"It seems like people want to make up for forty years of pain of separation all in one stroke," says one bank general manager about the sudden rise of the remittance market.

The trend of sending money to friends or relatives on the mainland began four or five years ago, going from a few trickles to become a river. In June of this year the mainland was hit by severe flooding, and this was followed by the government's opening of indirect remittances to the mainland at the end of August (limited to remittances only for "relief" or "gifts"). These were the stimuli for the current "flood."

The trial remittances, which began as early as a year and a half ago, correspond with the recent gush of money to the mainland. "Over the past year or so, almost 60% of the remittances have been concentrated in the Kiangsu-Chekiang area in the Yangtse River region. Shanghai is far and away the leader. Adding together all the scattered amounts for the whole interior of the mainland, it is nearly 40%. The great increase in the remittances to Anhwei after the flooding should be considered an aberration," points out Z.B. Yu, a consultant to the Standard Chartered Bank of England, which was the earliest to provide this service. The figures reflect the relatively large number of older people from Kiangsu and Chekiang in Taiwan, and also their relatively more well-off situations. They are still seen as the major source of clients for the banks.

House and Marriage Are Depending On It: Although money can't take the place of familial love, it can convey concern and provide material assistance.

Old Mr. Li started giving letters and money to people to take to the mainland each time he got wind of someone he knew who wanted to go there, beginning four or five years ago. He would happily tell his children, "This eight hundred US dollars is enough for your uncle to get himself a daughter-in-law," or "This two thousand dollars is for your aunt to build a new house." Since remittances to the mainland have been formally liberalized, he makes sure he goes to the bank every other month to arrange another.

Virtue does not remain isolated. Recently a large group of new clients have appeared at the banks handling remittances: mainlanders (born in provinces other than Taiwan), about 60, mostly men, with white hair cut short--you know at a glance they are retired servicemen or civil servants--and the destination of the remittance is invariably the mainland.

A teller named Lee at the Hua Nan Commercial Bank has seen many elderly gents go from laboriously arranging their first remittances to gradually becoming old hands who know the ropes. He calls this process "non-stop comedy."

The most common problem is that many older people do not know the simplified characters, and write them down incorrectly. Also, the regulations do not allow having more than one recipient, nor do they allow transferring the remittance. But many older men do not know the current whereabouts of their children there and are afraid that no one will help them send the money after they die, so they are insistent on sending the money to old friends back home, asking them to pass it along. Or there is the case of the old veteran who is in tough economic circumstances and, to save the NT$600 processing fee, wants to send the money to three sons simultaneously, and "let the eldest decide how to divvy it up." Then there was the case of the old gentleman whose handwriting was unclear when he filled out the form; the next day the bank called his house using the contact number on the form. Unexpectedly the man was not home, and when the woman who answered the phone was told what the story was, she yelled furiously, "He's sending money to that woman over there again!?"

Hua Nan and SCB Get a Head Start: In 1987 visits to family members in mainland China were permitted, initiating a tide of private remittances. Wang Kuang-chih, vice-president in charge of remittances at the Taiwan branch of the Citibank N.A., points out that after visits were permitted, many people were shocked by the extent of the hardship of the lives of friends and family in mainland China, and it became a common ambition of older mainlander men and women to give money to someone to take to the mainland for them. But sometimes the persons taking the money would be unscrupulous, and there was no legal protection, and from time to time one would hear of cases of deception or fraud. Moreover, it was impossible to estimate how much foreign exchange was flowing out in this way, and it became a troublesome "loophole" for financial authorities.

Because of the real need, at the end of May of last year, the Mainland Affairs Council of the Executive Yuan selected the Hua Nan Commercial Bank and the Standard Chartered Bank to handle contributions for the Red Cross and to handle the task of remitting the money indirectly to the mainland. The money would be collected at Hua Nan's 130-plus branches across the island and then turned over to SCB's Taipei branch. The Hong kong branch would then make out US dollar checks and send them to recipients in the mainland. It was different from most international remittances in that mainland remittances were limited to person-to-person transfers. Money could not be sent to a company nor used for commercial purposes.

