The countries of Eastern Europe with which the government has allowed direct trade are seven: East Germany, Poland, Czechoslovakia, Yugoslavia, Hungary, Bulgaria, and Romania. The Soviet Union and Albania are not included.
Actually, the R.O.C. opened trade with East Europe as early as ten years ago, in name at any rate, but the requisite conditions were not in place--questions of shipping, tariff, and payment, for example, hadn't been solved--and so there were few results. Two years ago our bilateral trade with Eastern Europe totaled only US$100 million, and most of it was carried out through indirect channels.
It's only in the past year or two, under pressure from our growing trade surplus with the United States, that we've begun considering the question of diversifying our markets. But where? We've had some success with Japan and Western Europe recently, but many obstacles in both places remain. And the Third World doesn't have enough purchasing power.
Eastern Europe looks like a market we can develop, if you analyze it. The seven countries that we can trade with directly now have a combined population of about 130 million, more than Japan's. And if you assume indirect trade with the Soviet Union, then the population comes to 300 million, which is greater than that of the U.S. or Western Europe.
Per capita income is pretty high now, probably around US$5,000 in East Germany, Poland, Czechoslovakia, and Hungary. That kind of income should mean high consumption, but the Communists have always stressed heavy industry, and their consumer goods are scarce and poor in quality. Because of the poor quality, they can't export them and earn foreign exchange, and because they're short on foreign exchange, they haven't been able to renovate their equipment.
Caught in this vicious cycle, most East European countries have high foreign debts, and they're very careful about importing consumer goods, putting them way down on their list of priorities.
All this doesn't mean they don't have the potential to consume. Since the government supplies food and housing, the people have a lot of disposable income on their hands. And they often wind up spending it on the black market.
So speaking strictly from the standpoint of supply and demand, the countries of Eastern Europe really are a good market for Taiwan.
In view of this, the China External Trade Development Council last year set up the Taiwan Businessmen's Association for East European and Nordic Countries to assist local businessmen in developing the market in an orderly fashion. Order is important, because we had a bad habit in the past: cutthroat competition among small and mid-sized enterprises that ruined the market. Our experience in the Middle East is a prime example.
Many people still think that since Eastern Europe is Communist, it must be dictatorial and totalitarian, but that's not entirely so now. Actually, many countries are trying to carry out economic reforms. As a whole, they're all moving toward internationalization and liberalization, only the pace is different--some are faster than others. And their "sensitivity" to Taiwan is not the same.
Our goals in dealing with each other are not quite the same. Although trade is important for them, what they want most now is foreign investment, particularly in heavy industry. But our main purpose in going to Eastern Europe is to sell.
They'd also like us to invest in light industry. But most businessmen on Taiwan have a lot of reservations about investing even in Southeast Asia, to say nothing of a Communist country.
I believe that the East European market has great potential, but it will be difficult to make quick progress--particularly because the gifts and toys that we're best at making aren't daily necessities, and so it will be hard to get import permits unless we use barter.
But finding things to barter won't be easy either, and even though we can import East European consumer goods now, we still have to apply for import permits case by case. Trilateral trade through a third country is another possibility, but none of it will be easy. So if we really want to do business with Eastern Europe over the long haul, we'll have to go about it in an organized and orderly manner.
Eastern Europe and Mainland China are both Communist, so naturally they share some similarities.
What's similar is that both markets are short on consumer goods, but the mainland has a billion people and a much larger demand. What we want from these two areas is also different. We want to sell to Eastern Europe, but from the mainland we mainly want to buy. We want to buy things like coal, petroleum, and cotton, which have a high cost of transportation, because if we have to go to South Africa for coal and to the U.S. for cotton, then we'll have a hard time competing with places like South Korea. So in the future, our trade with the mainland--carried out via indirect channels--will be greater than with Eastern Europe, although the form will be completely different.
What we want from the mainland is mainly two things: natural resources and manpower. We don't look on it as a market. What do you want "jenminpi" for? But combining our technology and marketing experience with their natural resources and manpower--wouldn't that be a combination tough to beat?
Basic Information About Eastern Europe ※Source: Andrew C, Tsuei[Picture]
Trade Relations Between the R.O.C. and Eastern Europe ※Source: Andrew C, Tsuei Total Imports and Exports (in US$ 1,000,000)[Picture]
[Picture Caption]
Eastern Europe has a rich cultural heritage: tourists to Hungary, for example, outnumber the country's population by two-to-one each year. Shown here is the Memorial Hall of Heroes in Budapest. (photo courtesy of China External Trade Development Council)
Andrew Tsuei, who led a group to Eastern Europe to explore markets for the CETDC, is currently executive director of the Union Group of Companies. (photo by Arthur Cheng)
Except for the policeman on the right carrying a gun, the first impression that East Berlin gives people is about the same as that of other big cities in the West. (photo by Chrissie Lu)
Vienna serves as a trade bridge between Communist Eastern Europe and the Free World. Most indirect trade between the R.O.C. and Eastern Europe is shipped through here. (photo by Arthur Cheng)
The R.O.C.'s Eastern Europe Trade Delegation was given a grand reception in Hungary. This is the scene of the United Exhibition for Sino-Hungarian Products. (photo courtesy of China External Trade Development Council)
Andrew Tsuei, who led a group to Eastern Europe to explore markets for the CETDC, is currently executive director of the Union Group of Companies. （photo by Arthur Cheng）
Except for the policeman on the right carrying a gun, the first impression that East Berlin gives people is about the same as that of other big cities in the West. （photo by Chrissie Lu）
Vienna serves as a trade bridge between Communist Eastern Europe and the Free World. Most indirect trade between the R.O.C. and Eastern Europe is shipped through here. （photo by Arthur Cheng）
The R.O.C.'s Eastern Europe Trade Delegation was given a grand reception in Hungary. This is the scene of the United Exhibition for Sino-Hungarian Products. （photo courtesy of China External Trade Development Council）
