Trading partners
Taiwan-US relations look even closer when expressed in terms of degree of economic interdependence.
Taiwan’s trade surplus with the US burgeoned in the 1980s, reaching a historic peak of over US$16 billion in 1987. The US then began pressuring Taiwan to open its domestic market to imports and to allow the NT dollar to appreciate.
In 2001, the US, mainland China, and Japan were the three top destinations for exports from Taiwan, with the US getting, by a small amount, the highest percentage. By 2009, however, with mainland China’s status as “workshop to the world” cemented, mainland China (including Hong Kong) was taking over 40% of Taiwan’s exports, with only 10% going to the States, putting the mainland in the number one ranking.
Statistics from 2011 list the US as Taiwan’s number three trading partner, while Taiwan is the US’ #10 trading partner. However, the US remained, as it has always been, the number one source country for foreign capital in Taiwan, with cumulative investment of US$22.4 billion. Most of that has gone into finance, insurance and the electronics industry.
From the point of view of American firms, doing business with Taiwanese is not merely a matter of profit, there is also a special friendship.
Sean Fogarty, director of the American State Offices Association in Taiwan (he is also head of Washington state’s Trade Development Office in Taiwan), says that Taiwanese speak American-accented English, which makes Americans feel right at home. In contrast, most English speakers in Singapore and Hong Kong studied in the UK.
Secondly, Fogarty continues, Taiwanese really understand American corporate culture because so many have studied or worked in the US, so it is easy to achieve mutual understanding. In particular, Taiwan is vital to American firms as a platform for moving into the mainland Chinese or other Asian markets.
Irene Tsai, managing director at the Pennsylvania Office of Trade and Investment, points by way of illustration to Air Products, a company from Pennsylvania which for more than 20 years has been engaged in a joint venture with Taiwan’s San Fu Group. The joint venture firm, Air Products San Fu Company Ltd., has been supplying specialized chemical gas products needed by Taiwan’s semiconductor industry and recently invested US$250 million to expand its facilities in the Southern Taiwan Science Park in an effort to meet rapidly growing demand in Asian markets for semiconductors and thin-film transistors. “The chief executive officer has always been a Taiwanese, with only the vice-CEO being an American, which shows the trust and respect American firms have for their Taiwanese partners,” she says.
Sean Fogarty feels that Taiwan’s entrepreneurs, who have built up their businesses from scratch, are not only transparent in their corporate governance, but are very receptive and flexible with regard to new concepts and new products. Their incredible adaptability makes them even more attractive to foreign capital.
Fogarty is also highly impressed with the purchasing power of Taiwan consumers. For example, the Neihu branch of Costco, a membership cash-and-carry warehouse chain based in Washington State, has the highest revenue per square meter of any branch in the world. However, Fogarty adds, “The goods and services that American states sell to Taiwan have to have tremendous value-added and sophistication, like medical instruments and biotechnology, because,” he says, “Taiwan’s own products are just too competitive!”
It’s said that when America sneezes, the whole world catches cold. Let’s hope they keep the New York Stock Exchange warmly dressed this winter!