The "check" system used SCB seems simple enough, but in practice many problems arose. "In a very rural place like our old hometown in Honan, if you send a US dollar check there, they might not even know what it is -- never mind figuring out how to get it cashed!" says Mr. Chang, now living in Hsinchu, who insists on bringing the money to the mainland himself or giving it to others from his hometown to turn over to relatives there.

And even if one knows what's going on, given the low degree of internationalization and the conservative practices of mainland banks, you have to pass through layers of obstacles to actually get the cash in hand.

Problems in Processing: "Last year we worked with the mainland's Bank of China," says an exasperated Z.B. Yu, former general manager at the Shanghai Commercial Bank and now a consultant at SCB. When the recipient took the US dollar check issued by SCB to a Bank of China branch, they refused to cash it on the spot--as is customary international practice.They would only give the money to the payee after they had themselves gotten it from SCB's New York office.

Given this procedure, it took more than a month for the recipient to get the money from the time they presented the check to the Bank of China. "A lot of people who had sent money there complained to us. But even though we negotiated this point repeatedly, they never allowed people to get the cash up front." Starting at the end of September of this year, SCB has given the business to the People's Construction Bank of China, which is willing to cash the checks on the spot, which has given Yu a bit more peace of mind.

Despite the time-consuming process, in the foreign-exchange-short mainland, US dollar checks are very useful and popular.

According to Z.B. Yu's observations, only about a third of the people who get US dollar checks have to change them into Renminbi right away for emergencies. Of the other two thirds, some deposit them in their personal foreign exchange accounts, others send them directly to sons or daughters studying overseas, and others even sell them on the black market to pick up the extra ten percent difference in the exchange rate--SCB often gets back checks like this which have been circulated around.

Under the circumstances, the fact that many of the US dollar checks that go to the mainland don't "settle down" there makes the finance authorities very unhappy. Citibank vice president K.C. Wang believes that this is one of the reasons why check cashing in the mainland still faces "difficulties" and is inconvenient.

The Dam Blows: With the check process less than ideal, and the fact that at that time mainland remittances had not been completely liberalized as a matter of policy, Hua Nan and SCB did not advertise heavily, and few people knew about it. Despite this, notes Z.B. Yu, in the time from last May to this September, over 41,000 different remittances were passed from Hua Nan to SCB, totaling US$50 million, an average of more than two thousand items per month with each averaging over US$1,000.

This figure changed radically in June of this year. After the flooding in the mainland, remittances at SCB increased dramatically. More than US$6 million was handled in July alone, and almost US$4 million in August (see chart). Immediately following upon this, at the end of August, the Central Bank announced the "Methods for Indirect Remittances to the Mainland," completely opening up this line of business. In less than half a month, all the designated foreign exchange banks and the postal bank had joined the fray, frantically signing agreements with the Taiwan branch offices of SCB, Citibank, and Bankers Trust Company; money would be sent through them to Hong kong. These three banks in turn opened talks with the major banks in various areas of the mainland to handle the details of money coming in from Taiwan.

Because the problems of acceptance of the checks have not been fully resolved, currently Citibank and Bankers Trust Company both use mainly telegram transfers and letter transfers. The latter means, taking the Citibank as an example, that after Taipei gets the remittance money, it gets passed through Hong kong to the Shenchen branch of Citibank; from there a notification to pick up the money is sent by registered mail to the recipient, and at the same time notification is sent to Citibank's partner-- the Commercial Bank of China--and its branch office nearest to the recipient; then the recipient will use his or her notification letter to come pick up the money. The whole process requires about 14 days. Telegram transfer means sending a telegram directly to the mainland banking system to place the remittance amount directly into the recipient's account; the money can be withdrawn after one week.

If You Want It--Go and Get It: A banker at Citibank notes that the mainland postal service, which plays a key role in the process, though not especially fast, makes few errors. By using the zip code, even remote minority autonomous regions are accessible. "The biggest headache is that there are still too few banks designated to handle foreign exchange, and hence it is extraordinarily inconvenient to get the money," he concludes.

