A curve that only rises:
Chan Te-sung, the head of the third office of the Directorate General of Budget, Accounting and Statistics at the Executive Yuan, points out that when talking about why things are so expensive here, you've got to discuss foreign and Taiwan-made goods separately.
In the past, Taiwan was trying to stimulate exports and reduce imports. With high tariffs and an undervalued currency, the prices for foreign goods were naturally high, and these goods became status symbols. In recent years, tariffs have gone down and the value of the currency has risen and so the price of foreign goods should have gone down. But prices have a one-way inflexibility about them. It's easy for them to go up but hard to come down. Secondly, the image of imported products as being high cost is already established. With the prices set high, the products will still sell as always. And the more expensive something is, the more people believe that it is a good product.
People used to think that "made in Taiwan" meant that a product was cheap, but as land, rent, and labor costs have risen, low prices for domestically made goods have become a thing of the past. Add onto this problem with marketing, circulation and production efficiency, and prices become very difficult to stabilize. "Take agriculture, for instance. The production and marketing structure is not complete, which leads to fruit and vegetables having to go through seven or eight middlemen. This naturally provides an opportunity for inflated prices," he says.
For example, Pingtung farmers sell wax apples to the wholesaler at NT$40 a Chinese pound; by the time they get to the consumer, they're going for a dear NT$160.
The rise in productivity can't keep pace with the rise in labor costs. This is invariably reflected in the prices from the factory and in the stores, which means that if the cost of raw materials or payrolls rise, then everything else does too.
The weak consumer:
The Consumers' Foundation believes that collusion by the industry associations is also one factor. "If industry wants to hike prices--particularly for standard consumer goods," says Chang Le-chi, chairman of the Consumers' Foundation, "consumers have no power to fight back."
Food prices, for instance, are extremely volatile. For the director of the nutrition department at Veterans General Hospital, they're a big headache. Every day she's got to adjust 13,000 meals. Even the Consumers' Foundation has no way to control this kind of phenomenon. "Furthermore, the price fluctuations all start from the small stores, and there's no way to investigate it properly. Unless it's a price rise across the industry, the consumer has no recourse under the Fair Trade Law. If a store individually raises its prices, the government can't do anything about it either."
Confronted with Taiwan's high prices, consumers are left to their own devices. One of the ways they deal with it is going abroad. But for the things that they've got to pay for in Taiwan--like food, housing, transportation, education and entertainment--there's no way to import these themselves.
"Import foreign attitudes," says Chu Li-Chang, a member of the Homemakers Union and Foundation. The countries with high incomes have high labor costs, so they do a lot of things themselves--cutting and curling their own hair, assembling their own furniture and appliances and even making curtains and clothing. How they differ from us, letting restaurants do our cooking and cabbies our driving.
The rational consumer:
"Reducing demand" is another strategy. A university professor once planned to take his wife out to eat shark fin soup, thinking the price was NT$1,200 instead of NT$12,000. When he discovered the mistake, he was annoyed, but his wife didn't care that she missed the soup. "If we stay home and eat pig's rib soup," she said, "we won't get any less protein."
There are even signs of progress. With shopping trips to Hongkong so prevalent, cosmetic prices here have fallen. And hypermarkets and manufacturer's outlets offering lower prices have become popular.
Perhaps the question consumers should really be asking themselves is, are we choosing our lives or are our lives choosing us?