or upsetting relations with their authorized manufacturers in Japan, Hong Kong or elsewhere in Asia. But it is known that the French firm Pierre Cardin and the British manufacturer of casual shoes Clarks are among the five that have sealed deals.

Although the Mini-Europe Plan may have the right concept for reducing the trade deficit with Japan, a variety of problems with its actual implementation have left it falling short of expectations.

"We have discovered in the past two years that the vast majority of manufacturing and sales rights for European brand names in Asia have already been obtained by the Japanese," Huang revealed. "And with our techniques lagging in some areas, most European manufacturers have shown little willingness to take back the rights from the Japanese."

Generally speaking, in consideration of the great potential of the Taiwanese market, European manufacturers are interested in cooperation with Taiwanese manufacturers. The French company Pierre Cardin discovered this early on and hence four years ago took back its Japanese distributer's rights to sell in Taiwan. Now its head office directly manages sales here. Ever since the ROC came out with the Mini-Europe Plan, Pierre Cardin has taken an even greater lead in signing deals with Chinese manufacturers, hoping that the Taiwanese can manufacture in the purely French style of Pierre Cardin and not create products in the style of Japan.

But there are not many European manufacturers as forward as Pierre Cardin in giving away these rights. Ho Ming-lang cites as an example the dying of fabric, explaining that ROC techniques still lag behind. "The quality of our weaving industry is world famous, but we still have problems with printing and dying. There are a few colors, for example, that we can't print correctly--to the point that they fade."

Problem of Race: Even if there wasn't a problem with skills, "what the Japanese love are the products of the original manufacturer, and they have yet to show interest in what authorized agents have manufactured abroad. Since Pierre Cardin began to manufacture outside of France, its sales in Japan have been deeply affected," says Huang, citing the second reason for the revision of the plan.

Delphine Lin, the representative of Pierre Cardin in Taiwan, says, "Pierre Cardin is aiming to be an international brand name and doesn't much consider the problem of race." Most European manufacturers emphasize their image and would rather privately cooperate with Taiwanese companies, being ill-disposed to admitting cooperation in the open and losing the consumer's impression that the brand is something rare.

Because the big European manufacturers are concerned about their brand image, the Mini-Europe Plan has shifted its sights to a lesser goal, hoping to establish partnerships with mid-level European brands. But this has not attracted the interest of ROC manufacturers. "Instead of working with an unknown manufacturer to boost its name recognition, wouldn't it be more meaningful to start one's own brand," says Liu Chin-li, the vice general manager of the Alex Bag Co., which has already established a brand that is designed and manufactured in France.

Brand Name as Guru: In this situation where the big brands have scruples and the small brands aren't well thought of, most industries are less than enthusiastic about the Mini-Europe Plan. As a result, the targets of the Mini-Europe Planning Group have been revised--from focusing on Japan to more broadly targeting the markets of Japan, Taiwan itself and Southeast Asia. Its main goal has been changed from reducing the sino-Japanese trade deficit to raising the level of domestic production.

"To prevent only being contracted for manufacturing and prevent losing everything when European manufacturers stop giving out rights in the future, I hope that our businesses do not entirely rely on the strength of the name to enter the market but also study the design, management and marketing conceptions of the original manufacturer so that they can stand on their own feet and develop their own brands to gain a place among those that are world famous," appeals Chiang Pin-kung, who is familiar with the Sino-Japanese trade relationship as political vice minister of economic affairs.

From this standpoint, the other point of emphasis of the Mini-Europe Plan--to establish a "European Design Center" in Europe, providing a channel for cooperation between domestic manufacturers and European designers, letting manufacturers create their own brand names and create products that are purely European in character--will be even more important.

"Currently, we have already established the Dusseldorf Design Center, which is mainly responsible for general commercial design; this year we will establish the Paris center, which will be responsible for fashion design; and next year we will establish our third design center in Milan, which will focus on such industrial design as furniture design," says Ho Ming-lang.

There are also a number of manufacturers who hold that because of the International Design Interaction sponsored by CETRA in recent years, such famous design companies as Frog and Conran have, because of the strength of the Taiwan market, already come to Taiwan to establish branch offices.

Raising Design Skills: "Commissioning the design of products requires communication from both sides and incessant revising of the design. If I want to find international quality design talent, I shouldn't disregard what is right here in favor of something around the world," say Chen Shang-hsien, the design development manager of the Hostan Co., which makes faucets.

But Frank Huang holds that the European Design Center will not only have designers for consultation with domestic companies about the latest trends in European design, but when domestic manufacturers require European designers, the center can also help in making introductions, and most importantly domestic manufacturers can send their own designers to Europe to work in cooperation with first-rate European designers. Manufacturers can take advantage of this opportunity to raise their own level of design so that in the end they won't be reliant on outside help.

After several revisions, the Mini-Europe Plan is already not a short-term goal with immediate rewards, but rather a long-term investment for strengthening the level of production. Or perhaps this was the right road to take all along for the original goal of "reducing the trade deficit with Japan."

[Picture Caption]

The French brand Pierre Cardin's formal decision to come to Taiwan is the first success of the Mini-Europe Plan. (photo by Huang Lili)

Introducing European brand names is the major work of the "Mini-Europe Plan."

Gaining the ability to make delicate designs will help to raise the level of our country's industry.

Introducing European brand names is the major work of the "Mini-Europe Plan.".

Gaining the ability to make delicate designs will help to raise the level of our country's industry.