For example, the Commercial Bank of China, which claims to have 23,000offices in the mainland, has only forty branches which can handle Citibank's foreign exchange remittances. Thus it is very common for someone to have to travel for one or two days to a neighboring county or city to cash a US dollar check, and even then you have to see if the local branch has enough US dollars available. If not, sorry Mack, but you'll have to open a US dollar account first; after the headquarters in Peking sends enough US dollars to the branch, then you will be notified. Of course, this could take a month or two.

"Although for some people from the countryside, having to go to the city to pick up the money is actually fun, giving them the chance to stay in the city as tourists for a few days, for the remitting bank, it's safer if the money can get to where it's going as soon as possible," points out K.C. Wang. For this reason, Citibank encourages people to dispense with US dollars and just take Renminbi.

Although it takes more concern and patience than other international remittances for the banks involved, no bank is willing to forego a chance at this enormous market. From the fact that Citibank handled almost 5,500 cases in September alone, you can see the market is indeed large.

Looking Forward to a Big Pie: And this pie may get even bigger. After the "Regulations Governing Relations Between the Two Sides of the Taiwan Straits," which are even now being sent to the Legislative Yuan for review, are passed, veterans who have returned to the mainland permanently but who still draw assistance from the Vocational Assistance Commission for Retired Servicemen can be expected to become regular clients.

Chronologically speaking, mainland remittances clearly increase around each of the three holidays of Dragon Boat Festival, Mid-Autumn Festival, and Chinese New Year. For example, in January of this year, SCB handled more than 5000 cases, for more than US$5 million in remittances, or about twice as much as the off-peak period. Citibank which hit Mid-Autumn Festival shortly after initiating this service, averaged nearly 300 cases per day for those few days; now it's down to a normal figure of about250 per day.

With all that money going to the mainland at once, you can't help but wonder whether or not some people are taking this opportunity to make commercial payments. Both Wang and Yu think the possibility is low: "Although there is no fixed upper limit to mainland remittances at this time (they follow general foreign exchange limits of US$3 million per person per year), they are firmly locked in small amounts sent person-to-person by the members of the general public," says K.C. Wang. According to statistics of Bankers Trust Company, the highest single remittance thus far has not surpassed US$60,000, equivalent to NT$1.5 million; you can't do any serious business with that.

Nevertheless, K.C. Wang reveals that in the month or so since Citibank opened its "Mainland Remittance Hotline," they often receive questions from Chinese medicine shops, martial arts groups, travel agencies, or other private institutions with relatively close dealings with the mainland. "As soon as indirect remittances for commercial purposes are permitted, money that enterprises currently send through Hongkong banks can go through domestic banking channels, and the amount will be so large that it is beyond estimation," says Wang. This will be precisely the inducement for all the banks to take their gloves off and aggressively join in.

It is rather poignant that 40 years ago the "crime" of "having relatives in Taiwan" was enough to have mainland friends and relatives classified as one of the "Five Black Elements." Forty years later, "having relatives in Taiwan" has become a source of financial assistance and comfort of which one can be proud. As mainland remittances become hotter and hotter, will their significance be limited just to economics?

[Picture Caption]

The visit of a family member from Taiwan is usually a big deal. Not only are there commemorative photos, but new houses and marriages are often riding on the help of "money from Taiwan."

Elderly gents pick up forms to remit money, hoping they can improve the lives of family in their hometowns in the mainland as quickly as possible. The photo shows a scene from the North Gate Post Office.

Total Funds Indirectly Remitted to the Mainland Chart by Tsai Chih-pen[Picture]

The visit of a family member from Taiwan is usually a big deal. Not only are there commemorative photos, but new houses and marriages are often riding on the help of "money from Taiwan.".

Elderly gents pick up forms to remit money, hoping they can improve the lives of family in their hometowns in the mainland as quickly as possible. The photo shows a scene from the North Gate Post Office.